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Ethereum simplified & Why is it so expensive?

If you have a curiosity in cryptocurrencies? And, in terms of Ethereum, simply what exactly is it?

Ethereum is a blockchain system similar to blockchain based bitcoin, except the program language helps developers to write applications that handles and automates complex results using blockchain transactions. A smart contract is the name for this kind of program. Like other cryptocurrencies, Ethereum can be used for sending and receiving value and without a third party watching or stepping in unexpectedly.

Commonly misunderstood, Ethereum itself is not a cryptocurrency. Ethereum is a blockchain based, decentralized platform. The cryptocurrency used on the platform is Ether. Unfortunately the cost of sending Ethereum right now is the most expensive it’s ever been. With a market cap of $232 billion, Ether is ranked second with a price of about $2,000 per coin.

If you’re sending ETH from one wallet address to another it requires computations. But if you are using Uniswap and crypto exchange that runs on the Ethereum blockchain it requires more computation. This is because the smart contract is going to be interacting with the liquidity pool and is going to exchange tokens back and forth and calculating gas fees or mining cost.

What determines the gas fee is the current price of Ethereum itself, the complexity of the transaction, the number of people doing transactions at the same time. Gas fees can go up to as much as 100 USD for just one single transaction. Before you do any transactions you should check ethgasstation.info for more information about the prices, transaction confirmation times and trying to avoid Ethereum busy transactions hours to avoid the high gas fee. Basically more transactions means higher fees.

Why does Ethereum have value?

Ethereum is the largest blockchain optimised for programmability with smart contracts. This allows for digital assets to exchange in ways to individuals that is not possible with physical assets. Transactions can be far more complex than a simple direct payment and Ethereum can handle and support all complexity and customizability.

Therefore, in the future, Ethereum could be implemented within all services of the financial industry and demand for the cryptocurrency Ether could be exponential. Currently, the financial industry has extreme solvency risk, and substantial amounts of human error, however Ethereum could remove that thus approving the platform and cryptocurrency to have very high value and extreme potential.

 

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*Disclaimer: Fyggex, does not give any guidance, advice or recommendations to neither invest or not in any available normal currency or digital currency directly or indirectly via any trading platform, exchange or provider. Our sole purpose is to make you aware of the related real or potential risks and opportunities so that you can make your own research prior to any financial decisions you may want to take. Past performance and position are not a guarantee of risk-free future returns.

 

Sources

ethereum.org/en/

www.financemagnates.com/cryptocurrency/news/why-is-the-price-of-eth-so-high-and-how-long-will-it-last/

usenobi.com/blog/why-is-ethereum-gas-fee-so-high/

www.coindesk.com/what-is-uniswap-complete-guide

theblockchaindecentral.medium.com/why-is-eth-ethereum-transaction-gas-fee-so-high-3c552a8371f4

fyggex.com/2020/08/18/everything-ethereum/

coinmarketcap.com/currencies/ethereum/