Ethereum in Plain English – Basics | Wallets | How

to Buy & Sell

by Chiamaka Atueyi

Ethereum is the world-leading programmable blockchain that was launched in

2015.
Just as Bitcoin was created to decentralize money by removing 3rd parties in
money exchange, Ethereum was created as a decentralized platform for
developers to build apps on.
If you don’t understand the above sentences, don’t worry. I broke it down further
in such a way that even a 10-year would understand

By the time you read the very last line of this post, you would have become a
‘pro’ in Ethereum matters as I have explained Ethereum in plain English – the
basics, wallets, exchanges, and all.

About to take off on this journey into the Ethereum sphere and I hope you’re set
to go with me?

Alright…Let’s do this!

Summary of Post

On this journey of becoming an Ethereum ‘pro’, these are the main points that
will be discussed:

 What is Ethereum?
 Who Created Ethereum?
 What is Ether (ETH)?
 What is Ethereum Classic?| Smart Contracts Gone Wrong
 Ether Mining
 Exchanges to Buy Ether
 Where to Store Ether(ETH) – Ether Wallets
 What Can Ethereum Be Used For?
 Ethereum vs. Bitcoin
 Frequently Asked Questions (FAQs)

A click on any of the points will have the details opened right before you.

Have fun reading this post.

What is Ethereum?

Ethereum Explained

Ethereum can be better understood if you understand the internet and how it
works. For starters, we all use the internet. You are reading this now on the
internet.

What is the internet and how does it work?

The internet, in simple terms, is the interconnection of computers around the

world through what is called servers or routers. The connected computers can
receive and send all kinds of information such as videos, voice, graphics and
text. What this implies is that the owners of these servers or routers (Facebook,
Google, Amazon, Hostgator, etc) can interfere with or control the information on
the computers connected to them. If they can, the government also can.

For example, Facebook can shut down your Facebook account if you fault their
policy, Google and Yahoo can also do the same. A whole website can also be
shut down by a hosting company. Secondly, hackers sometimes attack this
system and get hold of people accounts.

Ethereum was basically created to give users full control of their content online.
Just as Bitcoin was created to decentralize money by removing 3rd parties in
money exchange, Ethereum was created as a decentralized platform for
developers to build apps on.

For example, the only profit that comes from users ‘liking’ and ‘sharing’ their
favourite artist’s posts on Facebook is generated from an advertisement placed
on their page and it goes directly to Facebook. But in an Ethereum version of
such a social network, both the artist and the fans would receive awards for
positive communication and support.
This is achieved by ‘smart contracts.’

How Ethereum Works

Smart contracts are designed to automatically perform transactions and other

specific actions within the network with parties that you don’t need to trust. The
terms for both parties to fulfil are pre-programmed into the contract.

The completion of these terms then triggers a transaction or any other specific
action.
Now, I will take a detour to explain how a smart contract works.
Let’s say Rita sees a size 39 shoe displayed on an e-commerce site (e.g Jumia)
and orders it.
The shoe is worth $200 and Rita will want to ensure that the shoe fits properly
(i.e it is not a big sized 39 shoe) before expending such an amount for it.
To ensure no one pulls a fast one on the other, Rita puts up the $200 in a smart
contract with the condition that the money will be released:
1. To Jumia within 24hrs if the shoe really fits her (of course, the smart
contract will be designed to detect whether the shoe fits or not).
2. Back to Rita within 24hrs if the shoe does not fit and is sent back to Jumia.
Many people believe that smart contracts will eventually replace all other
contractual agreements.

This is because the implementation of smart contracts provides security that is

superior to traditional contract law, reduce transaction costs associated with
contracting, and establish trust between two parties.

Moreover, the system also provides its users with the Ethereum Virtual Machine
(EVM).
This essentially serves as a runtime environment for smart contracts based on
Ethereum.

Who Created Ethereum?

In late 2013, Vitalik Buterin described his idea in a white paper. He proposed
Ethereum because he felt Bitcoin should include script language for apps on the
Bitcoin Blockchain.
The scripting language used by Ethereum is Turing-complete, essentially
meaning that the types of decentralized applications (DApps) users can design is
limited only by their programming skills and creativity.
Failing to gain agreement, he proposed the development of a new platform with a
more general scripting language.

Ethereum was then publicly announced in January 2014 at a North American

Bitcoin conference in Miami with the core team consisting of Vitalik Buterin, Mihai
Alisie, Anthony Di Iorio, Charles Hoskinson, Joe Lubin, and Gavin Wood.

