Ethereum FAQs

Oct 03, 2017

What is Ethereum?

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.

Ethereum uses a public blockchain similar to bitcoin, but also enables advanced programmable transactions types.

What is Ether?

Ether (ETH) is the primary currency on the Ethereum network. Much like bitcoin (BTC), it is created by computerized mining. Ether can be sent from one address on the Ethereum network to another, and can also be used in other transactions called "Smart contracts.’’

Who created Ethereum?

Ethereum was proposed by Vitalik Buterin in a white paper. Since then many people have contributed work to the project.

Where can I get ether?

GDAX provides order books for both ETH/BTC and ETH/USD. You can create an account on GDAX to buy and sell ether with bitcoin, or US dollars.

How is Ethereum different than Bitcoin?

Bitcoin was conceived as a "a purely peer-to-peer version of electronic cash," focusing on payments, and value transfer as its primary applications.

Ethereum extends the ideas bitcoin is built on in order to provide a more generalized computational platform. This enables the creation of smart contracts, decentralized applications, and even decentralized governance applications.

Can I send bitcoin to an ether wallet?

No. Bitcoin and Ethereum are separate protocols, and it is not possible to complete a transaction from one to the other. However, you can buy and sell ether and bitcoin separately.

 

What happens if I send my ether to the wrong address?

Don’t do this. Unfortunately if you send ether to an incorrect address, it may be lost forever. Ethereum network addresses do not have the safety measures, so it is possible to lose ether if you enter an address incorrectly. Bitcoin addresses have built-in verification to prevent errors like this.

  

What are "Smart Contracts"?

A smart contract is an executable program stored on the Ethereum blockchain. The execution of a smart contract is processed by miners, and requires a payment of ether in order to fund the processing of the contract. One or more parties can create or fund a smart contract, which will execute according to the inputs it receives.

 

A smart contract is like a legal contract in that it specifies an agreement for the handling of a given situation which may arise in the future.  For example, an insurance contract specifies the payout to the insured in the event of an accident. Smart contracts differ from traditional legal contracts in that their execution is not subject to the interpretation of human institutions.

What is a Distributed Autonomous Organization (DAO)?

A DAO is a type of contract that enables agents to purchase shares, and collaborate in the management of an organization by voting.

Can I send ether to my GDAX account from an Ethereum contract?

No. Supporting this deposit type presents unique technical challenges, and we are unable to recover ether deposited to your GDAX account in this way. We may support this in the future. In the meantime, you can deposit ether on GDAX from any standard Ethereum address.

Can I send directly to smart contracts or a DAO from my GDAX account?

Unfortunately not. At this time we do not support the functionality required to send funds to smart contracts directly from your GDAX account. This includes smart contracts like DAOs.

 

GDAX is not a general purpose Ethereum wallet. When ether is sent to the receiving address for a DAO or other smart contract, tokens representing ownership are normally returned. However, GDAX does not support retrieving assets other than ether which are sent to your GDAX account address. We may consider supporting other assets built on Ethereum in the future.

Can I spend ether like bitcoin? Who accepts ether?

Like bitcoin, or any asset, ether has a value which can be used to trade for other assets, or goods and services. Unlike bitcoin, the development of Ethereum commerce has not been emphasized as a use case, and relatively few merchants accept ether.

Is ether safe/secure?

Although Ethereum has yet to have any major security flaws discovered, Ethereum is a young project, and loss of funds is a risk with the use of the Ethereum network in general. The Ethereum Foundation's legal agreement lists a number of these risks.

Is GDAX's ether hot wallet insured?

Yes. The majority of ether and bitcoin deposited to GDAX is held in highly secure cold storage. It is also necessary to hold some digital currency in a "hot wallet" in order to provide fast access to withdrawals for customers. The total balance of bitcoin & ether in the GDAX hot wallets is insured against hacking and theft

How much ether is in circulation? How is it issued?

There are currently slightly more than 80 million ether in circulation, most of which was created during the initial crowd sale, prior to the launch of the Ethereum network. New ether is created and issued to miners at a rate of 21 million per year. This may change in the future .

Should I buy ether? Is it a good investment?

We cannot provide investment advice. The arguments in favor of ether as an investment tend to emphasize the potential applications of smart contract, and the need to pay for the execution of contracts with ether. Arguments against ether as an investment tend to point to it's greater inflation rate compared to bitcoin, as well as the experimental nature of the Ethereum protocol.

I was storing ether on GDAX before the hard fork. How can I withdraw my ether classic?

You can read about our ether classic (ETC) policy here.

 

What is the reason GDAX does not support ether trading in NY?

Ethereum support is not immediately available to GDAX customers in New York. We are working diligently to extend Ethereum support to New York users as soon as possible.

What other companies are using Ethereum?

In November 2015, Microsoft and ConsenSys announced the addition of Ethereum Blockchain as a Service (EBaaS). Read more about the partnership and find some FAQs about the differences between Bitcoin and Ethereum, here: https://azure.microsoft.com/en-us/blog/ethereum-blockchain-as-a-service-now-on-azure/

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