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Guide: How to get started with Ethereum?

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There are various steps to understand the working of Ethereum Blockchain. We will discuss the complete workflow of using Ethereum Blockchain here.

There are various steps to understand the working of Ethereum Blockchain. We will discuss the complete workflow of using Ethereum Blockchain here. The different steps of using Ethrerum Blockchain are:

 

Get an Ethereum wallet:

The first step for using Ethereum Blockchain is to securely store the ‘ether’.  For that, you would require an Ethereum wallet. There are various kinds of ethereum wallets present in the market. You can choose a particular type of card on the basis of security and convenience. However, the above two criteria are inversely proportional. More is security, less is convenience. There are different kinds of wallets such as desktop wallet, mobile wallet, hardware wallet, and paper wallets. Desktop wallets use the PC or laptop platform to run. Mobile wallets run on smart mobile devices. Hardware wallets are very small in size but very effective in functionalities. They are preferred as the best and most secured wallets. Another option is the paper wallet where you can print/handwrite private key on a paper. There are various online tools dedicated to it.

You must have some backup of your private keys. In case you lose, you must alternative options.

 

Buy Ether:

Once you have the wallet for storing the ether, the next option is to buy ‘ether’. The process of buying ether varies from country to country. There are various ways to buy ‘ether’. One option is to exchange ethereum from your normal currency. There are various exchanges which allow you to buy ethereum from the money you have in your bank account.  Alternatively, you can also buy ether using another famous cryptocurrency, bitcoin. Some exchanges also allow this. The last option is to contact a user who has ether and want to sell it. In the mentioned way, you can buy ethereum.

 

Create/connect to smart contracts:

Above two steps were similar to the bitcoin working, but this step is completely different. Once you have ether, you can join smart contracts. Alternatively, you can also create smart contracts. There are numerous smart contracts that could be used to create decentralized applications.

 

Working:

Almost all the cryptocurrencies generate some identification numbers which are used to point out the destination of the debt fund. There are two components in the identification process of Ethereum Blockchain. One is called the public key and other is called the private key. These keys are represented by strings. You can use the public key to send ethereum to others. This allows the people to identify that you are the source of that particular fund transfer. The private key is used for authentication in the transaction. While spending the ether, you need to sign it with this key. It is similar to ATM credential pin of your debit card.

 

The advantage of this working system is that you can generate these keys at your home, you don’t need to go to banks for these.

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#Ethereum

Ethereum is not a Security: SEC Chairman confirms Commission Staff Analysis

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Jay Clayton, the Chairman of the SEC and an American attorney gave confirmation on the Commission Staff’s Analysis that said that cryptocurrencies such as Ethereum are not securities.

 

Ethereum like tokens are not securities:

The SEC chairman has responded to a letter signed which was signed by Tedd Budd and several other colleagues after asking that whether the policy that would put forward last year by William Hinman, the director of the Divison of Corporate Finance should be regarded as the policy of the SEC or just a judgment of the Securities and Exchange Commission’s staff.

Jay Clayton responded to the letter by stating that he agrees to the statements of William Hinman that was made during the June 2018 speech that concern the digital tokens or cryptocurrencies. He said that he agrees that if a digital token is offered as security is not fixed (static). It might be offered first as security as it might meet the definition of an instrument contract, however, the position might change over time if the digital token is offered in a manner that does not represent that definition anymore. He agreed with William Hinman’s clarification about how the digital token might not represent the definition of an instrument contract.

 

The response letter by SEC Chairman Jay Clayton:

jay-clayton-response-1

jay-clayton-response-2

 

jay-clayton-response-3

 

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2100 Ethereum accidentally sent as fee: Mining Pool returns half

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A user had accidentally sent 2100 Ethereum as a transaction fee which was verified by Sparkpool. Sparkpool asked the user to verify himself.

A user had accidentally sent 2100 Ethereum as a transaction fee which was verified by Sparkpool. According to Sparkpool, they on 25th February, they received an email claiming that the user had mistakenly sent 2100 Ethereum as mining fee on 19th February which was more than $300,000.

