What is Ethereum and How to Use it
by Emma Feller
Ethereum (ETH) is a decentralized software platform that is built on blockchain technology. While it can also be used as a token itself to send and receive funds, Ethereum does so much more, enabling users to create “smart contracts” and allowing the development of new tokens and currencies for a variety of different purposes. This makes it unique to a lot of other crypto, and it’s led to the development of decentralized applications, a major feature of the crypto market.
As a token, Ethereum supports fast, low-cost transactions, and it is accepted by a growing number of sites and businesses as a form of payment. Before you start using Ethereum, it’s a good idea to learn exactly what it is and how it works. You’ll find all the details here in this guide.
How Ethereum Works
The Ethereum network uses blockchain technology, a core feature of all cryptocurrencies. Unlike other crypto coins, though, it was designed to be more than just a digital asset, utilizing the potential of blockchain to create a fully decentralized ecosystem. A blockchain is essentially a decentralized way of storing data. It’s made up of a linked chain of “blocks,” each of which contains the data on all transactions.
All users that make use of Ethereum can connect to the network, and an identical copy of the Ethereum blockchain is distributed to every device that connects. By sending or receiving Ether, a transaction is created and is stored on a block, with the entire process validated by the network.
Changes cannot be made to the blockchain without all programs on the network reaching a consensus, which helps to keep it secure and ensure that the data stored is always accurate. While Ethereum started out as a proof-of-work coin, which involved miners that validate blocks, it now uses proof of stake.
One of the main disadvantages of proof-of-work coins is that they waste a lot of energy. Proof of stake is far less energy-intensive, as it doesn’t require a huge level of computer power to mine new blocks. Instead, the network is operated by validators, which vote on the consensus, which is used to create new blocks storing transaction data.
A validator needs to stake their Ethereum in order to take part, which can be done solo or as part of a pool. Solo staking requires a minimum of 32 ETH, with larger stakes providing more votes on the consensus. Once staked, the Ethereum is locked in place for the staking period and is used as collateral.
The validator will receive rewards for staking this ETH based on votes they make to validate new blocks, a process known as attesting. However, acting dishonestly when attesting that data is valid will cause the ETH to be burnt, and the validator can be removed from the network. This ensures a high degree of accuracy as each validator is incentivized to always act honestly.
You don’t need to have 32 ETH in order to take part in staking, as it’s also possible to join a staking pool. The rewards are shared between all active participants within a pool, meaning you get to earn ETH. However, the easiest way to obtain new Ethereum is by purchasing it.
You can buy Ethereum from a cryptocurrency exchange using traditional (fiat) currency or by trading other coins you own. Most crypto users purchase from popular exchanges such as Coinbase, Kraken, or Binance, but there are lots of different exchanges that support ETH trading, including decentralized exchanges built on the Ethereum blockchain.
Once you’ve acquired your first Ethereum coins, you’ll be able to send and receive them. However, you should first set up a wallet to store your ETH, and this will also make transfers much easier. A wallet is essentially an interface that you can use to access your Ether. There are lots of different wallets available, including online, offline, and hardware wallets.
How you choose to store your Ether is up to you, but it’s important to note that some methods are more secure than others. Security is always important, and you should never reveal your private keys to anyone. When sending or receiving money, you’ll simply need the wallet address.
If you’re sending money from the exchange to your wallet, copy your wallet address and paste it into the withdrawal box. Make sure it’s entirely correct before you send your coins, as transfers cannot be reversed. You also need to make sure that you’re sending it on the right network, as there are sometimes several different options. Your wallet needs to be compatible with the network you use.
Here are some of Ethereum’s features that set it apart from other cryptocurrencies:
Peer-to-peer – The Ethereum network uses a distributed blockchain to record transaction data and allows all transfers to be made without a middleman. Anyone can use it, and it’s faster and cheaper than a lot of traditional payment methods.
