101 Frequently Asked Questions About Ethereum
For those who are new to Ethereum and want to know more about the platform and its token, this post features answers to 101 most common Ethereum-related questions.
You’ll find out how to use the blockchain to build dApps, send and receive ether, track transactions, join mining pools, and stake ETH. Also, you will become more aware of the platform’s technical backbone and the factors that drive Ethereum price fluctuations.
Are Ethereum addresses case-sensitive?
No, Ethereum addresses are not case-sensitive since they are displayed in HEX.
Are Ethereum and Ethereum 2.0 the same?
Ethereum 2.0 is the upgrade to the Ethereum blockchain, designed to improve its scalability and speed. Key Ethereum 2.0 features are proof-of-stake and sharding. They are not yet the same network, but the merger of the two is planned for the near future.
Is there a limit to how many Ethereum coins can be issued?
No, Ethereum doesn’t have a supply limit, meaning there’s no cap on how many coins can be minted.
Are Ethereum fees fixed?
No, Ethereum fees are determined by two main factors: the complexity of the computation (amount of “gas”) and the network load (“gas” price). In EIP-1559, the development team added a base fee to improve the precision of estimating transaction costs. Also, to keep Ethereum deflationary, since the release of London, transaction fees that used to be redirected to miners are being burned (destroyed).
Do Ethereum and Bitcoin prices correlate?
Yes, Ethereum is considered the highest-correlating cryptocurrency with Bitcoin, meaning that the values of the two move in similar directions.
Can Ethereum transactions be traced?
Yes. Since the blockchain is public, you can trace Ethereum transactions by wallet addresses. However, blockchain explorers don’t disclose the identity of a wallet owner.
Can Ethereum surpass Bitcoin?
While, at the time of writing, the so-called “flipping” hasn’t yet happened, some experts think there’s a chance Ethereum will surpass Bitcoin, as it has a wider range of use cases - developers can use the blockchain to develop decentralized apps in DeFi, art, prediction market, and other industries.
Did Ethereum split?
Yes, there were several Ethereum forks, including the infamous DAO fork that split the blockchain into Ethereum and Ethereum Classic. Users who were not happy about removing the hacker’s transaction from the blockchain and violating the immutability principle created their own Ethereum-like chain. Ethereum Classic is a fork of the original blockchain and has no connection to the original one except for the common codebase and transaction history before the DAO hack. ETC founders believe that no use case justifies altering the blockchain as it has to be a reliable source of history.
Has Ethereum ever been hacked?
While the network itself was never hacked, hackers exploited codebase vulnerabilities in Ethereum-based projects, as was the case for the infamous $55-million The DAO attack.
Did Ethereum 2.0 launch?
At the time of writing, only Phase 0 of the update — the Beacon Chain — is live. The full update is estimated to be released around 2023.
Did Ethereum have an ICO?
Yes, Ethereum had an ICO in 2014. The token sale was a huge success — in the first 12 hours, the development team sold 7 million ether.
Did Ethereum fork?
Yes. While the DAO hard fork is the most famous one, there’s a long history of network forks: from Ice Age to Byzantium and finally London that went live in August 2021. All future network upgrades are expected to be deployed as Ethereum forks.
Did Ethereum move to Proof-of-Stake?
Partly yes. The shift was originally planned by the development team as a way to scale Ethereum. The first step was taking December 2020, when the Beacon Chain was shipped.
At the time of writing, Ethereum has both PoS and PoW chains although the PoS chain can only be used for staking - in the future, the PoW mainnet will merge with the Beacon Chain.
Do Ethereum transactions time out?
Technically, Ethereum transactions don’t expire. Therefore, if miners refuse to execute a transaction, it will stay “pending” forever (unless canceled by its creator).
Does Ethereum have a future?
Yes. At the moment, the platform is gaining exposure and traction, acquiring new ambitious use cases (DeFi, NFTs, Web 3.0, and others). Once the final stages of ETH 2.0 are out, the blockchain will be faster and more scalable, encouraging more developers to build dApps on the network, driving more users to these dApps, and feeding investor interest.
Does Ethereum pay dividends?
Sort of, Ethereum 2.0, with its PoS algorithm, allows users to stake Ethereum and get rewards for validating blocks.
