A Simple Guide to Understanding Ethereum and Buying Ether

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Lately there has been a lot of talk about a new cryptocurrency in the community – Ether. In order to understand what Ether exactly is, we first need to understand Ethereum.

What is Ethereum?

Ethereum is a cryptocurrency and a blockchain platform with smart contract functionality. It’s basically a decentralized platform for developers to build apps on top of and it was invented by Vitalik Buterin in 2013.

Ethereum can be used to codify, decentralized, secure and trade just about anything: voting, domain names, financial exchanges, crowdfunding, company governance, contracts and agreements of most kind, intellectual property.

But what does all of this have to do with Ether?

Well, Ether is the currency of the Etherium platform. Ether will be required by anyone wishing to build upon or use the Ethereum platform. Just like BItcoin, Ether can be traded around the web and mined. In a second I’ll show you exactly where you can buy it.

The total supply of ether and its rate of issuance was decided by the donations gathered on the 2014 presale of the currency. The results were roughly:

  • 60 million ether created to contributors of the presale
  • 12 Million (20% of the above) were created to the development fund, most of it going to early contributors and developers and the remaining to the Ethereum Foundation
  • 5 ethers are created every block (roughly 15-17 seconds) to the miner of the block
  • 2-3 ethers are sometimes sent to another miner if they were also able to find a solution but his block wasn’t included (called uncle/aunt reward)

The founders of Ethereum state that Ether is not a currency as much as it is “crypto-fuel”, meaning it’s a token that has one main use – to pay for the Ethereum platform. This means that you probably won’t be able to buy stuff with Ether online. However you can still trade it and invest in it in hopes its price goes up.

Because Ether is less “mature” than Bitcoin at the moment, it’s less suitable for non technical people. For example, you can download Ether’s official wallet app from github, but there’s no “user friendly” version of it yet. There’s also MyEtherWallet and EthereumWallet available with a simple interface.

How to buy Ether (credit card, wire transfer and cash)

At the moment you can get Ether from several Bitcoin exchanges like Krakenpoloniex and shapeshift.io. You can also buy Ether directly from brokers like Coinmama and Coinhouse using simpler payment methods like credit cards.

Cex.io has recently launched Ether trading and even set the trade fee to 0% for ETH/BTC. Users can buy Ethers for USD using their ordinary Visa/MasterCard issued in literally any currency.

Mining Ether uses proof-of-work. It’s similar to Bitcoin mining in a sense that there is a diminishing block reward for every block mined.

You can try mining Ether using your own computer (CPU mining), but it will probably not get you too far. However, if you have a dedicated GPU set up for the task then you can get some real rewards. For information on exactly how to mine Ether visit Ethereum’s official web page.

Ether and Ethereum in General are disruptive technologies that are set to change how the Internet works. Whether it succeeds or not remains to be seen, but for now you can easily get your share of “the Internet’s future” by following the steps mentioned above.

If you want to learn more about Ethereum you can use the variety of social channels dedicated to the platform: Facebook, Twitter, YouTube, Reddit, StackExchange and the Etheruem blog.

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Ofir Beigel

Owner at 99 Coins ltd.
Blogger and owner of 99Bitcoins. I've been dealing with Bitcoin since the beginning of 2013 and it taught me a lesson in finance that I couldn't get anywhere else on the planet. I'm not a techie, I don't understand "Hashes" and "Protocols", I designed this website with people like myself in mind. My expertise is online marketing and I've dedicated a large portion of 99Bitcoins to Bitcoin marketing.

7 Comments

    • @Irfan
      I built a quite extensive list of ether faucets. What has to be said about these faucets is that they are all self-hosted since there is no external service like faucetbox that supports this currency yet. For many of these faucets the payout level is quite high and it takes a lot of time to be paid out. You should be able to access the list by klicking my name above this comment.

  1. I just turned all my BTC into Ether on my Eobot!! and changed all my mining settings to Ether. I could actually see a future for this, Just like how BTC was worth literally nothing. Its something worth investing on. I can’t wait to see 5 years later it being with hundreds. If you’re gonna invest INVEST NOW!!

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