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Blockchain ➉

Ethereum Value

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Introduction

The emergence of Ethereum was under the guidance of Vitalik Buterin, a cryptocurrency specialist/programmer, beginning in 2013 and reached its release version in July of 2015. Ethereum blockchain is an open source built upon a computing distribution platform that demonstrates scripting functionality. The Ethereum Foundation, based in Switzerland as a non-profit organization, attracted top specialists in the field from all around the world. Like Bitcoin, Ethereum stands as one of the top platforms for cryptocurrency in decentralized blockchain tech. On top of Nakamuto’s anonymous version, it offers greater range of adaptability. Additionally, the transference of Ether to other accounts as compensation for mining done through computing work is easily done. Ethereum can use scripts over public nodes through an international virtual network. The blockchain, in a round about way, determines the value of Ethereum.

Foundation of Ethereum value

To understand how Ethereum (ETH) is calculated, let’s use pizza as an example. In order to arrive at a price two factors come into play: the amount person A is selling pizza for and the amount person B is willing to spend on it. Let’s say Larry wants to sell his pizza at $3.00 a slice, but Javier is only willing to pay $2.00 for Larry’s tasty pizza. As it stands, there is no deal and no transaction. However, if both Larry and Javier reach an agreement at $2.50, then that is how the price of pizza is determined. During tourist season more people might desire pizza. Therefore, the price will go up as a result. On the other hand, Larry may make too much pizza during a period when people are not in the mood for it. And so, the price will fall. Ether is not the same as pizza due to what is known as “Consistent”. As one British pound is the same as another; likewise, one Ether matches another in value and conception. Pizza isn’t like this as one pizza may be made differently from another – maybe David’s pizza isn’t as good as Larry’s. With currencies, let’s use the Japanese Yen (JPY) as an example. At any time someone has 1 JPY, there are millions of other people who are trading/exchanging JPY. The person with 1 JPY might think the price is fixed or doesn’t change. But in actuality, the value of the JPY is always in flux. Therefore, on one week 1 JPY might exchange for $107 and on the next for $110. Ether works in a very similar manner.

Value of Ethereum. Programmer explains.

Calculation of Ethereum value

Before getting into the nitty and gritty of Ethereum calculation, one needs to understand the term as it relates to Ethereum. Some might simply say that gas is how miners of ETH get paid; however, it is a little more complex than that. Gas is the surcharge that is tacked for performing computational work on each transaction. Bitcoin works in a similar manner. However, Bitcoin only looks at the transaction in terms kilobyte size; whereas, ETH gas takes into consideration the actual computational work done. For instance one transaction might be larger in terms of kilobytes but smaller in regards to computational effort. In this way, Ethereum is superior yet again. The normal gas limit for most transactions is 21000. However, exceeding this limit would make the time it takes transactions to complete to be lower. Now, the formula for ETH price (with g = gas): g(Ether price/g) = Ether price = transaction fee. The following example is provided:

var sender = web3.eth.accounts[0];//sending the ether
var receiver = web3.eth.accounts[1];//receiving the ether
var balance = web3.eth.getBalance(sender);//finding its total balance
var transactionObject = {
from: sender,
to: receiver
}
var transactionFee = web3.eth.gasPrice * 21001;
transactionObject.value = balance – transactionFee;
web3.eth.sendTransaction(transactionObject, myCallbackFunction);

Very often, one may find the 21001 being replaced by the code: web3.eth.estimateGas(transactionObject). As to why this happens, transactions are not the sole thing happening in the Ethereum Network. As a result transaction amounts vary based upon different amounts of gas. Mining metrics are calculated on network hash rate of 220,769 GH/s Ether-USD exchange rate which is 1 ETH=$ 833.06. The previous figures change based on the total network hash rate. The average time to calculate the block time is 15 seconds. Nonetheless the electricity price used in generating these metrics is $0.12 per kWh. Furthermore, network hash rate varies over time, this is just an estimation based on current values.

Why Does ETHEREUM Have Value? Explaining Economics of ETH!

Mining in Ethereum

Mining Ethereum is not that complicated, and if you have an understanding of the indolent e concept then it’ll be no sweat. In regards to what is required for AMD/Nvidia graphic cards on Windows 7,8, and 10 (64-bit only), at least one GPU with OpenCL or CUDA and 3GB+ of ram is the minimum. Furthermore, an address in Ethereum wallet to receive payments is necessary. Also, mining pool configuration needs to be implemented through NanoPool or Ethermine. Ethereum is a decentralized network/platform that performs and makes contracts which then execute functions without downtime, restriction, scam, or third party boundaries being possible. The aforementioned applications work on a customized blockhain – which then determines property ownership. This will allow developers and entrepreneurs to create business, move assests with presets determined at a previous time period – all this without having to deal with burden of risk or middlemen. As was explained before, the price of ETH is reached through a consensus/agreement. The selling price is the “ask price” and the “bid price” is what the buyer is willing to pay. The area between these two is known as the “spread” with the “current price” being the last transaction on record.

Today, mining cryptocurrency can be costly in terms of computing power – and Ethereum is no exception. Many have already forged ahead in this field and now mine using many computers with high end processors. However, that doesn’t mean that it still can’t be done as many can still do hobby mining as a valid means to acquiring some measure of gas. Firstly, one must research a good build for for a mining computer. The hardware should focus on using GPUs as they are superior in mining operation over normal CPUs. Next, one will have to install a mining client that will work on Ethereum nodes (e.g. Geth). After this is accomplished, installation of the mining program is required. The program Ethminer can be installed without too much trouble. However, for detailed instructions on this process, looking over the documentation on the Ethereum website is advisable.

Conclusion

Given that blockchain technology and cryptocurrencies are still in their infancy, trying to predict Ethereum’s values is tricky at best. By combining qualitative research with interviewing industry professionals, researching linear regression, and implementing a Monte Carlo analysis, it is quite prudent to have conservative outlook concerning Ethereum’s value while at the same time considering correlations of speculation, news, and hype to make some variable impact. Due to Ethereum’s past success and myriad of possibilities, making it part of one’s investment portfolio is the right call.

Presently, some of the fundamental concepts are clearer than before which has aided the development of application without getting bogged down in implementation details. Thus far, Ethereum’s data structure offers a grand outlook with the hope of of becoming a key foundation in the hope of building better worlds. Oddly, Ethereum has attracted a wider range of people from diverse domains of interest beyond the normal pale of academics, autistic hobbyists, and tech savy entrepreneurs. Individuals could could eventually adapt the technology to a wider range of activities (e.g. political voting) and as it stands the sky’s the limits.

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About Faisal M. Aldrees

Accomplished Procurement Specialist as a promotion with a strong background in Network design and implementarion. Success in optimizing manufacturing processes and capitalizing on revenue generation opportunities. Skilled in performing financial analysis to influence procurement decisions and managing multimillion-dollar purchasing budgets. Proven leadership abilities that enable teams to achieve production targets and quality benchmarks while developing new supply chains and vendor relationships.