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The Ethereum community debated how and whether to reclaim the ether, and whether to shut down The DAO,<ref name="Wired10160618" /> as the decentralised nature of The DAO and of Ethereum meant a lack of a central authority that could take quick action, instead requiring community consensus.<ref name="bi20160617"/> After a few weeks' discussion, The DAO was shut down, and Ethereum hard-[[Fork (software development)|forked]] (a [[Backward compatibility|backward-incompatible]] change<ref name=":2">{{Cite web|url=http://spectrum.ieee.org/tech-talk/computing/networks/hacked-blockchain-fund-the-dao-chooses-a-hard-fork-to-redistribute-funds|title="Hard Fork" Coming to Restore Ethereum Funds to Investors of Hacked DAO|last=Peck|first=Morgan|date=19 July 2016|website=IEEE Spectrum: Technology, Engineering, and Science News|publisher=IEEE|access-date=20 July 2016}}</ref>) to reverse the hack and return The DAO funds, with some controversy.<ref name=":1">{{Cite web|url=http://blogs.wsj.com/moneybeat/2016/07/20/ethereum-gets-its-hard-fork-and-the-truth-gets-tested/|title=Ethereum Gets Its Hard Fork, and the ‘Truth’ Gets Tested|last=Vigna|first=Paul|date=20 July 2016|website=Moneybeat|publisher=The Wall Street Journal|access-date=20 July 2016}}</ref> This was the first fork of any mainstream blockchain to be for the purpose of making reparations to investors in a failed enterprise.<ref name=":2" />
The Ethereum community debated how and whether to reclaim the ether, and whether to shut down The DAO,<ref name="Wired10160618" /> as the decentralised nature of The DAO and of Ethereum meant a lack of a central authority that could take quick action, instead requiring community consensus.<ref name="bi20160617"/> After a few weeks' discussion, The DAO was shut down, and Ethereum hard-[[Fork (software development)|forked]] (a [[Backward compatibility|backward-incompatible]] change<ref name=":2">{{Cite web|url=http://spectrum.ieee.org/tech-talk/computing/networks/hacked-blockchain-fund-the-dao-chooses-a-hard-fork-to-redistribute-funds|title="Hard Fork" Coming to Restore Ethereum Funds to Investors of Hacked DAO|last=Peck|first=Morgan|date=19 July 2016|website=IEEE Spectrum: Technology, Engineering, and Science News|publisher=IEEE|access-date=20 July 2016}}</ref>) to reverse the hack and return The DAO funds, with some controversy.<ref name=":1">{{Cite web|url=http://blogs.wsj.com/moneybeat/2016/07/20/ethereum-gets-its-hard-fork-and-the-truth-gets-tested/|title=Ethereum Gets Its Hard Fork, and the ‘Truth’ Gets Tested|last=Vigna|first=Paul|date=20 July 2016|website=Moneybeat|publisher=The Wall Street Journal|access-date=20 July 2016}}</ref> This was the first fork of any mainstream blockchain to be for the purpose of making reparations to investors in a failed enterprise.<ref name=":2" />


Around 5% of the Ethereum mining power rejected the hard fork and continued on the old blockchain. This was called Ethereum Classic (ETC), ether for which is traded on multiple exchanges.<ref name="coindesk20160725">{{cite web|url=http://www.coindesk.com/ethereum-classic-price-services-alterative-blockchain/|title=Alternative Ethereum Blockchain Gains Support as Price Declines|work=CoinDesk|date=25 July 2016|first=Michael|last=del Castillo|accessdate=29 July 2016}}</ref> One mining pool representative threatened to launch a [[Bitcoin#History modification|51% attack]] on the Classic blockchain, with the aim to "make Ethereum more successful," though the company running the pool repudiated his comments.<ref name=":3">{{cite news|url=http://www.coindesk.com/ethereum-hard-fork-creates-competing-currencies-support-ethereum-classic-rises/|title=Ethereum Hard Fork Creates Competing Currencies as Support for Ethereum Classic Rises|publisher=Coindesk|accessdate=24 July 2016}}</ref> The fork also left both Ethereum blockchains susceptible to [[Replay attack|replay attacks]] between the two, affecting some exchanges.<ref>{{Cite web|url=http://www.coindesk.com/rise-replay-attacks-ethereum-divide/|title=Rise of Replay Attacks Intensifies Ethereum Divide|last=Hertig|first=Alyssa|date=2016-07-29|website=CoinDesk|publisher=|language=en-US|access-date=2016-08-02}}</ref>
Around 5% of the Ethereum mining power rejected the hard fork and continued on the old blockchain. This was called Ethereum Classic (ETC), ether for which is traded on multiple exchanges.<ref name="coindesk20160725">{{cite web|url=http://www.coindesk.com/ethereum-classic-price-services-alterative-blockchain/|title=Alternative Ethereum Blockchain Gains Support as Price Declines|work=CoinDesk|date=25 July 2016|first=Michael|last=del Castillo|accessdate=29 July 2016}}</ref> One mining pool representative threatened to launch a [[Bitcoin#History modification|51% attack]] on the Classic blockchain, with the aim to "make Ethereum more successful," though the company running the pool repudiated his comments.<ref name=":3">{{cite news|url=http://www.coindesk.com/ethereum-hard-fork-creates-competing-currencies-support-ethereum-classic-rises/|title=Ethereum Hard Fork Creates Competing Currencies as Support for Ethereum Classic Rises|publisher=Coindesk|accessdate=24 July 2016}}</ref> The fork also left both Ethereum blockchains susceptible to [[Replay attack|replay attacks]] between the two, affecting some exchanges.<ref>{{Cite web|url=http://www.coindesk.com/rise-replay-attacks-ethereum-divide/|title=Rise of Replay Attacks Intensifies Ethereum Divide|last=Hertig|first=Alyssa|date=2016-07-29|website=CoinDesk|publisher=|language=en-US|access-date=2016-08-02}}.</ref> As of August 2014, the old blockchain is still being actively traded, and has around 20% of the mining power of the new blockchain.