Its development was funded by an online public crowd sale from July–August
2014, with the participants buying the Ethereum value token with another digital
currency, Bitcoin.

So, hold on, Ethereum is also a currency? (This is becoming confusing!)

NO! Ethereum is the blockchain while Ether is the currency of the blockchain; just
like the Ripple network and Ripple (XRP).
Just scroll for further details on Ether.

Ether (ETH) – The Currency of Ethereum

Ether is the value for one Ethereum Blockchain token.

In a simpler term, Ether is the currency of Ethereum; just as the USA has the
Dollar (USD) and Nigeria the Naira (NGN).

It does not only operate as a digital currency, but it also acts as ‘fuel’ for the
decentralized apps within the network.

You must have Ether to be able to develop an app on the Ethereum network, pay
the transaction fees, and for computational service.

The transaction fees are automatically calculated based on how much ‘gas’ an
action requires.
Gas is the unit for how much computation work is done.
Ethereum Ether ranks as the second coin on coinmarketcap by market
capitalization (preceded only by Bitcoin).
It has a market capitalization of more than $20 billion (as of 11th November
2019).

What is Ethereum Classic (ETC)?| Smart Contracts Gone

Wrong

Ethereum Classic is a cryptocurrency that resulted from a split in the Ethereum

Blockchain. This split took place because of a disagreement in the Ethereum
community.

What really happened?

A hacker found a way to steal 60 million USD worth of Ethereum coins. This
brought a division within the Ethereum community.
To salvage the situation, one group agreed that ‘Code is not law’.
They proposed a hard fork in the Ethereum blockchain and that the stolen Ether
should be returned to the original owners.
Another group still stuck with ‘Code is law’ and that it should not be tampered
with.
So the Ethereum Classic (ETC), in reality, is the original Ethereum while
Ethereum Ether (ETH) is the one that has undergone a change.

‘Code is law’ is a rule established on Ethereum blockchain

regarding smart contracts. Now, smart contracts on Ethereum
blockchain have the terms of the contract encoded in them. For a
smart contract to run, it follows specifically the code which has the
contract terms.
Thus the saying: Code is Law simply means that the code of a
contract must be followed to the very last.

With that explained, I will go ahead and look at how Ether can be gotten: through
mining or by purchasing from exchanges.

Read on for further details.

Ether Mining

Ether mining is the process of maintaining the Ethereum ledger through solving
complex mathematical problems.

Mining Ether requires Proof-of-Work. This simply means that miners contribute
their computing power to solve a complex mathematical problem in order to
confirm a block within the network.

Ether miners receive 2 ETH as their reward plus all transaction and code-
processing fees (gas) contained in their block, plus a possible bonus for
any uncle blocks they include.
Unlike Bitcoin mining, Ether can only be mined with a Graphical Processing Unit
(GPU).
How to Start Mining Ethereum

1 – Install your GPU and set up your computer

2 – Get an Ethereum wallet (e.g MyEtherWallet)

3 – Join an Ethereum mining pool

4 – Start mining!

Now, instead of mining, some persons will choose to purchase Ether.

Listed below are a good number of exchanges where you can do just that.

Just read on.

Where to Buy Ether (ETH) at the Best Price

The demand for Ethereum Ether has continued to increase as more people
discover its use and potential investment opportunity.

The top cryptocurrency exchanges where Ether can be bought in Nigeria include:
1. Quidax
2. Luno
3. Blockvila
4. Remitano
5. Binance
6. BuyCoins
7. Paybis
Details are discussed below.

1. Quidax

Quidax is one of the best exchanges to buy

the Ethereum Ether ETH in Nigeria.
It was launched in 2018 and has received
massive adoption by most traders in Nigeria.

Besides Ether, Quidax supports storage and

trade of Bitcoin, Dash, Ripple, Litecoin,
Tether, BitcoinCash, and BitcoinGold.
2. Luno

Luno started in 2013 in Singapore and has

since expanded its services to several other
countries.
It is a broker/trading platform type of
exchange and it had the brand name
changed in 2011 from Bitx to Luno.

Luno currently supports only 5

cryptocurrencies: Ethereum, Bitcoin, Bitcoin Cash, Litecoin, and Ripple.

