The Ultimate Ethereum Frequently Asked Questions List for 2020

  1. What is Ethereum? What does 'Ethereum' mean?
  2. How does Ethereum work?
  3. Who invented Ethereum? How was Ethereum created? Who is behind Ethereum?
  4. What is Ethereum used for?
  5. Why does Ethereum have value?
  6. How many Ethereum coins are there? What is the Ethereum maximum supply?
  7. What is an Ethereum transaction? How do Ethereum transactions work?
  8. Are Ethereum transactions anonymous? Can Ethereum be traced?
  9. What is Ethereum mining? How is Ethereum mined? How does Ethereum mining work?
  10. Can Ethereum be taxed? Are Ethereum gains taxable? Are Ethereum transactions taxable?
  11. How does a Ethereum ATM work? Are Ethereum ATMs safe? Are Ethereum ATMs anonymous?
  12. Can Ethereum scale?
  13. Can Ethereum be stolen?
  14. Can Ethereum be hacked?
  15. Where is Ethereum stored? Where to store Ethereum?
  16. What is an Ethereum wallet? How do Ethereum wallets work?
  17. Who uses Ethereum? Where is Ethereum used?
  18. Who accepts Ethereum? Where is Ethereum accepted?
  19. Why is Ethereum the future?
  20. Can Ethereum crash? Will Ethereum crash?
  21. Is Ethereum a good investment?
  22. Where to buy Ethereum? How to get Ethereum?
  23. Can I buy Ethereum without ID? Is there a way to get Ethereum without SSN?
  24. Can I get Ethereum without KYC? Is it possible to buy Ethereum without verification?
  25. Which cryptocurrency to buy? Should I buy Bitcoin or Ethereum? Ethereum vs Bitcoin?
  26. When will Ethereum be proof of stake?
  27. What are Ethereum tokens? How are Ethereum tokens created?
  28. What are Ethereum smart contracts? How do Ethereum smart contracts work?
  29. Is Ethereum publicly traded?
  30. Can Ethereum reach 1000? Can Ethereum reach 10000? Can Ethereum reach 100K?
  31. How long is a Ethereum transaction time?
  32. How many confirmations for a Ethereum transaction?
  33. How much is a Ethereum transaction fee? How much does a Ethereum transaction cost?
  1. What is Ethereum? What does 'Ethereum' mean?

  2. Ethereum is inspired by some of the design concepts of Bitcoin, the world's first decentralized cryptocurrency, but with several attempts at improvement. A decentralized cryptocurrency keeps track of all transactions by all addresses on a peer-to-peer shared record. The Blockchain breaks up the record of transactions into blocks, each one crypographically connected to the previous. One of Ethereum's innovations is Smart Contracts, code scripts stored on the blockchain which execute when their conditions are met. Ethereum is traded on bitni.com.

  3. How does Ethereum work?

  4. Blockchain based cryptocurrencies like Ethereum work by grouping transactions together in data blocks, then linking the blocks cryptographically. The chain of blocks is stored across a decentralized network of nodes, and distributed as peer-to-peer shared files. Smart Contracts, small pieces of code, are executed on the blockchain. Quantities of Ethereum are stored at addresses, cryptographic sequences paired with a private key used to spend the amount at the address. The user's wallet keeps track of all their Ethereum addresses and adds up the balance.

  5. Who invented Ethereum? How was Ethereum created? Who is behind Ethereum?

  6. Ethereum was designed by Vitalik Buterin and implemented by a small team of programmers, as an attempt to technically improve Bitcoin, by increasing the generation of new blocks to once every few seconds instead of 10 minutes, using Ethash as the hash function, and Smart Contracts. The first tweak makes transaction times faster. The second makes mining more accessible to those without specialized hardware.

  7. What is Ethereum used for?

  8. Ethereum is used for anything money is used for - buying, selling, donations. But Ethereum can also be used for even more things than fiat currency: A means of accepting donations or facilitating commerce that cannot be shut down by governments or the banking system. Also storing up wealth that cannot be confiscated.