== Ether ==
== Ether ==

Revision as of 20:48, 4 August 2016

Ethereum
Initial release30 July 2015
Repository
Operating systemClients available for Linux, Windows, OS X, POSIX
TypeDecentralized computing
LicenseMultiple open-source licenses
Websitewww.ethereum.org

Ethereum is a public blockchain-based distributed computing platform, featuring smart contract functionality.[1][2] It provides a decentralized virtual machine, the Ethereum Virtual Machine (EVM), that can execute peer-to-peer contracts using a cryptocurrency called ether.

Ethereum was initially proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Development was funded by an online crowd sale during July–August 2014.[3] The Ethereum platform was officially launched at July 30, 2015, and is actively developed.

After a fork of the blockchain in July 2016, there are currently two active Ethereum blockchains: Ethereum and Ethereum Classic. Ether from both is traded on cryptocurrency exchanges.[4][5]

History

Origin

Ethereum was initially described in a white paper by Vitalik Buterin,[6] a programmer involved with Bitcoin, in late 2013 with a goal of building decentralized applications.[7][8] Buterin, describing it as "a next-generation cryptocurrency and decentralized application platform,"[9] believed that many applications could benefit from Bitcoin-like software.[10]

While there was early praise for the technical innovations of Ethereum, questions were also raised about its security and scalability.[10] Buterin won the World Technology Award in 2014 for the co-creation and invention of Ethereum.[11][non-primary source needed]

Launch

Initial funding for the Ethereum project was provided by a public crowdsale in July and August 2014, with the participants buying the ether with bitcoins.[3] The total amount raised by the closure of the event at September 2, 2014 was $18,439,086 worth of bitcoins, resulting in the creation of 60,102,216 ether tokens.[12][failed verification][citation needed]

Ethereum's live blockchain was launched on 30 July 2015.[13] The Ethereum software project was initially developed by a Swiss company, Ethereum Switzerland GmbH (EthSuisse),[14] and a Swiss non-profit foundation, the Ethereum Foundation.[3]

By May 2016, the market capitalization of the cryptocurrency ether was more than US$1 billion and Vox noted that the relatively new digital currency was challenging bitcoin by offering a range of services that are not possible using bitcoin.[15]

The DAO and the blockchain fork

On June 17, 2016 The DAO, which had been hailed as a revolutionary use of Ethereum that demonstrated the potential for the platform, was hacked and around a third of the ether held by The DAO, worth about $50 million at the time, was moved[16][17] into a clone of The DAO that likely prevented the hacker from withdrawing the ether for about a month.[18]

The Ethereum community debated how and whether to reclaim the ether, and whether to shut down The DAO,[18] as the decentralised nature of The DAO and of Ethereum meant a lack of a central authority that could take quick action, instead requiring community consensus.[17] After a few weeks' discussion, The DAO was shut down, and Ethereum hard-forked (a backward-incompatible change[19]) to reverse the hack and return The DAO funds, with some controversy.[20] This was the first fork of any mainstream blockchain to be for the purpose of making reparations to investors in a failed enterprise.[19]

Around 5% of the Ethereum mining power rejected the hard fork and continued on the old blockchain. This was called Ethereum Classic (ETC), ether for which is traded on multiple exchanges.[5] One mining pool representative threatened to launch a 51% attack on the Classic blockchain, with the aim to "make Ethereum more successful," though the company running the pool repudiated his comments.[4] The fork also left both Ethereum blockchains susceptible to replay attacks between the two, affecting some exchanges.[21] As of August 2014, the old blockchain is still being actively traded, and has around 20% of the mining power of the new blockchain.