3. Blockvila

Blockvila is your best choice for broker

exchanges in Nigeria.
Formerly Ngexchanger, the exchange was
founded in 2017. It has proven itself to be one
of the best indigenous cryptocurrency
exchanges.
This can be accredited to its excellent customer
support system, user-friendly interface, and
instant funding when buying Ether.

4. Remitano

Remitano is a Peer-to-Peer exchange that was

launched in 2016.
It connects buyers and sellers using the
Escrow system.

It started off as a P2P Bitcoin exchange in

Nigeria but has now expanded its services over
the years.
Users on Remitano can now buy and sell Ether through P2P.
5. Binance

Binance is another good exchange that you

can buy Ether from.
It is a trading platform for over 500
cryptocurrency pairs.
The platform was launched in 2017 by
Changpeng Zhao, a Chinese developer and
now offers a lot more services apart
from crypto trading.

6.BuyCoins

BuyCoins is a P2P exchange that is based in

Lagos, Nigeria.
The exchange was launched in 2017 as
Bitkoin Africa but later rebranded to BuyCoins
in February 2018.

The platform serves only Nigerians and

supports the following cryptocurrencies:

 Bitcoin
 Ethereum
 Litecoin

7. Paybis

Paybis is a digital and cryptocurrency

exchange where you can swap one currency
for another.
For example, from fiat money (such as Dollar,
Euro, e.t.c.) to cryptocurrencies (such as ETH,
BTC, XRP, e.t.c.).

Other cryptocurrencies that can be bought on

Paybis include Bitcoin, Litecoin, Ripple, Bitcoin Cash, and Neo.
Some other exchanges where you can buy Ether include CEX.IO, Bitstamp,
Coinbase,e.t.c.

Another way of buying Ethereum is through Bitcoin. If you already have Bitcoin,
you can easily exchange it for Ethereum.
If you don’t have Bitcoin, there are numerous methods of buying Bitcoin using
various payment methods as you find suitable.
Once you have your Bitcoin, you can exchange it for Ethereum on these
platforms.
 Changelly
 Blockchain.info
 ShapeShift.io
Okay, so now I have acquired the coins, where do I store them?

Got you covered still; just scroll down and read up!

Where to Store Ether – Ether (ETH) Wallets

Ethereum Ether (ETH) is the 2nd cryptocurrency by market capitalization. It is as

well one of the most promising techs in the blockchain realm.
While we have an extensive range of Ether wallets out there, I will only look at
the best and most popular Ether wallets around. The list includes:

1. Bitfi
2. Ledger
3. Trezor
4. KeepKey
5. Ellipal Titan
6. Coinomi
7. MyEtherWallet
8. Exodus
9. Jaxx
10. Exchanges
Find the details below.

1. Bitfi

This is still the best and most secure hardware wallet for Ethereum Ether as at
the time of compiling this list.
Bitfi stores your Ether securely offline. Considering security, Bitfi security is state
of the art with the development team claiming it to be unhackable.
This claim is based on the fact that nothing is stored on this device; not the seed
keys or the private keys.

Then how does it guarantee security? It guarantees security in a very unique

way.
On set up, Bitfi prompts you to create a single word private key that is not stored
on the device or on any server in the world.

This single word is remembered only by the user and serves as a password and
also a private key.

2. Ledger

Ledger wallet is one of the cheapest Ether hardware wallets money can buy and
costs from $59 – $119.
In this wallet, your Ether and other cryptos are stored offline on the device.

In a case where you want to spend your Ether, Ledger signs you in with the
private key stored on the device.

Ledger products include Ledger Nano S, Ledger Nano X, LedgerLive, Ledger

Back-up Plan, e.t.c.

3. Trezor

Trezor is the world’s first hardware wallet invented for BTC. However, the wallet
now supports Ethereum Ether through the MyEtherWallet web interface.
It works by storing Ether on a secure offline electronic chip which can only be
accessed and activated when you log in with your password.

It costs from $78 – $170. Its products include Trezor One and Trezor T.

4. KeepKey

KeepKey is one of the most popular hardware wallets in town. It is another great
Ether wallet that supports other cryptocurrencies as well.
KeepKey is greatly secured and privacy-centric. It stores crypto assets by
keeping the private keys offline and backed by a seed phrase.

So, you can store your Ethereum and other cryptos with a level of security that
can guarantee the safety of your assets.
5. Ellipal Titan

Ellipal Titan claims to be 100 percent isolated from all networks by only creating
a connection with the computer or smartphone via QR codes.
It supports Ether and over 30 native coins including all the ERC20 tokens.

