Ether crypto currency

Owned by TheTradingHall
Last updated: Jun 16, 2016
2 min read

 

Ether is the cryptocurrency of the Ethereum Blockchain. It is a necessary element -- a fuel -- for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations. To put it another way, ether is the incentive ensuring that developers write quality applications (wasteful code costs more), and that the network remains healthy (people are compensated for their contributed resources). 

Exchanges

The list of exchanges offering trading on crypto currencies is quite long. Most of them will offer the fallowing services:

  • Access to main fiat and crypto currencies
  • Order routines with 24/24 7/7 access
  • Charting tools
  • Cold storage
  • Audited and inspected for unusual activity
  • User instant messaging

When choosing an exchange, you shall verify:

  • Its location
  • Potential margin trading
  • Lending
  • Potential fiat to crypto trading
  • Access to mining pools
  • security
  • Fees

Gas

Gas is the internal pricing for running a transaction or contract in Ethereum, a measure of computational effort. The term Gas is simply the Ether cost you have to pay to get your Ethereum message or transaction executed as soon as possible. With Ethereum, there is a blocksize limit too – so you’re paying for premium space in the next block.

Since computation is expensive (mind that it has to be done by every full node in the network), excessive consumption of gas needs to be discouraged. Therefore, each unit of gas must be paid for (in Ether) by the sender of the transaction that triggered the computation.

For example, something as simple as transferring DAO tokens from one address to another or casting a vote can reach fees between $0.05 - $0.1 to cover the computation gas.

Transaction gas limit

It is often not easy and in general even impossible to know in advance how much gas a transaction will need eventually. Therefore, transactions have a gas limit field to specify the maximum amount of gas the sender is willing to buy. If the gas used exceeds this limit during execution, processing is stopped.

The transaction gas limit also protects full nodes from attackers, who could, without a gas limit, make them execute effective infinity loops

Block gas limit

Additionally, blocks, too, have a field called gas limit. It defines the maximum amount of gas all transactions in the whole block combined are allowed to consume. Similar to the maximum block size in Bitcoin (measured in bytes), its purpose is to keep block propagation and processing time low, thereby allowing for a sufficiently decentralized network.

See also