FAQ
How are ethers created?
The total supply of ether and its rate of issuance was decided by the donations gathered on the 2014 presale. The results were roughly:
- 60 million ether created to contributors of the presale
- 12 Million (20% of the above) were created to the development fund, most of it going to early contributors and developers and the remaining to the Ethereum Foundation
- 3 ethers are created every block (roughly 15 seconds) to the miner of the block
- 0.625-2.625 ethers are sometimes sent to another miner if they were also able to find a solution but his block wasn't included (called uncle/aunt reward)
Is the ether supply infinite?
No. According to the terms agreed by all parties on the 2014 presale, issuance of ether is capped at 18 million ether per year (this number equals 25% of the initial supply). This means that while the absolute issuance is fixed, the relative inflation is decreased every year. In theory, if this issuance was kept indefinitely then at some point the rate of new tokens created every year would reach the average amount lost yearly (by misuse, accidental key lost, the death of holders etc) and there would reach an equilibrium.
But the rate is not expected to be kept: sometime in 2018-2019 Ethereum will be switched from Proof of Work to a new consensus algorithm under development, called Casper that is expected to be more efficient and require less mining subsidy. The exact method of issuance and which function it will serve is an area of active research, but what can be guaranteed now is that (1) the current maximum is considered a ceiling and the new issuance under casper will not exceed it (and is expected to be much less) and (2) whatever method is ultimately picked to issue, it will be a decentralized smart contract that will not give preferential treatment to any particular group of people and whose purpose is to benefit the overall health and security of the network.
Who needs ether?
Developers who intend to build apps that will use the ethereum blockchain. Users who want to access and interact with smart contracts on the ethereum blockchain.
I bought ether during the 2014 presale. How do I access it?
The Ethereum Wallet includes an easy presale import. Download it and it will offer that option automatically.
Using the command line
If you are still on the console, then quit it by pressing control+C multiple times and pressing enter.
Then, if you are using Geth execute this:
geth wallet import /path/to/my/presale.wallet
Alternatively, if you are using Eth execute this:
eth --import-presale /path/to/my/presale.wallet
This will prompt for your password and imports your ether presale account. It can be used non-interactively with the --password option taking a password file as argument containing the wallet password in cleartext.
If this does not work, please do not hesitate in contacting us on our forums, reddit or at info (at) ethereum.org.
If you don't feel comfortable securing your ether right now but just want to check that your presale wallet is included in the blockchain, then use our online balance checker.
Read more about accounts.
How do I mine ether?
The Ethereum network is kept running by computers all over the world. In order to reward the computational costs of both processing the contracts and securing the network, there is a reward that is given to the computer that was able to create the latest block on the chain. Every 15 seconds, on average, a new block is added to the blockchain with the latest transactions processed by the network and the computer that generated this block will be awarded 3 ether. Due to the nature of the algorithm for block generation, this process (generating a proof of work) is guaranteed to be random and rewards are given in proportion to the computational power of each machine.
This process is usually called mining in the crypto-currency lingo.
CPU MINING Using the command line
If you are on a private network (and if you just want to test the technology for free, you should) then any normal computer with a normal CPU will be able to run the network and earn test ether (ether that is only redeemable on the test network where it was generated) through mining. This is the best choice for small-scale network or testing privately, as it's less resource intensive. On the real (or live test) network a normal desktop (or laptop) computer might take a very long time to successfully mine a block and receive ether.
Before you do any mining, you need to set which address will receive your earnings (called "etherbase"). You only need to do this once. Here's how to set your etherbase and then start mining:
Geth:
miner.setEtherbase(eth.accounts[0])
miner.start()
Eth:
web3.admin.eth.setMiningBenefactor(web3.eth.accounts[0])
web3.admin.eth.setMining(true)
Before you can find any blocks, however, your computer needs to go through a process called “building a DAG”. This DAG (short for “Directed Acyclic Graph”) is a large data structure (~1GB) required for mining, intended to prevent ASIC machines (“Application Specific Integrated Circuits”) from being mass manufactured for mining ether. Its goal is to protect miners like yourself so that you will only ever need your home computer to remain competitive. The DAG should take about 10 minutes to generate and as soon as it finishes, Geth will start mining automatically.
If you have successfully mined a block you will see a message like this among the logs:
🔨 Mined block #123456
To check your earnings, you can display your balance with:
web3.fromWei(web3.eth.getBalance(web3.eth.accounts[0]), "ether")
GPU MINING Using the command line
If you are serious about mining on the live ethereum network and getting real ether rewards, then you should use a dedicated computer with very powerful graphics cards in order to run the network.
Instructions for Eth:
If you are using Eth then GPU mining comes out of the box. Simply quit the console (press control+C multiple times and then enter) and then start it with the --GPU option turned on:
eth -b --genesis path/to/genesis.json -i -m on -G
Once you started, just follow the same instructions as normal CPU mining.
- C++ Etherminer. This is a version for the pro miners. To install it, follow the guide to install the whole C++ ethereum code.
