How does Ethereum work?

1 min reading

Ethereum (or Ether) is the second most popular cryptocurrency in the world after Bitcoin. It's appreciated by the traders for its stability and market cap.

If you want to start your adventure with Ethereum, you must have a wallet (and we mean crypto wallet, although "paper" wallet is also an option). Your coins will be stored there. With a wallet, you can sell or buy cryptocurrencies without any problems. There are a few types of said wallets: desktop wallets (on your PC or Laptop desktop - like a normal computer app), mobile wallets (in your phone, obviously), hardware wallets (these secure devices that can often be detached from the internet, and can sign transactions without being online). There's also a paper wallet - you just have to write your private key on a scrap of paper and lock it in a safe or in a deposit box for safety.

When you have a wallet, you can finally buy (or sell) Ether coins. Obtaining Ether varies by country. Usually, you'd have to find the seller online, although there's also an option of finding someone who wants to sell coins in person, especially in New York or Toronto (they have frequent Ethereum meetups). Exchanges allow users to buy coins directly with dollars or Bitcoin. Typically there is a sign-up process. Buying ether with another currency might take an extra step. Bitcoin is the most commonly used cryptocurrency, and people around the world are more likely to want to trade for it in their currency.

Once you have ether, you can send it directly to another person (‘peer-to-peer’). It will likely cost a small transaction fee paid to miners.

And there you go! You have Ether coins in your wallet. Use it as you please, without the third party participation, thanks to the Ethereum's peer-to-peer network.