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What Is Ethereum? (3/6) - Getting started with Ethereum


What can I buy with ether (ETH)?

Unlike Bitcoin, Ethereum isn’t intended to be used only as a cryptocurrency network. It’s a platform for building decentralized applications, and as a tradeable token, ether is the fuel of this ecosystem. So, the primary use case for ether is arguably the utility it provides within the Ethereum network.

With that said, ether can also be used similarly to traditional currency, meaning you can buy goods and services with ETH just as with any other currency.

Heatmap of retailers that accept ether as payment. Source:

What is Ethereum used for?

People can use Ethereum’s native currency, ETH, as digital money or collateral. Many also see it as a store of value, similar to Bitcoin. Unlike Bitcoin, however, the Ethereum blockchain is more programmable, so there is much more you can do with ETH. It can be used as the lifeblood for decentralized financial applications, decentralized markets, exchanges, games, and many more.

What if I lose my ETH?

Since there aren’t any banks involved, you’re responsible for your own funds. You can store your coins on an exchange, or in your own wallet. It’s important to note that if you use your own wallet, you absolutely must take care of your seed phrase. Keep it safe because you need it to restore your funds in case you lose access to your wallet.

Can I revert Ethereum transactions?

Once data is added to the Ethereum blockchain, it’s almost impossible to alter or remove it. This means that when you make a transaction, you can think of it as it’s set in stone. So, you should always double-check if you’re sending funds to the correct address. If you’re sending a large amount, it might be useful to send a small amount first to be sure that you’re sending to the right address.

With that said, due to a hack in a smart contract, Ethereum hard forked in 2016, where the malicious transactions were effectively “reversed”. This, however, was an extreme measure to an exceptional event, and not the norm.

Are Ethereum transactions private?

No. All transactions that are added to the Ethereum blockchain are publicly visible. Even though your real name isn’t on your Ethereum address, an observer might be able to connect it to your identity through other methods.

Can I make money with Ethereum?

As it’s a volatile asset, you can make money with ETH just as you can lose money with it. Some people might hold ether for the long-term, betting on the network becoming a global, programmable settlement layer. Others choose to trade it against other altcoins. Still, both of these strategies carry their own financial risks.

As it’s the main pillar of the Decentralized Finance (DeFi) movement, ETH can also be used for lending, as collateral for taking out loans, minting synthetic assets, and – at some point in the future – staking.

Some investors may only hold a long-term position in Bitcoin, and not include any other digital asset in their portfolio. In contrast, others may choose to hold ETH and other altcoins in their portfolio, or allocate a certain percentage of it to shorter-term trading (e.g., day trading or swing trading). There isn’t a one-size-fits-all approach for making money in the markets, and each investor should decide for themselves what the most suitable strategy might be for their profile and circumstances.

How can I store my ETH?

There are many options to store coins, each with their own pros and cons. As with anything that involves risk, your best bet might be diversifying between the different available options.

Generally, storage solutions can be either custodial or non-custodial. A custodial solution means that you are entrusting your coins to a third party (like an exchange). In this case, you need to log in to the custodian’s platform to make transactions with your cryptoassets.

A non-custodial solution is the opposite – you maintain control of your own funds, while using a cryptocurrency wallet. A wallet doesn’t hold your coins like your physical wallet – rather, it holds cryptographic keys that allow you to access your assets on the blockchain. It’s worth noting again: it’s imperative that you backup your seed phrase when using a non-custodial wallet!

How to store your ETH in an Ethereum wallet

If you’d like to store your ETH in your own wallet, you have two main options: hot wallets and cold wallets.

Hot wallets

A cryptocurrency wallet that’s connected to the Internet in some way is called a hot wallet. Typically, it will be a mobile or desktop application that allows you to check your balances, and to send or receive tokens. Because hot wallets are online, they tend to be more vulnerable to attacks, but also more convenient for everyday payments.

Cold wallets

A cold wallet is a crypto wallet that isn’t exposed to the Internet. Since there’s no online attack vector, the chances of an attack are overall lower. At the same time, cold wallets are typically less intuitive to use than hot wallets. Examples of cold wallets can include hardware wallets or paper wallets, but the use of paper wallets is often discouraged as many consider them obsolete and risky to use.

What is the Ethereum logo and symbol?

Vitalik Buterin designed the earliest Ethereum emblem. It was made up of two rotated summation symbols Σ(Sigma from the Greek alphabet). The final design of the logo (based on this emblem) is made up of a rhomboid shape called an octahedron surrounded by four triangles. Similar to other currencies, it might be useful for ether to have a standard Unicode symbol so apps and websites can easily display ether values. While not as widely used as say, the $ for the USD, the most commonly used symbol for ether is Ξ.

Source : Binance

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