Does Ethereum use blockchain?
Yes, Ethereum uses an open-source public blockchain supporting smart contracts and decentralized applications.
Has Ethereum peaked?
Ethereum’s all-time high coincided with the market peak of May 12: the coin’s price reached $4,196.
When did Ethereum price hit the bottom?
In June 2017, Ethereum briefly suffered a drastic price drop from $319 to $0.1 - it was ETH’s all-time low. It didn’t last — the coin quickly rebounded.
What was Ethereum's all-time high?
At the time of writing, Ethereum’s all-time high is $4,362.
I have Ethereum, now what?
There are several ways to use Ethereum:
- HODL and sell when the price hits a new peak.
- Stake ETH to gain interest besides just HODLing.
- Trade ETH on P2P marketplaces to pay for products or services.
- Trade ether to buy other crypto assets.
- HODL without an intention to sell
How does Ethereum mining work?
Ethereum miners use time and energy to verify transactions and add blocks to the blockchain. To achieve consensus (agreement on the order in which transactions are recorded), Ethereum currently uses Proof-of-Work (developers have to solve a resource-draining puzzle to add a block to the ledger). A block creator is incentivized with a block reward.
How is Ethereum different from Bitcoin?
The key difference is that, while Bitcoin mainly acts as a store of value, Ethereum is an underlying technology used to build decentralized apps and smart contracts. Ethereum’s applications aren’t limited to finance: dApps empower art, retail, prediction market, job hunting, and other industries.
How do Ethereum smart contracts work?
Smart contracts are self-executable programs that run on the Ethereum blockchain. Developers use functions to specify contract’s conditions — once these are met, the code runs automatically, with no human involvement.
How does Ethereum staking work?
Instead of using energy as a legitimacy factor, Proof-of-Stake ensures security by having network participants deposit a minimum amount of 32 ETH (users can stake more tokens but they won’t get rewards for extra ETH). Theoretically, everyone who has a stake can become a validator and compete for transaction fee rewards. Realistically, it’s challenging to run a validator node 24/7 (to ensure security and accountability, unavailable validators are penalized and lose a part of their stake).
How does Ethereum gas work?
Gas and its price multiplied is the cost of a transaction on the Ethereum network. With the London fork, the network follows a predictable approach to calculating gas fees. Instead of determining transaction costs at blind auctions, the blockchain will calculate the gas fee automatically based on real-time network demand.
Before the update, transactions fees were redirected to miners - since the release of London, they are being burned as a way to maintain deflationary pressure on Ethereum.
How is Ethereum price determined?
As is the case for any cryptocurrency, the price of Ethereum depends on the supply and demand for the token. ETH price depends on
- Number and popularity of projects on the blockchain— the wider the range of adoption, the more the coin is worth.
- Institutional interest
- Market competition
- Regulatory decisions
- Speculation and hype
Is Ethereum a good investment?
Among cryptocurrencies, Ethereum is one of the longest-running and most reliable projects. On the other hand, compared to traditional investments like precious metals, oils, or stocks, crypto is more volatile — while investors can have astronomic returns, they risk significant losses as well.
Is Ethereum 2.0 going to crash?
No, there’s no reason for the release to crash the prices. In fact, since gas fees will be lower and the TPS will be higher, more developers are likely to join the network, increasing the value of the token.
When it is a good time to buy Ethereum
As with other cryptocurrencies, Ethereum investors follow the following rules:
- Buy low, sell high
- Buy the rumor, sell the news
- Do your own research
If you want to sell Ethereum, what is the best moment?
Fundamentally, there are three approaches to selling Ethereum:
- Selling when you need money.
- Selling when you reached a profit milestone set in the investment plan.
- HODLing for as long as you can because you believe that the token is far from its peak value and the potential of the underlying technology.
Is Ethereum an altcoin?
Ethereum fits the definition — a cryptocurrency other than Bitcoin, perfectly, thus it is an altcoin.
When was Ethereum initially introduced and by whom?
Ethereum was launched on July 30, 2015. The founding team comprised Vitalik Buterin (the ideator of the network and the author of the original white paper), Dr. Gavin Wood, Joseph Lubin (now a founder of ConsenSys), and other developers: Charles Hoskinson, Anthony Di Iorio, Jeffrey Wilcke Mihai Alisie, and Amir Chetrit.
