What is Ethereum? How does Ethereum works, Can You Convert Ethereum into Cash?




Ethereum is the world’s second popular cryptocurrency after biggest crypto Bitcoin. Most of you have question in your mind, What is Ethereum? How to Mine Ethereum? Ethereum Price? Ethereum is a good investment? Can You Convert Ethereum into Cash? and so on

What is Ethereum

Ethereum is powered by blockchain technology, it is a open source and decentralized global software platform. Ethereum’s native Cryptocurrency is the Ether (ETH) and it is commonly known for Ether only.

Anyone can make use of Ethereum to create or invent any secured digital technology. Ethereum has token which is designed to pay for work done that support the blockchain. We can also used it for the payment in goods and services if accepted.

Ethereum is designed to fulfill the purpose of Decentralization, Security, Scalability and Program. For developers and enterprises Ethereum is useful to create technology which is based upon it.

Ethereum supports smart contracts which is one of the important tool behind decentralized applications. Smart contracts is used by many decentralized finance (DeFi) and other applications in conjunction with blockchain technology.

Learn more about Ethereum Token ETH and how they are integral part of decentralized finance, non fungible tokens, the metaverse and decentralized autonomous organizations.

Key Points

  • Ethereum is actually blockchain based platform which is also known for its cryptocurrency Ether (ETH).

  • Secure digital ledgers which is publically created and
    maintained is enabled by blockchain technology that power Ethereum.

  • Ethereum and Bitcoin has lots of similarities but their limitations and long term vision are different.

  • In September 2022, Ethereum changed from proof of work to proof of stake.

  • As Ethereum is blockchain based technology, it is considered as foundation for many emerging technologies.

  • Joe Lubin is the founder of Ethereum.

How does Ethereum works

Vitalik Buterin submitted the papers to publish the Ethereum’s idea in 2014. Vitalik Buterin and Joe Lubin are the founder of blockchain software company Consensys, they launched the Ethereum platform in 2015.

Both the founders analyzed the full potential of blockchain technology. Not only in secure virtual payment method but also in various methods and enhancement beyond that.

There are several cryptocurrencies available in the market out of those Bitcoin is one of the popular Cryptocurrency, followed by Ether (ETH) as second largest/popular Cryptocurrency.

Ether Cryptocurrency gain popularity right after Ethereum launched in market.

Ethereum Virtual Machine (EVM) is offered by Ethereum platforms that executes the scripts over distributed public nodes available worldwide over the network.

Decentralized application required power to run pn network, such applications are created by developers and the power provided by public nodes present over network. Developers buy ether and mine it over the network to pay for the usage of network Gas is the internal mechanism used to set the prices for each transactions over the network.

Till 15 September 2022, Ethereum were using Proof of Work (POW) model to execute and verify the cryptocurrency transactions with the help of Ethereum Mainnet blockchain. Proof of Work is used for data integrity and verification, it is a consensus algorithm.

On 15 September 2022, they transfer the Ethereum to Proof of Stake (POS) model which is consensus algorithm running on beacon chain. Moving to Proof of Stake (POS) has increase the transaction speed, energy required to process and verification.

Blockchain Technology in Ethereum

Like every other cryptocurrencies Ethereum involves blockchain technology. An identical copy of information is distributed in all the blocks present over the network means Information present in the block gets added to every newly generated block with new data.

Network of automated program has validated the Blockchain, these programs consensus on validity of transaction information. We cannot make any changes to the blockchain until the network reaches a consensus this makes blockchain more secure

Consensus Mechanism algorithm is used to validate whether consensus is reached or not. Proof of Stake algorithm is used by ethereum where validators (network of participates) generates a new block and work together to verify the information present.


Proof of Stake (PoS) is cheaper and mpre environment friendly than Proof of Work (PoW).

Proof of Stake Mechanism

Energy in required to validate the mined blocks, Proof-of-Work requires more energy to mine the blocks but Proof-of-Stake is different and it does not require energy to validate mined blocks. It uses the LMD ghost algorithm and finalization protocol called Casper FFG, combined into a consensus mechanism called Gasper. Gasper is used to monitor and define how validator Or miners receives the rewards for there work and punishment for dishonesty.

32 ETH must be staked by solo validators to activate their validation ability. Individual miner can stake minimum ETH but they need to share the rewards received and need to join the mining pool. A miner generates a new block and attests the information valid in a process called Attestation. Committee is the other validator who verify the blocks broadcasted to them and vote for its validity.

Proof-of-Stake punished the validators who act dishonestly. Gasper identifies the miners who attack the participants present over the network, also identify the bloks to accept and reject based on the Validators votes.

Dishonest validators are punished by burning there ETH stakes and removed from the network. Burning refers to transferring crypto to wallet that has no keys and which takes them out of circulation.

Ethereum Cryptocurrency Wallet

Every miner uses Cryptocurrency wallet to store their Ether. Wallet is nothing but a digital interface developed by developers which is use to store and access the ethereum on blockchain. Every wallet has some address associated with it, which is similar to our email address, we can send an Ether just like we send an email.

Private keys are stored in wallet not actual ether, Private key work as a password when any transaction initiated. Each ether owned by miner or any individual has private key associated, this key is essential for accessing ether (ETH).

Various storage methods are used to secure these keys, you must have heard about these storage methods

  • Hardware Wallet

  • Paper Wallet

  • Cryptoart

  • USB flash drive

  • Cryptosteel

  • Deep Cold Storage

History of Ethereum

The hard fork and the split of Ethereum and Ethereum classic was one of the notable event in the history of Ethereum. In 2016, group of participates steal ether worth of $50 million by gaining the majority control of Ethereum blockchain, that was raised for one project called DAO.