More information on Mining
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Ethereum's proof of work algorithm does not make use of Scrypt or Sha256, instead, it leverages EtHash, a Hashimoto / Dagger hybrid. You can read all about the theory behind this and its design in the Ethereum gitBook, mining chapter. Note that for Serenity (a future release, a major milestone on the Ethereum development roadmap) we are planning to switch to Proof of Stake (PoS).
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The Ethash proof of work algorithm is memory hard, you'll need at least 1+GB of RAM on each GPU. I say 1+ because the DAG, which is the set of data that's being pushed in and out of the GPU to make parallelisation costly, will start at 1GB and will continue growing indefinitely. 2GB should be a good approximation of what's needed to continue mining throughout the year.
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Mining prowess roughly scales proportionally to memory bandwidth. As our implementation is written in OpenCL, AMD GPUs will be 'faster' than similarly priced NVIDIA GPUs. Empirical evidence has already confirmed this, with R9 290x regularly topping benchmarks.
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ASICs and FPGAs are strongly discouraged by being rendered financially inefficient, which was confirmed in an independent audit. Don't expect to see them on the market, and if you do, proceed with extreme caution.
What's the relationship between bitcoin and ether?
Ethereum would never be possible without bitcoin—both the technology and the currency—and we see ourselves not as a competing currency but as complementary within the digital ecosystem. Ether is to be treated as "crypto-fuel", a token whose purpose is to pay for computation, and is not intended to be used as or considered a currency, asset, share or anything else.
There are many ways in which you can use Bitcoins within the Ethereum ecosystem:
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Trade BTC for ETH: multiple third-party companies are working to make the exchanging of ether and bitcoins as easy and seamless as possible. If so desired one could trade bitcoins for ether with the purpose of executing contracts and trade it back immediately in order to keep their value pegged and secured by the bitcoin network. The latest version of the wallet includes an automatic conversion between ether and bitcoin.
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Use a pegged derivative: Ethereum is a great tool for creating complex trading between multiple parties. If you have a source for the price of Bitcoin that all parties trust, then it's possible to create an ethereum based currency whose value is pegged to the market value of Bitcoin. This means that you could trade bitcoins to a token that is guaranteed to always trade back to the same amount of bitcoins while still being fully compatible with other ethereum contracts.
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Use a Bitcoin relay to convert a 2-way peg: the bitcoin relay is a piece of code that allows you to sidechain a bitcoin into ethereum. This means that you can use Bitcoin's native limited scripting capability to lock a bitcoin into a contract that is directly connected to an ethereum contract, which can then issue an ethereum based token that is guaranteed to be backed by bitcoin. The relay is under development and as implementations are tested and proved to be secure, we will list them here.
How do I send ether using the command line?
ATTENTION: Ethereum addresses don't have built-in checks on them yet. That means that if you mistype an address, your ether will be lost forever, without a secondary confirmation window. If you are moving a significant amount, start with smaller quantities that you can afford to lose, until you feel comfortable enough.
There are two types of accounts in Ethereum: normal accounts, holding ether that can only be moved with a private key and contracts, which hold ether only controlled by their own internal code. In this section, we focus on the former. The remainder of this guide will be dedicated to the latter.
Similarly, your transactions are also of two types: those sent to normal accounts are ether transfers, while the rest are communication with smart contracts.
Before you execute your first ether transfer you need a friend to send your ether to. If you don’t have any, you can also create as many new accounts as you want, following the steps discussed previously and simply move your funds between accounts you own. Assuming you created a second account to send the ether to:
var sender = web3.eth.accounts[0];
var recipient = web3.eth.accounts[1];
var amount = web3.toWei(0.01, "ether");
The first two lines set local variables with account numbers for easier access later. Change the sender and recipient addresses to whatever you like. If you are adding a friend's account address instead, put it in between quotes like ‘0xffd25e388bf07765e6d7a00d6ae83fa750460c7e'. The third line converts the chosen amount to the network's base unit (wei).
Although there are many names for ether denominations, we will use only two: “ether” and “wei”. Wei is the atomic unit of ether, and is the one used on the system level. Most day-to-day transactions will be done with ether, which is equivalent to one quintillion wei, or a 1 followed by 18 zeros. So before sending any transactions, it’s very important to convert the amount to wei, and for that, you can use the web3.toWei function.
After having set the variables above, send the transaction with:
web3.eth.sendTransaction({from: sender, to: recipient, value: amount})
Waiting a few seconds, the transaction should be complete. To check the balance of an account, simply type:
web3.eth.getBalance(recipient)
Tip: If you are using Geth then you can just use eth instead of web3.eth command.
Transaction Receipts
Anytime you create a transaction in Ethereum, the string that is returned is the Transaction Hash. You can use those to keep track of a transaction in progress, or the amount of gas spent in a past transaction using eth.getTransaction() and eth.getTransactionReceipt. Here's how to use it:
var tx = web3.eth.sendTransaction({from: web3.eth.accounts[0], to: web3.eth.accounts[1], value: amount});
web3.eth.getTransaction(tx);
And if the transaction has been picked up already, you can check its receipt with this:
web3.eth.getTransactionReceipt(tx);