When was Ethereum Classic created?
Originally, Ethereum Classic was part of the Ethereum mainnet — it forked after the DAO incident in July 2016 (the first Ethereum Classic block was released on July 20th).
What is Ethereum currently used for?
Broadly speaking, Ethereum is the first step to a decentralized Internet — blockchain network that allows building and deploying dApps in finance (DeFi), supply chain, art, services, and other industries. The platform helps eliminate intermediaries by enabling smart contracts — automated and immutable programs that follow if-then statements.
What Ethereum wallet to use
When choosing a secure Ethereum wallet, first do thorough research. Here are a few options to consider.
Wallets for crypto beginners:
Wallets for advanced investors:
Hardware wallets for high-net-worth individuals:
What Ethereum miner to use?
Here are the most popular Ethereum mining software tools — do your own research and choose the one that meets your needs:
- ETHMiner (runs on all platforms)
- Claymore (runs on Linux and Windows)
- WinETH — a top-notch Ethereum miner for Windows
As for mining rigs, here are several alternatives to consider:
- NVIDIA GeForce GTX1070
- AMD Radeon RX Vega56
- NVIDIA GeForce GTX1060
Will the Proof-of-Stake transition kill Ethereum mining?
Yes, once the mainnet merges with the Beacon Chain (Phase 1.5), the difficulty bomb will be released. Once that happens, the difficulty of PoW puzzles will be so high that miners will have no incentive to solve them and will switch to PoS instead or mine different cryptocurrencies.
When did Ethereum trading start?
Ethereum was released in July 2015 — at the same time, 72 million coins entered circulation and were distributed among project supporters, with the first known trades taking place in August 2015.
Where are Ethereum smart contracts stored?
Smart contracts are stored as code compiled to bytes on the blockchain. The blockchain is physically stored on every computer running a full Ethereum node.
Where does Ethereum gas go?
Gas fees are paid out of a sender’s balance. When consumed, they are claimed by a miner who verified the transaction. If unused, gas fees are refunded.
Which Ethereum network to use?
There is a single production network (mainnet) and multiple development environments (testnets) programmers use to build and test Ethereum apps. The most discussed Ethereum network is the public mainnet that enables blockchain transactions. Testnets are Ethereum networks that allow developers to test smart contract code before releases. The most popular ones are:
- Ropsten
- Goerli
- Rinkeby
- Kovan
Who is behind Ethereum
The credit for coming up with the concept of Ethereum goes to Vitalik Buterin — a Russian-Canadian programmer and writer. At the moment, he is one of the platform’s co-founders and one of the largest Ethereum whales.
Will a Sharded Ethereum Be Flexible Enough for Decentralized Finance?
Yes. Sharding will introduce a drastic increase in network throughput, enabling over 100,000 transactions per second. The update will allow DeFi developers to cater to wider user bases and scale their products. Also, sharding will lower gas fees, making DeFi cost-efficient for end-users.
How many ETHs are there in the world?
At the time of the writing, the circulating supply of Ethereum tokens is around 117,500,000. Unlike in Bitcoin, there isn’t a hard cap on the maximum supply of ETH tokens.
How is Ethereum tackling its gas fee problem?
The development team is dealing with the gas fee challenge through a series of ETH 2.0 updates and hard forks.
ETH updates:
- Sharding — breaking the main blockchain into separate side chains to reduce network congestion.
- Rollups — moving processes off-chain and only process confirmations on the main chain.
Hard forks:
- Berlin — burning gas fees instead of directing them to miners, reducing gas fees for several operations.
- London — introducing base fees to reduce the volatility of transaction costs.
Do I need an Ethereum wallet to invest in Ethereum?
Generally, keeping crypto in a wallet is more secure than HODLing on exchanges. Having said that, you don’t need a wallet for Ethereum and you can store any amounts of ETH on exchanges.
What tokens does an Ethereum wallet store?
Most Ethereum wallets support ETH (ether), all ERC-20 tokens (the platform’s token type), as well as other coins (Bitcoin, EOS, Litecoin, etc.).
Ethereum and Ether: what’s the difference?
