Whether you’re into cryptocurrency news or not, you’ve probably heard of Bitcoin. What you may not be as familiar with, however, is the second-most popular cryptocurrency: Ether (ETH), which is part of the Ethereum open-source blockchain.
In fact, you may have even seen a financial website using an Ethereum price feed API and not even realized that it was tracking market prices of ETH. To get these prices, an Ethereum price feed API needs to follow the Ethereum blockchain.
What is a Blockchain?
A blockchain is a digital chain of custody that shows the transactional history of cryptocurrencies and digital files. It doesn’t record your personal details when you complete a transaction using a cryptocurrency, so it doesn’t create a receipt or anything that shows what the money was spent on. Instead, it notes the transaction, and then the next transaction makes a copy of the previous one and so on.
All cryptocurrencies utilize blockchain technology to provide stability in the trading and investing world since the blockchain prevents new coins from being created out of thin air. A blockchain like Ethereum shows all transactions that have taken place using ETH coins, allowing users to see exactly how many coins are in the market to determine their value and verify their authenticity.
How Can You Spend ETH?
To spend ETH through Ethereum, owners of coins will either need to find someone who will accept the coins as payment or the coins will need to be sold through an exchange for fiat currency. Buying and selling cryptocurrencies makes use of blockchains to determine the market value of a coin in real-time. These values can swing wildly throughout the day, so investors keep a close eye on markets before using exchanges to buy or sell.
Smart Contracts and Ethereum
One defining characteristic of Ethereum that isn’t present for all cryptocurrencies is the use of smart contracts. These are computer programs that automatically execute actions when pre-defined conditions have been met. The use of smart contracts helps to limit risk when trading in cryptocurrencies since a smart contract can be written into the blockchain itself, allowing all parties to be notified when conditions go into effect.
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