Smart contracts – You can use the Ethereum network to create smart contracts, which are special programs that execute when certain conditions are met. This has a lot of uses in the financial and legal world, enabling trustless contracts between parties.
Decentralization – While many would argue that Ethereum is more centralized than other cryptos such as Bitcoin, it’s still not controlled by a single organization or person. Its founder, Vitalik Buterin, is highly involved in Ethereum development, but he doesn’t have control of the future of Ethereum.
The History of Ethereum
Here are some of the key events in the history of Ethereum:
2013 – Ethereum founder Vitalik Buterin describes his concept for the Ethereum network in a whitepaper, outlining how blockchain can be used for much more than money.
2014 – The development of Ethereum begins, funded by the public live sale of pre-mined Ether. In addition, the non-profit Ethereum Foundation is launched.
30 July 2015 – The Ethereum network goes live with the genesis block created, containing more than eight thousand transactions.
June 2016 – One of the first decentralized applications, DAO, is exploited, with a hacker stealing $50 million worth of DAO tokens. It raises security issues about the Ethereum network and results in a hard fork, leading to Ethereum Classic, which persists on the original blockchain.
March 2017 – The Enterprise Ethereum Alliance is formed, which aims to drive the use of Ethereum technology to empower enterprises.
March 2021 – Visa announces it’s processing stablecoin payments using the Ethereum network.
15 September 2022 – The Merge takes place, transitioning the Ethereum consensus mechanism from proof of work to proof of stake and cutting the network energy usage by 99%.
Ethereum for Gambling
Ethereum is a great option for fast and secure payments, which makes it ideal for transferring money and paying for things online. Although it’s also treated as an investment, you can now spend your Ethereum too, with a growing number of businesses accepting it as a form of payment.
Among the ways you can spend your Ether is at online casinos. The first crypto casinos launched in 2013, offering the chance to play exciting games and potentially win Ethereum. Since then, the number of crypto casinos has grown, and there are now hundreds of options that let you play and gamble your Ether online.
Just like a regular online casino, Ethereum casinos offer real money games. You can make deposits using Ethereum, and some sites even let you purchase Ether directly using your card. There are Ethereum bonuses too, and it’s really easy to get started. Perhaps you wish to start your ETH gambling adventure with the classic Ethereum slots.
Ethereum Casino Regulations
Online gambling is heavily regulated, and crypto casinos are no different. It’s important to only ever play at licensed and regulated sites, as this means they’ve agreed to follow the rules and laws to ensure fairness and safety. Your Ethereum is safe, provided you only ever play at sites that are licensed and have good reputations.
It’s also important to check your local laws, as gambling with crypto may not be legal everywhere. There are some countries with strict rules against online gambling, and while you may technically be able to sign up and play, it makes sense to ensure you’re not at risk of prosecution first.
Provably Fair Games
Ethereum casinos offer hundreds of different games for you to enjoy, with loads of options from top software providers. However, many crypto casinos also feature unique crypto games such as Dice and ETH Crash. These games are built on blockchain technology and are designed to be provably fair.
With a regular casino game, you need to trust the casino you’re playing at when they tell you it’s fair to play. With provably fair games, you can verify this yourself. The public seed is available to check, and all of the transactions within the game are public on the blockchain, so you can verify that it’s fair to play.
Is gambling with Ethereum legal?
That depends on where you live and the laws local to you. Some countries still have restrictions on gambling with crypto, so it’s important to check before you sign up and start playing.
How safe is it to use Ethereum?
Ethereum is very safe, provided you secure your private keys and always take precautions when sending and receiving funds. When it comes to gambling with Ethereum, you’re safe as long as you use a licensed and trusted crypto casino.
Which casinos accept Ethereum deposits?
A growing number of online casinos now accept Ethereum for deposits, allowing you to sign up and play with your ETH. You can find a list of all trusted ETH casinos right here at CryptoCasinos, along with expert reviews of each site.