What is Ethereum anyway? Is it the best cryptocurrency? Don't take the plunge on Ethereum until you read our complete guide.
horizontal top view close up of metallic ethereum on a stack of bitcoin golden coins

What Is Ethereum? A Guide on Buying Ethereum in Australia

There are now over 2000 cryptocurrencies available to buy. With so many of them around it can get very confusing, especially for people who are new to the crypto scene.

How are you supposed to know which will be the best investment if you do not know the differences between them? One of these cryptocurrencies that you may have heard investors talking about is Ethereum. 

If you are wondering what Ethereum is and how it is different from other cryptocurrencies, we are here to help. In this article, we answer the question “What is Ethereum?” 

What is Ethereum?

As the world moves towards a digital economy, it is logical that digital currencies should gain popularity. This is the main reason for the rise of cryptocurrency

Cryptocurrencies are typically powered by blockchain technology, in which ownership records are stored on a computerised ledger. They take their name from the method of cryptography, which encrypts data so that only the person with the correct key may access them. It makes them extremely secure for use online. 

The top cryptocurrency by market share is Bitcoin and the second is Ethereum. However, both cryptocurrencies are slightly different in the way they work. 

How Does Ethereum Work?

Ethereum is different to other cryptocurrencies like Bitcoin. Ethereum actually refers to the blockchain used to create it. The actual currency is called Ether, though people tend to use the terms interchangeably. 

A blockchain is a list of records that use cryptography to keep them secure. These records can be used to create other applications, and in this instance, we are dealing with the Ethereum blockchain. Ether is the native currency of that chain.

Ether can be used to transact with many Ethereum applications. It can also function as a medium of exchange like Bitcoin. In addition to this, many people to treat Ether as an investment asset. 

How Do I Buy Ethereum?

Most cryptocurrencies, including Ether, are purchased on an cryptocurrency exchange. There, you can exchange your fiat currency such as Australian dollars for cryptocurrencies.

There are a large number of exchanges in Australia, so look online for reviews. Make sure they are reputable and have enough customers vouching for them. Once you have found one, set up an account. 

You will need an official photo ID for setting up an account. Find the page where you can purchase Ethereum, then purchase the correct amount. 

It is advisable to create a cryptocurrency wallet. A wallet is a place where you can store your cryptocurrency once you have bought it from the exchange. They are much more secure than keeping your money at the exchange and will make sure you are the only person in control of your private keys. 

Investing in Ethereum

The two main ways to invest in Ethereum are either holding it directly or through an index portfolio. An index portfolio spreads out your investment, making it less risky and hassle-free. Your money will be spread over a number of available cryptocurrencies, so should one drop in value, another one may rise. 

What Can You Do With Ethereum?

There are a number of apps that have been created using Ethereum. They range from financial apps, crypto-collectibles to file storing. Some of the crazier ones are CryptoKitties (an exchange lisiting digital cats), betting without using a bookmaker, and a rental system for hard disc space.

Ethereum also provides a host of online learning tools. You can use this to begin creating your own programmes and applications. 

How to Mine Ethereum

Cryptocurrency mining is the process in which verified transactions get added to the blockchain ledger. Mining also allows new coin creation. Yet not all cryptocurrencies are mined. 

People will debate the profitability of mining Ether. While you may gain some coins, the time and cost of equipment needed to do any mining may outweigh the value. Profit are in Ether, based on any fees given for the transactions you mine. 

If you are mining Ethereum you need a special computer hardware unit called a graphical processing unit (GPU). You need to check its hash rate, which is the value at which the mining device operates. The higher your hash rate speed, the more likely you are to beat others to the next block and get a reward before anyone else. 

Some miners may choose to set up a mining rig. This is a machine that comprises numerous GPU units, giving a super-fast hash rate. Thus, unless you have the money to put into a large rig that will allow you to compete with major corporations, then Ethereum mining may not be profitable. 

Once you have purchased the GPU hardware, you will need to install the software. The drivers should be on the GPU website or provided with the unit. Once you have done this, you will need to download the Ethereum blockchain and connect it to the network. 

Once connected, you will be linked with the other nodes on the network. You can now begin mining, build decentralized apps, send transactions, and deploy smart contracts. 

Start Investing

Now you can answer the question “What is Ethereum?”, think about investing. Coinstash can take the hassle out of buying crypto and even aid you in the process.

Stop by for our handy blog articles to understand more about the cryptocurrency ecosystem. 

About Coinstash

Coinstash is a registered digital currency exchange based in Australia. Our customers praise Coinstash as one of the most user-friendly, educational and supportive platforms. Through its live support 7 days a week, Coinstash has accumulated numerous positive reviews from its customers. Coinstash is also one of the only digital currency trading platforms that has participated in Australian government Austrade’s landing pad program.

Note nothing in this article should constitute general or specific financial advice. Coinstash does not take into account your circumstances when publishing articles. Any content on Coinstash.com.au or related domains are informational only.