Ethereum is not as daunting as it sounds. In fact, if you have a smartphone or computer, you can try the platform, provided you own ether. Ether are unique pieces of code that allow you to update your ledge.
If you already know how to buy Ethereum from good dealers, you’ll also need to know what to do with the cryptocurrency. Here is the lowdown.
The first step is to have a place in which to securely store the ether. This storage place is called an Ethereum wallet. It’s important to understand that if you lose your private key, it’s a far bigger deal than if you were to misplace a password. In fact, you would lose your ether forever.
Fortunately, there are several options for wallets in which to store your cryptocurrency, including desktop, web, paper and hardware wallets. The one you choose will depend on your preferences for security and convenience.
Buying Your Ether
How to obtain ether tends to vary from one country to the next and you’ll need to contact someone online or in person who would like to trade ether. What’s more, if you choose to buy either with another cryptocurrency, a few extra steps may be required.
For instance, Bitcoin tends to be the most common cryptocurrency and people all over the world prefer to trade for it in their own currency. So, if you would like to purchase ether in your local currency, for example, the easiest way may be to buy Bitcoin at an exchange and then go ahead and trade the Bitcoin for ether. Once you’ve purchased ether, you can send it directly to someone else, but do keep in mind that it might cost a minor transaction fee.
What Can You Do with Your Ether?
If you’ve already invested in Bitcoin, or done some reading up on Ethereum, you’ll likely have noticed that the exchange and wallet lingo is relatively similar to Bitcoin. However, the Ethereum applications are rather different.
If you have ether, you can either create or join smart contracts. It’s easy enough since there’s a code that automatically kicks in with the terms and agreements so there is no need to rely on a third party. You can even use bundles of smart contracts to create a decentralised application.
How Does It All Work?
So, how does it all work? Ethereum – and the other cryptocurrencies – have a somewhat confusing storage system.
Let’s compare what we know. Take a look at your credit card – there’s a string of numbers on the front. That allows banks to determine where to send money when your card is swiped. Similarly, cryptocurrencies allow you generate identification numbers to recognise where to debit funds.
There are two key components in this system that users need for identification” your private key and your public key. The keys are usually represented as a string of scrambled letters and numbers and the two are linked by cryptography.
Your public key may be sent to other people so they know where to send your money to. If you want people to send ether to you, you will need an address, which is also a scrambled string of numbers and letters.
To spend your ether, you will need to sign over your funds using the private key, similar to a password, or credit card pin.
This is the basic way to use your Ethereum.