Ethereum is the new Bitcoin, if you choose to believe it. I was recently introduced to Ethereum when I was browsing the Microsoft Azure service catalog and came across their blockchain simulation service, which allows you to spin up a test network to deploy Distributed Applications (DAPP’s) onto an isolated Ethereum blockchain network. Pretty cool stuff in itself, and not today’s subject!
Ethereum is a blockchain technology, which uses peer-to-peer networking technology (like BitTorrent) to create a network of nodes which synchronise every transaction on the network. Transactions between “accounts” are recorded on the blockchain, which keeps record of every single transaction on the network, on every single node – this means that transactions are highly secure, and cannot be reversed. This high security is provided by a process called “mining”, which requires the transactions to be “hashed”, a process of computing large amounts of random jibberish to a certain specification (let’s call if difficulty) such that when the specification is met, transactions which are used to compute that jibberish, are committed to the network and through a process of synchronising and voting, are rendered permanent.
What makes Ethereum miles different to BitCoin, is the addition of distributed application technology; allowing developers to write “contracts” which can be used to represent simple things like voting in an election, or creating a shareholder registry backed by Ethereum currency (which in itself has spawned a number of “ICO”‘s; initial coin offerings; the equivelant of an IPO).
Good question. The financial world is full of regulation. As Ethereum is a digital currency, you can’t just go to the bank and exchange your money. To buy Ethereum, you need to have an account with an intermediary, who will take your “real” money in the form of AUD or USD, and exchange this for ETH(ereum) or BTC (bitcoin). The problem for Australian’s, is we have limited choices here; there’s only a small handful of services which allow you to purchase ETH, and even fewer which allow Australian’s to sell it! *** If you know of any, please email me! ***
EDIT: Since sharing this post, I’ve been pointed to a few other exchanges which support buying/selling for Australian users; these are listed at the bottom of the post.
What’s different with crypto-currency, is that you are even more responsible for securing your new found money. If your CoinSpot account is hacked, it’s easy for someone to send the Ethereum/Bitcoin in your account to their own account, and at that point, it’s gone forever.
You MUST secure your account, your computer, and any other devices you use to login!
This is trickier. You need a physical computer; laptop or otherwise; and about 20GB of free space.
This comes with a disclaimer; you must download the Ethereum wallet from the Ethereum Project website; https://www.ethereum.org – scroll to the bottom and find the download button. You’ll receive this disclaimer which covers off what I said above; it’s no joke.
Once you’ve downloaded this and installed it, you need to wait for the blockchain to synchronise – the first time you run this, it will execute a “fast sync” which can sync the entire blockchain in under an hour. If you exit before this finishes, it will revert to a full sync, and start at zero all over – this will take a lot longer.
It should look a little something like this:
Next step, you want to click ADD ACCOUNT. You’ll be prompted for a password – I suggest using 1Password or LastPass to generate a very strong password!
After you confirm your password and heed the warning about backing up your keys, BACK UP YOUR KEYS.
To do this, point to the Accounts menu, then Backup, then Accounts.
Make sure you backup these files to something safe! DropBox, a USB flash drive – whatever it is, if you transfer money to this new account, you MUST have the key on your PC – if your computer is lost, stolen or you have to format the hard drive for whatever reason, you won’t be able to ever get your account back, unless you backed up the keys as directed above.
Simple. Grab the account address by clicking your account in the Ethereum Wallet app, then use the Copy Address button to copy it to your clipboard.
Paste your account address in the Recipient field, select your ETH wallet and how much you want to transfer – click Use Max if you want to transfer the whole lot.
Make sure the address is right!!!! If you muck that up, your moola is GONE.
If you’re happy with it, click Send Funds, and wait for it to show up in your Ethereum Wallet. Done.
Now you do whatever you want to do with your Ethereum. Watch the price soar, hoping it will net you millions of dollars, or write some DAPPs. The beautiful thing about CoinSpot, is that Australians can finally sell cryptocurrency, so I’ve been quite excited to use it.
If this guide has helped you at all, feel free to send any amount of ETH to 0x5F1928371C40623Ee81BE986C08941D4067b74a9