 

What happened next?

Sparkpool was generous enough to reply to the email asking the user to verify himself as the owner of the ethereum account from which the transaction was made. Sparkpool asked the user to send 0.022517 ETH on the mining pool’s ethereum address from the same address (0x587ecf600d304f831201c30ea0845118dd57516e) from which the transaction was made.

According to what Sparkpool asked him to do, the user sent the same amount of ETH (0.022517) to Sparkpool’s address on the same day to confirm his identity as the owner of the address. After confirmation, Sparkpool negotiated on the term that they are going to keep half of the amount of ETH i.e. 1050 ETH for the pool miners and the rest half they are going to return to the user.

The user sent another transaction to Sparkpool’s address to confirm the negotiation made by Sparkpool. This transaction was worth 0.666 ETH and also contained a coded paragraph in which the user thanked Sparkpool and their miners for helping them and that they are willing to share 1050 ETH with the miners after which Sparkpool returned 1050 ETH to the user.

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Fall of Ethereum Mining Rewards: What has Constantinople hard fork changed?

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Ethereum went through the long-awaited Constantinople Hard Fork which increased the energy efficiency and reduced the Ethereum mining reward.

After continuous delays, Ethereum, at last, went through the long-awaited Constantinople Hard Fork which apart from increasing the energy efficiency of Ethereum mining, also reduced the Ethereum mining reward from 3 ETH to 2 ETH.

Ethereum Difficulty Bomb:

Ethereum network currently runs by Ethereum mining which involves a lot of miners approving the transactions on the blockchain. However, the future motive of Ethereum is to shift from the current Proof-of-work model to a Proof-of-stake model which does not involve mining. In order to stop the miners from backing out in case of a fork, Ethereum has included a ‘difficulty bomb’ which is a tool that will allow the ethereum mining difficulty to rise massively and discourage the miners so that they automatically shift over to the new Proof-of-stake model.

 

Are Miners interested in Proof-of-stake model?

It is quite obvious that ethereum miners are not interested in the proof-of-stake. However, the investors have been patiently waiting for ethereum to turn into a Proof-of-stake model from a long time as this would lead to the reduction in the inflation rate of Ethereum and eventually the price might rise.

Let’s look at the charts and see how the difficulty, block time and hashrate has been affected by Ethereum’s Constantinople hard fork:

 

Average Ethereum Mining Difficulty:

Ethereum-Difficulty-Chart-and-Difficulty-History-Chart-CoinWarz

Source: Coinwarz.com

The average Ethereum mining difficulty chart shows that due to the hardfork that happened on the 1st of March, the difficulty has tremendously decreased which indicates that the decrease in ethereum mining rewards is in relation to the ethereum mining difficulty.

 

Average Block Time of the Ethereum Network:

Average-block-time

Source: Etherscan.io

After the Constantinople hard fork, the block time of the ethereum network was also reduced from more than 19 seconds before the hard fork to around 13 seconds after the hard fork which is around 30% decrease. The chart shows that the reduction in the ethereum mining rewards also lowered down the block time apart from lowering the ethereum mining difficulty. As both the ethereum mining rewards as well as the block time has decreased, the Constantinople hard fork has not affected the ethereum miners much because as the ethereum mining rewards have decreased so the miners are paid less per block, however, the block time has also decreased which means that the miners can now mine more blocks in less time which compensates their mining rewards.

 

Average Hashrate of the Ethereum Network:

average-hash-rate

Source: Etherscan.io

The chart shows that after the Constantinople hard fork, The Ethereum Network hashrate hasn’t changed. However, this is not what was being expected by everyone. As the mining difficulty and block time would drop after the hard fork, it was expected that the hashrate would increase drastically as because the performance should be more in case the ethereum mining difficulty is less.

 

Why the Hashrate remained unchanged?

One of the reasons for the unchanged hashrate could be the increase in the price of Ethereum after the Constantinople hard fork. This led to the miners having bullish predictions about the price of ethereum although the mining rewards decreased.

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