For the new project, they shown success of raid for the involvement of third party. Most of the Ethereum community wants to reverse the robbery by invalidating the Ethereum blockchain and approves the blockchain new version

Whereas fraction of community choose to maintain original Ethereum blockchain version. Not changed version of Ethereum permanently become cryptocurrency Ethereum classic.

Bitcoin vs Ethereum

Ethereum and Bitcoin compared to each other as they have so many similarities except few important distinctions.

Founders and developers have described the Ethereum as ‘The world’s programmable blockchain’, which positioning itself as an programmable network, electronic with several applications.

Quick Facts

Ethereum platform was invented to leverage blockchain technology for several diverse application but the Bitcoin was invented only to serve as a payment method.

Maximum 21 Million bitcoins can enter into circulations, Limit for creation of ETH is unlimited although time required to process a block of ETH limits how much ether minted each year. More 122 million Ethereum coins can enter into circulation.

Ethereum and Bitcoin networks both charge different transaction processing fees, that is one of the significant difference between Ethereum and Bitcoin. This fees are paid by participants on each Ethereum transactions known as a gas of Ethereum network. Bitcoin transaction fees are absorbed by broader Bitcoin network.

As of September 2022, Ethereum uses Proof-of-Stake consensus mechanism whereas Bitcoin requires Proof-of-Work mechanism, which require miner to compete for rewards.

What is the Future of Ethereum

Transition of Ethereum to proof-of-stake protocol enables users to mint new ETH based on their ether holding also enable users to validate transactions, this is the part of Ethereum platform significant upgrade. This upgrade now referred as Ethereum, previously called Eth2.

Ethereum is for using two different layer, first layer is execution layer which is used for validations and transactions of ethereum. Second layer is Consensus layer where consensus chains and attestations is maintained.

This upgrade also added more capacity to Ethereum network which helps to support its growth, increase in capacity of Ethereum network can address chronic network congestions problems.

Development of sharding will divide Ethereum database among the entire network, to address this scalability developement of sharding is continued by Ethereum. This idea has similarities with cloud computing technology, where multiple computers is used to handle the workload which will helps to reduce computational time.

Divided smaller database is called as shards which is present over Ethereum network, these shards will be worked on by those who have staked ether. Shards is beneficial for validators because it allows more validators to do there work at the same time by reducing the time required to reach consensus, this process is known as Sharding Consensus. Development of sharding is completed sometime in 2023.


What is Web3? Actually web3 is just a concept, the principle say that it is powered by Ethereum, because many applications that are developed make use of it.

Use of Ethereum in Gaming

Ethereum is also implemented in Virtual reality and gaming. Ethereum blockchain is also used to secure the data present inside the Decentraland world. Decentraland world is the virtual world, Wearables, Avatar, Buildings, Land and Environments are tokenized using blockchain to create the ownerships.

Axie Infinity is another game that has its own cryptocurrency which is called as Smooth Love Potion (SLP), this game also uses blockchain technology. The game uses SLP crypto for the rewards and any transactions within the game.

Non-Fungible Tokens

In 2021, Non-Fungible Tokens (NFTs) popularities rised to next level. Digital items created by Ethereum is tokenized by NFTs. Tokenization provides one specific digital tokens to one digital assets, that store it and identify it on the blockchain.

Owner wallet address gets stored in encrypted data format by Non-Fungible tokens. NFT can be view as a transactions on the blockchain also it can be traded and sold. Ownership gets transferred after transaction is verified by the network.

NFTs are being developed for all type of assets. Example – Sport person can be treated like trading cards, we can pick our favorite sport person and buy one sport tokens, these tokens are also called as fan tokens. Few of the NFTs are video’s that contain some memorable moments of athletes and some of the NFTs are pictures that resemble a trading card.


In metaverse universe you may use some application like wallets, virtual world, dapp, buildings you visit, all such applications are build on Ethereum.

DAOs Development

DAOs stand for Decentralized Autonomous Organizations. For taking decision over distributed network DAOs is used as a collaborative method.

Ethereum may play significant role in corporate and personal finance, also many factor comes in picture from modern life style as future of cryptocurrencies are still vague.

How to buy Ethereum

Many cryptocurrency exchanges platforms are available in the market for buying and selling ether (ETH). Crypto exchange like Coinbase, Gemini, Kraken, Binance and few brokers like Robinhood, does support ethereum.

Ethereum is good Investment Or Not

The answer is totally depends on person interests like financial goals, objectives and risk tolerance. Ethereum is might be one of the biggest investment for investors in the future as many companies and innovative technologies uses ethereum and investing in ethereum considering larger roles for our society in the future.

How Does Ethereum Makes Money

Validators/miners can earn rewards for their contributions in Ethereum (ETH). Ethereum is not a centralized organizations that makes money.

Ethereum is Cryptocurrency Or Not

Ether or ETH is the native cryptocurrency for Ethereum. Ethereum supports huge range of decentralized applications as it is based on a blockchain technology platform. Ethereum is also commonly known as Ether Coins. Although Ether is the cryptocurrency of Ethereum and it is powered by blockchain technology.

Can You Convert Ethereum into Cash

Yes. Investors can use Cryptocurrency Exchange platform like Coinbase, Kraken and Gemini to convert Ethereum into cash. You have to create an account in exchange platform, link your bank account and transfer ETH available in Ethereum wallet to exchange. Place an order to sell ETH on exchange, once sold transfer the amount (US dollar) to your linked bank account.

Investing in any Cryptocurrency including Ethereum is highly risky, this article does not recommend you to invest in Ethereum as every individual has different opinion and financial conditions

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