Ethereum Value

Introduction

Ethereum was introduced by Vitalik Buterin a cryptocurrency researcher and programmer in late 2013 and it was initially released 30th of July 2015, it's an open-source which is block-chain based computing distribution platform and features scripting functionality. Ethereum foundation, a Swiss non-profit, with contribution from great minds all of the globe. Also, with Bitcoin, Ethereum is considered to be one of the prime platforms in shared ledger and blockchain technology. It supports an adaptive version of Nakamoto unanimity through transaction based on state development. Ether is defined as a cryptocurrency and its blockchain is produced by the Ethereum platform. Moreover, Ether can be relocated between accounts and used to remunerate contributor mining nodes for computing operated. Ethereum can execute scripts using an international network of public nodes through a virtual machine.

Calculation of Ethereum

For calculating Ethereum well, it depends. We can use orange as an example, as a start point one would imitate the price of an orange based on two things which are: how much someone is trying to sell it for, and how much someone else is trying to buy it for. If Faisal wants to sell it for USD2.50 and Angel is only prepared to pay USD2.00, there is no deal. But if they have an agreement and a price that works for both, let’s say USD2.25, then the agreement will happen. If it’s winter, there might be more people wanting to buy oranges, so the price will go higher. Or if there is a lack supply of oranges will become less, so more people are trying to buy less oranges, which can also make the price up. Ether are different from fruits in that they are what is called ‘Consistent’ - one USD is identical to another USD, like one Ether is the same as another. Oranges, on the other hand, are not because they can vary in mass and kind. Currencies work exactly the same - if you have a coin or note of let’s say SAR currency in your hand, at any point in time there are millions of people buying and selling your SAR currency, so while you might observe it as fixed, it’s value actually continuously is changing. When you want to exchange it for another currency at a currency office, let’s say for USD, one day you pay 10 SAR to a dollar, the next day maybe 11 or 9. Ether works exactly the same way but not like what you are used to everyday. 

Before jumping into how to calculate transaction fees that go along with Ether transactions. We have to introduce gas which is a currency all on its own used by the Ethereum network. Gas is used for paying Miners for their work, where Miners are people who are working on processing payments. The amount of gas needed for a normal transaction is 21000 gas, hence people put more options pf putting more gas and the time for the transaction to take place is lower. Now to the main part of how to calculate Ether price is as follows: gas * (Ether price / gas) = Ether price = transaction fee. Referring back to (Ether price/ gas ) as the gasPrice then the final equation is gas * gasPrice = transaction fee. A small example is:

var sender = web3.eth.accounts[0];//sending the either

var receiver = web3.eth.accounts[1];//receiving the ether

var balance = web3.eth.getBalance(sender);//finding it's total balance

var transactionObject = {

 from: sender,

 to: receiver

}

var transactionFee = web3.eth.gasPrice * 21001;

transactionObject.value = balance - transactionFee;

web3.eth.sendTransaction(transactionObject, myCallbackFunction);

Note that you’ll often see the code replacing the 21001 above: web3.eth.estimateGas(transactionObject) however the reason behind that is Ether transactions are not the only thing done in the Ethereum Network. Therefore, different transactions cost different gas amounts. 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.

Mining in Ethereum

As we have seen mining in Ethereum is not that complex if you had understood the indolent e concept it’s going to be a piece of cake. Looking at what is needed for mining on windows desktop machines with AMD and Nvidia graphic cards are Windows 7,8.1, 10(64-bit only), one or more GPU capable of OpenCL or CUDA with 3GB ram or higher and an Ethereum wallet address for payouts. Furthermore, in Ethereum mining pool configuration through NanoPool or Ethermine zero configuration required, provide wallet address and get paid automatically, Dev fee 1% and now supports ETC (Ethereum Classic) as well. Ethereum is a distributed podium that runs clever contracts that runs on functions that are similar to programming without any possibility of downtime, restriction, scam or third-party boundaries. The previous applications route on a customized blockchain, which is a powerful platform that handles the ownership of properties. This with enable developers create a business, move funds in agreement with commands given long in the past and many other things that have not been invented yet, all without a middleman or risk. Going back to mining, Ethereum means the increased volume of Ether in circulation. Price of Ether is determined the same way everything on earth is and that’s through social agreement. Meaning that Ether price is based on weather the owner will sell it for and what a buyer would pay for it. The seller price is referred as “ask price” and the buyer who’s willing to pay is referred to as the “bid price”. However, the space between these two prices is called the “spread” and the last transaction on record is the “current price”. It’s a back and forth tug of war the prices everything in a free market system where property, stocks, gold and even flat currencies like the UK pound are priced the same way. Meaning if someone was only willing to give you 90 pence of goods for a pound, you would accept that price or wait until the values goes up. Investors and traders therefore use the essentials of Ether to make the best thinkable guess for its future value. To calculate it they will take the market consensus price is and what will it be, supply and demand. In the case of Ether, it has a limited supply which is used to make clever contracts on its network and has a growing user base. The platforms for trading Ethereum can be done either by buying and selling of coins or through CFD (contract for difference). The definition of CFDs is a contract for difference (CFD) is a popular form of derivative trading. For Ethereum exchanges there are certain platforms to start trading. ETORO, Plus+500, Bitstamp, GDAX, GEMINI and Kraken are all platforms anyone can start trading in with a certain minimum deposit and certain number or cryptocurrencies. Let’s talk about eToro it’s a social trading company that will help the its users to watch trading, they can duplicate them and start their own.

Conclusion

With the advent of blockchain and cryptocurrencies being as new and revolutionary as it is, predicting the five-year projected value of Ethereum requires numerous factors to be considered. Through a combination of qualitative research conducted through interviews with industry professionals, linear regression, and a Monte Carlo analysis, it can be concluded that while having Ethereum a lower expected value has a much greater variance as a result of its strong correlation with speculation, news, and hype. Ethereum’s wide range of outcomes, both positive and negative, indicate that it should be included in the investment portfolio to take advantage of this fact.

Somehow a few of the core ideas are clearer, and all this has helped to explain a bit about the exciting applications without getting knocked out in implementation details. We're only just beginning to scratch the surface of what types of things this weird new data structure (the blockchain) and this weird new computer (the Ethereum architecture) are good for. It seems to me that part of what is exciting today is that engineering effort happening at the same time as more purely abstract work. But who are the people that are actually building all this stuff? We'd expect financial technology companies both startup and established, hard-working hobbyists, some academics. But surprisingly, people in other domains who are already looking at using the technology for things like voting. I would guess is that the Ethereum architecture and the blockchain data structure will eventually find many more diverse applications.