Ethereum is a blockchain that supports smart contracts, enables dApps and transactions. Ether is the platform’s native cryptocurrency.
Can you buy fractions of Ethereum?
Yes. While ETH itself is divisible up to 18 decimal places, most exchanges allow users to buy fractions of Ethereum up to 8 decimals (0.00000001 ETH).
What affects the price of Ethereum?
Ethereum price movements are driven by:
- The usefulness of the platform (how many projects Ethereum supports and how impactful they are).
- Security (how reliable and attack-resistant Ethereum is).
- Image in press and awareness — how many people know about Ethereum and are ready to bet on its bright future.
- Crypto regulations — whether centralized governments pass legislations that block crypto in general or Ethereum in particular.
- Competitors — how many rivals Ethereum has and how their market capitalization compares to that of Ethereum.
The price of Ethereum is not dependent on centralized financial institutions.
How high can the price of Ethereum go?
There’s no set-in-stone way to predict Ethereum’s price in the future because there are too many determinants (mining activity, updates, regulation, etc). However, according to various estimates (by third parties, not Redot), ETH can potentially hit $10,000 by 2025 and $100,000 by 2028.
How much can you earn by staking your Ethereum?
The annual percentage return of ETH staking is dynamic - it’s reduced as more people join the network. At the moment, contributors make 5.6% in yearly returns — you can track fluctuations via Ethereum Launchpad.
How long does it take to mine 1 Ethereum?
The amount of time to mine 1 ETH depends on the network’s current difficulty level. At the time of writing (Aug-Sep 2021), miners need on average 57.5 days to mine 1 Ether.
How much is 1 Ethereum now?
At the time of writing (September 14, 2021), 1 ETH is worth $3,350 USD.
Who accepts Ethereum as payment?
Below are a few large-scale companies that accept Ether for payment:
- Shopify
- CheapAir
- EGifter
- Overstock
Here’s an extensive list of businesses accepting payments in ETH.
How to exchange Ethereum to USD or another crypto?
To sell and buy Ethereum, you need to use exchanges or OTC desks. Let’s take a closer look at how exchanges operate. Whether you choose a centralized (CEX) or decentralized (DEX) platform, the process is roughly the same:
- Choose an exchange that lists Ethereum
- Enter the amount of ETH you want to sell
- Choose the currency you want to exchange Ethereum for (USD, BTC, and so on).
- Review the transaction details
- Confirm the transaction.
When did Coinbase add Ethereum?
Coinbase supports Ether since July 2016.
How many block confirmations are needed for an Ethereum transaction?
A block confirmation is the process of adding a transaction record to the ledger. The higher the number of confirmations, the more secure the transaction is.
In Ethereum, 6 confirmations are a minimal requirement to consider a transaction complete.
What number of confirmations for an Ethereum transaction is considered secure?
On average, exchanges require over 50 confirmations per transaction to ensure security. For high-value transactions, 60 or more confirmations can be necessary.
How long does it take to send Ethereum?
The amount of time allocated for transaction processing depends on the number of block confirmations required to complete the ETH transfer. Most transactions are processed in 2-3 minutes.
How to buy Bitcoin with Ethereum?
As long as you have a non-zero Ethereum balance, you can trade ETH for Bitcoin on centralized and decentralized crypto exchanges. Some exchanges have a minimum trading amount. Also, take some time to research transaction fees to choose the most cost-efficient trading platform.
Can I mine Ethereum on Linux?
Yes. There are plenty of Ethereum miners available for Linux.
How to buy Ethereum with a credit card?
Buying Ethereum using a credit card is the same as any online shopping. Go to an exchange platform, choose a tab “Buy crypto”, enter your credit number, the amount of ETH you want to buy, and the CVV code. After you confirm the transaction, a corresponding amount of money will be converted into Ethereum tokens.
What algorithm does Ethereum use?
At the moment, Ethereum uses Proof-of-Work for the original network and Proof-of-Stake for the beacon chain of Ethereum 2.0 (which is yet to be merged with the mainnet). In Phase 1.5 of the update, there will be a full shift to PoS.
How to sell Ethereum for cash?
To sell Ethereum, you can use over-the-counter (OTC) trading or crypto exchanges.