  9. Why does Ethereum have value?

  10. Ethereum has more value than Fiat Currency because it's more useful: It's anonymous, decentralized, irreversable, cannot be devalued, cannot be confiscated, can be sent over the internet to anywhere in the world in minutes. Things that are very useful and scarce tend to be valuable. One reason Ethereum has value because it fulfills all of the requirements of money: Store of Value, Medium of Exchange, Unit of Account.

  11. How many Ethereum coins are there? What is the Ethereum maximum supply?

  12. The number of Ethereum is technically unlimited, as no maximum supply limit has been hard coded into the system. However, inflation of new Ethereum coins is limited to 2 generated per new block. Unlike some other cryptocurrencies, Ethereum block generation mining rewards do not reduce by half every certain number of years.

  13. What is an Ethereum transaction? How do Ethereum transactions work?

  14. An Ethereum transaction is a transfer of value from one address to another. Unlike Bitcoin, which moves value by spending previously unspent transactions, Ethereum keeps track of accounts and balances directly. A transaction is created by a user on their Ethereum client software, then broadcast out to all the other nodes and becomes part of the Blockchain.

  15. Are Ethereum transactions anonymous? Can Ethereum be traced?

  16. The blockchain is a public record of all transactions by all addresses. However, an address is just a number - it doesn't reveal anything about the identity of the one using it, like a street address can. As long as this number is never linked to an identity, the Ethereum user is safe. There is no way to "trace" a Ethereum address to the person using it - unless they leave clues connecting their Ethereum address to their physical identity. bitni.com has maximum anonymity - we don't ask for personal details.

  17. What is Ethereum mining? How is Ethereum mined? How does Ethereum mining work?

  18. Ethereum mining is the computational process of adding new blocks to the blockchain. New transactions are grouped together in a block. New blocks must cryptographically connect to previous blocks with a proof-of-work hash function. Mining hardware is designed to the hashing function as quickly as possible. Miners are paid a small transaction fee for including new transactions in blocks. Mining also creates new Ethereum coins, which go to the miners.

  19. Can Ethereum be taxed? Are Ethereum gains taxable? Are Ethereum transactions taxable?

  20. Ethereum was not designed to be taxed. If no one reports their Ethereum gains, there is no way an authoritarian regime can know who gained what. However, centralized exchanges with accounts and IDs do report their user's Ethereum balance to tax authorities. If you want privacy from authoritarian regimes, you need an accountless exchange that doesn't ask for your ID - bitni.com is the best exchange in this regard.

  21. How does a Ethereum ATM work? Are Ethereum ATMs safe? Are Ethereum ATMs anonymous?

  22. Ethereum ATMs allow a customer to buy Ethereum by inserting physical cash, like a vending machine, or send Ethereum to receive physical cash. (The former are called "1 way" ATMs and the latter are called "2 way".) If the Ethereum ATM is from a trusted manufacturer and operator, it should be safe to use. Different Ethereum ATMs have differing AML/KYC requirements.

  23. Can Ethereum scale?

  24. Ethereum has scaled to handle millions of transactions per month. Ethereum is software, and it can evolve to scale - the code can be modified with better algorithms and the network then upgrades to the more advanced version. Ethereum attempts to improve on Bitcoin to solve scaling issues, by creating a new block every few seconds instead of 10 minutes, which allows transactions to be processed faster.

  25. Can Ethereum be stolen?

  26. Anyone who knows the private key can move the coins from an address. If the private key is not known, it's not possible to spend the coins at an address. Ethereum stored in the wallets of a centralized exchange can be stolen - it happens all the time. At a Non-custodial exchange like bitni.com, you are in charge of your wallet at all times.

  27. Can Ethereum be hacked?

  28. Ethereum was hacked in it's infancy, when the bugs were still getting worked out, but it was quickly patched. If the patched version Ethereum network could be hacked, it would have probably already happened. The blockchain is decentralized across thousands of independent nodes - the more nodes on the network, the higher the security. If any one node is compromised, it will not compromise the others. However, centralized Ethereum exchanges are hacked all the time! That's why you need a non-custodial exchange like bitni.com.