The wallet costs $169 (excluding shipping fees).

6. Coinomi

Coinomi is a mobile wallet available on Android and recently, on desktop and

iOS. It supports Ether and 1000+ cryptocurrencies and tokens.
Its integration with Shapeshift and Changelly makes it easy to buy and swap
cryptocurrencies securely.
If you lose your device, don’t worry! You can use your recovery phrase to get
your portfolio back.

7. MyEtherWallet (MEW)

This wallet is particularly different from other traditional web wallets. This is
because unlike most web wallets, in MyEtherWallet, you control your Ether
private keys.
MEW is also distinguished because it is an open-source wallet requiring no third-
party servers.

For convenience, you can also connect some hardware wallets such as Trezor or
Ledger to MEW’s web environment to access your funds easily.

8. Exodus

Exodus is the world’s first multi-cryptocurrency desktop wallet.

It supports up to 100 cryptocurrencies including Ethereum Ether.

It is very keen on security too, introducing email recovery and seed keys to make
sure your digital assets are secure.

9. Jaxx

Jaxx is a multi-crypto wallet that supports wallet for over 80 cryptocurrencies

including ETH.
It has an elegant interactive design with excellent security features.
Your private keys never leave your device and features like seed keys allow you
to synchronize and restore your wallet funds whenever needed.

10. Exchanges

Most exchanges serve as wallets for storing Ethereum Ether and other
cryptocurrencies.

Examples include Quidax, Luno, Blockvila, Binance, etc.

Now, armed with this knowledge of where to store ETH, let’s go-ahead to look at
how ETH is gotten.

What Can Ethereum Be Used For?

Ethereum is a software platform that allows developers to build and deploy

decentralized applications.

Some of these dApps (decentralized applications) created with Ethereum

include:

 Augur — An open-source prediction and forecast market that rewards

correct predictions.
 Gnosis — A decentralized prediction market that enables users to vote on
anything from the weather to election results.
 EtherTweet — This application takes its functionality from Twitter,
providing users with a completely uncensored communication platform.
 Etheria — It feels and looks very much like Minecraft, but exists entirely on
the Ethereum Blockchain.
A total list of its applications can be found on the State of the dApps website.

Ethereum Ether vs. Bitcoin

For the past few years, Ethereum Ether has remained on the number 2 slot in
coin ranking and is preceded only by Bitcoin.

The coins were compared in the table below:

 Parameters Ethereum Bitcoin

Creation Date 2015 2009

Market Capitalization Value Over Over

(as of 12th November 2019) $20,000,000,000 $150,000,000

Total Number of Coins 81 million 21 million

Block Transaction Time 15 seconds 10 minutes

Consensus Mechanism Proof of Work Proof of Work

Mining Hardware GPU ASIC Miners

Initial Distribution ICO Mining

Hashing Algorithm Scrypt SHA 256

Number of
15 tps 7tps
Transactions per Second(tps)

Frequently Asked Questions (FAQs)

Is Ethereum a Currency?
As already established, Ethereum is not a cryptocurrency but a network.
But the network is run with the help of Ether, a cryptocurrency created by the
Ethereum network.

Ether has a Shorter Block Confirmation Time. Why?

This is because Ethereum allows for uncle blocks to be added to the blockchain.
But in Bitcoin, an uncle (orphan) block will not be validated.
Therefore, Bitcoin uses a stricter difficulty adjustment to reduce the likelihood of
having two blocks mined at the same time.

Is It Safe to Invest in Ether?

Ether has proven itself as a household name in the crypto sphere so investing in
it won’t be a bad idea.
Some persons may prefer investing in Bitcoin alone since it has been at the
forefront of cryptocurrency evolution.
But as the saying goes: Do not put all your eggs in one basket.
Shifting some eggs into the ETH basket will help you diversify your investment.
But then, all investments should be done with great wisdom.

Will Ether Rise Above Bitcoin?

Many Ethereum enthusiasts believe that Ethereum’s market cap will someday
rise above that of Bitcoin. This is known as Flippening.
On June 12th, 2017, Ether peaked at $420.
This led to speculations that it could overtake Bitcoin in total market value.
This was mainly because of the ICO hype that was funded through Ether,
increasing its demand.
But today, Bitcoin’s total market cap is about 8X higher than that of Ether.