To trade on exchanges, enter the amount of ETH you want to sell and choose USD or a different fiat currency to get paid. After the transaction is processed, your ETH will be traded for cash.
What is my Ethereum address?
An Ethereum address is a 42-character string you can share to receive ETH from others.
How to check Ethereum balance?
There are two ways to check Ethereum balance depending on whether you use an exchange or a non-custodial wallet (self-custody).
Non-custodial wallets:
You can use Ethereum blockchain explorers to check your Ethereum balance. Here’s how it works:
- Go to a blockchain explorer such as Etherscan.
- Enter your Ethereum address.
- Your wallet’s balance and transaction history will appear.
CEXes
- Log into your account
- Choose “Balances”, “Funds” or a similar tab,
- Choose “Ethereum” and see your ETH balance.
Why is Ethereum so low?
At the time of writing (September 2021), Ethereum’s price is relatively high, compared to previous years. Ethereum prices typically go down when the crypto market goes through the bear phase.
Generally, Ethereum price drops can be linked to:
- Regulatory pressure
- Bad news for crypto
- Lower demand for Ethereum-based projects
How to send Ethereum to Ledger Nano S?
Here’s a step-by-step guide to sending ETH to Ledger Nano S:
- Buy Ledger Nano S directly at Ledger, not resellers on retail platforms.
- Install and open Ledger Live
- Generate an Ethereum address for Ledger via the Ethereum app.
- Use this address to send ETH to your wallet when trading on exchanges.
How to send Ethereum to Metamask?
You can send Ethereum to Metamask from an exchange or a wallet. To send ETH to Metamask, copy your wallet’s public address and use it to transfer Ethereum from an exchange or a different wallet.
You can find MetaMask address under the name of the account (e.g. 0x12b56…)
How to install Ethereum on Windows?
- Go to Go Ethereum Downloads.
- Download both the installer and the .zip file.
- Install the .exe file or run the files from the installer via CLI.
To make sure you are doing everything right, follow step-by-step installation instructions.
How to uninstall an Ethereum wallet?
Since blockchain is immutable, it is impossible to delete an Ethereum address. However, you can withdraw all ETH a wallet holds to another address and delete wallet software from your device.
How much Ethereum does Vitalik Buterin own?
At the time of writing, Buterin holds 333,500 tokens — over $1 billion worth of ETH.
How will the Ethereum hard fork affect paper wallets?
After a hard fork, a paper wallet crypto holder needs to claim crypto in the new wallet by importing the private key from the old paper wallet. Please note that it is only required if explicitly stated by Ethereum developers.
How to buy a large amount of Ethereum?
Crypto whales usually buy high amounts of tokens via over-the-counter (OTC) exchanges to avoid price fluctuations. OTC transactions are not listed on exchange platforms.
How does someone send me Ethereum coins?
To receive Ethereum tokens, you need to share your ETH address with the sender. To monitor your ether balance, use the “Ether” tab in your wallet or exchange. Alternatively, you can monitor your ETH balance using block explorers.
How to build a DApp on Ethereum?
Here’s a step-by-step breakdown of dApps development:
- Install a development framework like Truffle.
- Run the development environment.
- Write and compile a smart contract.
- Deploy your contract.
- Run your dApp in the browser for the first time.
- Modify the codebase to customize the dApp.
What is "Code is law" in Ethereum?
“Code is Law” is the principle ensuring that no one and nothing has the right to interrupt the blockchain code execution adopted by a community fork of Ethereum dubbed Ethereum Classic. Ethereum Classic is a separate blockchain and currently has no connection to the main Ethereum network.
What is an uncle/ommer block in Ethereum?
When two blocks are created at the same time, only one is added to the ledger. The other one becomes an “uncle” block. It’s not a part of the chain, but unlike “orphan” block miners in Bitcoin, “uncle” miners on Ethereum are rewarded.
Why is my received Ethereum still pending?
There are two common reasons:
- You paid a low transaction fee, so miners are not interested in processing the transaction.
- There are other pending transactions in your wallet.
To solve the pending transaction problem, it’s a good idea to use wallets that automatically calculate gas fees.
Why is there a need for Ethereum if Bitcoin exists?