  29. Where is Ethereum stored? Where to store Ethereum?

  30. The data of all Ethereum transactions is stored in a public ledger (blockchain) distributed as peer-to-peer shared files. Each node has a complete copy of all transactions ever made - the blockchain. So the blockchain is stored in the cloud - not on a centralized server, but on thousands of independent nodes. Each user's Ethereum balance is also kept track of in their wallet.

  31. What is an Ethereum wallet? How do Ethereum wallets work?

  32. A Ethereum wallet stores all of the user's Ethereum addresses. The sum value of all of the addresses in a wallet is automatically added up - this is the total balance of a wallet. Centralized exchanges store the user's wallet, which is risky. Non-custodial exchanges like bitni.com do NOT store user's wallets, which is much safer.

  33. Who uses Ethereum? Where is Ethereum used?

  34. Millions of people everywhere in the world use Ethereum for all the same things as any other money is used for - buying, selling, and donations - and the number of users is growing rapidly. Anyone needing to transfer wealth internationally, especially outside the grasp of authoritarian regimes, for ridiculously low cost, will find Ethereum useful if they are not already using it. Ethereum is also used as an investment and a hedge against inflation.

  35. Who accepts Ethereum? Where is Ethereum accepted?

  36. Many merchants, especially online, accept cryptocurrencies as payment. Charities like Wikipedia accept donations in crypto. Web Hosts and Domain registrars often accept crypto. Large brick and mortar stores are starting to accept crypto payment. Some local restaurants are also coming on board. bitni.com accepts Ethereum to convert to other currencies, of course.

  37. Why is Ethereum the future?

  38. The reason why a cryptocurrency is the future can be summed up in 3 words: Because it's better. Ethereum is a huge improvement over fiat currency. It is also an improvement over precious metals - they can't be wired over the internet. If central banks continue destroying the value of fiat currencies, cryptocurrencies will become even more important to the future of money.

  39. Can Ethereum crash? Will Ethereum crash?

  40. If Ethereum were going to crash to zero, it would have probably done it already. There have been wild price swings - because it's new and there's a lot of speculation, like the internet when it first came out. But there are wild price swings with other commodities like oil. Ethereum's low after it's all-time high of over a thousand dollars is still over a hundred dollars. For Ethereum to crash to $0, demand would need to be zero or supply would need to be infinite - a highly unlikely scenerio.

  41. Is Ethereum a good investment?

  42. The Original Bitcoin has gone from pennies to thousands and thousands of dollars in less than a decade, utterly blown away the stock market, even gold and other precious metals, and far outperformed pretty much any other investment. While Ethereum has not reached Bitcoin's high, it has performed relatively well, going from less than a dollar to over a thousand dollars at it's high - a pretty good investment.

  43. Where to buy Ethereum? How to get Ethereum?

  44. Exchanges are where Ethereum is bought and sold, however there are several types: Centralized Exchanges store the user's coins like a bank and require ID. Decentralized Exchanges (DEX) facilitate peer-to-peer buying and selling between users - and these can be done locally in-person or online. Non-Custodial exchanges like bitni.com are a quick and easy way of swapping cryptocurrencies without signing up.

  45. Can I buy Ethereum without ID? Is there a way to get Ethereum without SSN?

  46. Many Centralized exchanges have rigorous requirements for identification, such as uploading a scan of passport or other government documents. Decentralized exchanges usually have less stringent requirements for identification, especially if the transaction is in-person. Non-custodial exchange bitni.com does not require identification for crypto-to-crypto swaps. If you want Ethereum without SSN, you've come to the right place.

  47. Can I get Ethereum without KYC? Is it possible to buy Ethereum without verification?

  48. KYC stands for Know Your Customer. Many regimes have become increasingly authoritarian towards cryptocurrency and seek to crack down on anonymous trading, by requiring the customer to upload documents proving their identity. Many exchanges have caved in to the pressure and now have KYC policies. Centralized exchanges almost always have KYC, some Decentralized exchanges do as well. bitni.com does not require KYC for crypto-to-crypto swaps.