While Bitcoin is the largest cryptocurrency by market capitalization, its range of applications is limited. It is meant to be a digital asset and a currency. While there have been attempts to bring smart contracts to Bitcoin, it’s unclear whether there will ever be a functional scalable implementation.
Ethereum, on the other hand, allows storing other types of information on its blockchain. This allows for harnessing the power of blockchain in other fields (insurance, healthcare, law) through dApps.
How to create a public and private key pair for Ethereum?
Here’s how you can generate a public and private key for an Ethereum address:
- Create a private key using an open-source library like Ethereumj, with SHA256 hash function.
- Generate a public key with the ECDSA — secp256k1 algorithm.
- Join both keys into a pair by applying the keccak256 hash function.
Why is Bitcoin going up and not Ethereum?
Ethereum is moving at its own pace, which has been steadily increasing due to the upcoming Ethereum 2.0 update. Additional applications like NFT trading and DeFi also contribute to Ethereum’s popularity and fuel its price and market cap growth.
Why is Ethereum so much lower than Bitcoin at the moment?
Ethereum is a younger cryptocurrency. Bitcoin was introduced by Satoshi Nakamoto in 2008, whereas Ethereum was officially released only in 2015, six years after BTC. The network is steadily growing. The increase of ETH value stems from various factors, including new DApps use cases, speculation, liquidity, etc.
How much Ethereum to stake?
It makes no sense to stake more than 32 ETH since you won’t get rewards for extra tokens. You can, however, start several validators to stake more Ethereum and get rewards. It’s possible to join the network by staking less than 32 ETH in a staking pool. When deciding on how much Ethereum you want to stake, stick to the common-sense investment rule: “invest the money you are not afraid to lose”.
Why is it so expensive to store data on Ethereum?
As a preventive measure for overloading the network, Ethereum requires developers to pay for every stored byte. Thus it’s expensive to store data on Ethereum. The average gas fees are high: 20,000 gas for one 256-bit word, or 640,000 gas for a kilobyte of data.
While gas fees change depending on network congestion, on average, developers pay $0.7 per kilobyte of storage. Since storing data on Ethereum is so expensive, developers don’t use the blockchain for permanent storage, using Filecoin, SWARM, IPFS or other solutions.
Where does mined Ethereum get stored?
Mined ether tokens are sent to an address miners specify when they run the client (typically a wallet or an exchange).
Who are a few of the famous people who sold Ethereum too early?
Since there’s no way to trace an Ethereum address back to the owner’s identity, it’s hard to know who among high-profile holders sold ETH too early unless they admit to it personally.
How much was Ethereum at presale?
At the start of the pre-sale, for 1 BTC, users would get 2000 ETH tokens. After 14 days, the offer was adjusted to 1337 ETH for 1 BTC and stayed this way until the presale ended on September 2, 2014.
Which corporations use Ethereum?
Multiple corporations use Ethereum to run DApps, including JP Morgan, HSBC, UBS, and others.
What is a Merkel tree in Ethereum?
A Merkel tree is a CPU-efficient approach to data organization. It ensures secure transactions using hash functions. For its consistency and efficiency, the Merkel tree is widely adopted among blockchain networks, including Bitcoin and Ethereum.
How to launch an ICO with Ethereum?
- Polish a project idea and figure out if you need an ICO to see it through.
- Check if ICOs are legal in your country.
- Do some research on competitors.
- Create an ICO token using ERC20 tokens. Follow the instructions on the Ethereum website.
If Bitcoin crashes what happens to Ethereum?
Since altcoins follow Bitcoin trends, it’s likely that, if the former collapses, so will the latter. However, given the dynamic nature of crypto, with bull and bear cycles changing quickly, both Bitcoin and altcoins might have a high likelihood of rebound.
How to join Ethereum mining pools?
Here are the steps for joining an Ethereum mining pool:
- Download Ethminer.
- Choose a mining pool you want to join.
- Connect to the mining pool via the command-line interface.
Can you buy Ethereum instantly?
Yes, most exchanges allow users to instantly buy Ethereum.
How to run an Ethereum node?
To join the network as a participant, you need to run a node. There’s a detailed walkthrough of the process on Ethereum's official website.
How to get Ethereum for free?
Some platforms offer fractions of Ether for free as rewards for completing surveys, participating in affiliate programs, or playing games.