  49. Which cryptocurrency to buy? Should I buy Bitcoin or Ethereum? Ethereum vs Bitcoin?

  50. In many ways, Ethereum is technically superior to Bitcoin. It has much faster transaction times. It can be mined on home computers without specialized hardware. However, Ethereum doesn't have the massive publicity that Bitcoin has (not all of Bitcoin's publicity is good, but apparently there's no such thing as bad publicity). And that's why Bitcoin is priced much higher. Many more people know about Bitcoin than Ethereum. However, that can change, as Ethereum could become more widely known in the future.

  51. When will Ethereum be proof of stake?

  52. Currently Ethereum is proof of work, which means the miners have to solve a hash function for the block to be considered valid. There is speculation a future version of Ethereum may be proof of stake. A proof of stake algorithm validates blocks by voting from nodes, the amount of voting power determined by the number of coins held.

  53. What are Ethereum tokens? How are Ethereum tokens created?

  54. The official Ethereum coin is called Ether. However, there are unofficial coins separate from Ether, built on top of the Ethereum platform, called Ethereum 'tokens'. Tokens are address to balance mappings which store their values in a smart contract. Some tokens are fungible, which means monetarily interchangeable - one dollar can be interchanged with any other dollar. Other tokens are individually unique and non-fungible.

  55. What are Ethereum smart contracts? How do Ethereum smart contracts work?

  56. Smart Contracts are code scripts stored on the blockchain which execute when their conditions are met. Ethereum Smart Contracts are Turing Complete, which means they can perform all of the functions of a computer language, and even have their own programming language called Solidity. The most basic Smart Contract is an "IF-THEN" - IF some condition has been met, THEN do something.

  57. Is Ethereum publicly traded?

  58. Most Ethereum trading is done by buying and selling coins directly by individual investors. However, there are cryptocurrency funds listed on stock markets. A Cryptocurrency Exchange Traded Fund (ETF) holds assets in single cryptocurrencies or a basket of them. It may be more convenient to buy into one basket fund instead of manually managing dozens of different cryptos and their respective wallets. In the case of Ethereum, it is probable some Cryptocurrency ETFs are holding it.

  59. Can Ethereum reach 1000? Can Ethereum reach 10000? Can Ethereum reach 100K?

  60. Thousands, or tens of thousands, or even hundreds of thousands of dollars for a Ethereum coin may seem speculative, but Ethereum's high is already over a thousand dollars. Ethereum started out at practically nothing and rose in a parabolic curve to it's high hundreds of times higher than the starting price. $10000 is only about six times higher than the all time high. If the long term trend continues, Ethereum could reach new highs orders of magnitude greater.

  61. How long is a Ethereum transaction time?

  62. A new block on the Ethereum blockchain is added about every 15 seconds. The number of transactions in each block is limited to about 70. Transactions paying higher fees are given priority over those paying lower fees, which must sometimes wait to be included in future blocks instead of the current one. A Ethereum transaction time can be as short as the generation of one block in 15 seconds. However, 20-30 levels of blocks is needed for irreversibility, thus the safe transaction time is 5-7.5 minutes.

  63. How many confirmations for a Ethereum transaction?

  64. A Ethereum transaction can be tentatively completed in as little as 1 confirmation in 15 seconds. However, the latest blocks in the blockchain are changeable until more blocks are added after them. For irreversibility, 20-30 levels of blocks and thus 20-30 confirmations are needed. The latest block in the process of being added to the blockchain is changeable. Not till several more blocks have been added after it is that part of the blockchain considered immutable.

  65. How much is a Ethereum transaction fee? How much does a Ethereum transaction cost?

  66. A Ethereum transaction fee is the cost of having transaction data included in blocks added to the blockchain permanent record, which fluctuates under market supply and demand. Fees have been as low as a few cents and as high as a few dollars. Lots of factors affect Ethereum transaction fees, such as the cost of electricity, the hardware capacity and competition between miners, the number of simultaneous transactions competing to be included in a block.

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