Ether

Ether
Denominations
Subunit
 10−3finney
 10−6szabo
 10−18wei
Demographics
Date of introduction30 July 2015[13]Genesis block
User(s)Worldwide
Issuance
Currency typeCryptocurrency
 Websitewww.ethereum.org
Valuation
Issuance modelDisinflation[22][non-primary source needed]

The value token of the Ethereum blockchain is called ether. It is traded on cryptocurrency exchanges like any other cryptocurrency;[23] it is also used to pay for transaction fees and computational services on the Ethereum network.[24]

Controversially, Buterin sold 25% of his ether holding in April 2016,[25] describing this diversification as "sound financial planning," and also quoted Gavin Andresen’s statement concerning Bitcoin: "I still say that it’s an experiment, and the whole thing could implode." [26]

The price can be volatile per circumstances, such as a plunge from $21.50 to $15 when The DAO was hacked on June 17, 2016.[17]

Smart contracts

Main article: Smart contract

Smart contracts are applications with a state stored in the blockchain. They can facilitate, verify, or enforce the negotiation or performance of a contract, or that make a contractual clause unnecessary. Ethereum contracts can be implemented in various Turing complete scripting languages,[27] The Ethereum system has been described by the New York Times as "a single shared computer that is run by the network of users and on which resources are parceled out and paid for by Ether."[24][28]

Smart contracts on a public blockchain mean that bugs, including security holes, are visible to all but cannot be fixed quickly;[29] the 17 June 2016 attack on The DAO was of this sort and could not be quickly stopped or reversed,[16] the buggy contract only being fixed by a controversial rollback of the hack transaction on the Ethereum blockchain.[20]

Programming languages

Main article: Solidity

The Ethereum Virtual Machine (EVM) works on a protocol defined in the Ethereum Yellow paper. Solidity is the JavaScript-like programming language designed for developing smart contracts that run on the Ethereum Virtual Machine (EVM). Solidity is compiled to bytecode which is executable on the EVM. Using Solidity, developers can write applications that implement self-enforcing business logic embodied in smart contracts.[30] Enterprise software vendors such as Microsoft and ConsenSys have also created systems that translate common programming languages such as Visual Basic into Solidity coded smart contracts.[30]

Performance

In Ethereum all smart contracts are stored publicly on every node of the blockchain, which has trade-offs.[31] The downside is that performance issues arise in that every node is calculating all the smart contracts in real time, resulting in slower speeds.[31] Ethereum engineers have been working on sharding the calculations, but no solution is present at this time.[31] As of January 2016, the Ethereum protocol can process 25 transactions per second.[31][needs update]

Uses

The Ethereum platform has multiple intended uses, but it is mostly used as a cryptocurrency (cryptographically-secured value transfer system). By March 2016, companies developing for the Ethereum distributed application platform were being birthed around the technology, although previously-established interested parties included Microsoft, IBM, and JPMorgan Chase.[24]

Hypothetically, higher-level software could utilize Ethereum to establish an online marketplace platform.[3]

Applications

Ethereum has been used as a platform for decentralized applications, decentralized autonomous organizations and smart contracts.[24][32] The intended scope of applications include projects related to finance, the internet-of-things, identity management,[33][non-primary source needed] farm-to-table produce, electricity sourcing and pricing, and sports betting.[24] Decentralized autonomous organizations may enable a wide range of possible business models that were previously impossible or too costly to run.[34] Notable Ethereum applications include:

  • Augur decentralized, distributed prediction market software.[35]
  • ConsenSys, a blockchain startup focused on Ethereum technology, developing both enterprise software and distributed applications.[36]
  • The DAO[37] with the objective to "provide a new decentralized business model for organizing both commercial and non-profit enterprises".[38][39] The DAO was funded with Ether.[24][38]
  • Backfeed, socioeconomic platform[40]
  • Ethcore, an Ethereum-based private venture focusing on light clients and Internet of Things (IoT).[41]
  • FreeMyVunk, a gaming value platform.[42]
  • The Rudimental, an equity crowdfunding portal for arts and media.[43]
  • TransActive Grid[44]
  • Slock.It, a system for building smart locks with Ethereum,[45] and built The DAO.[18]
  • Etheropt, a decentralized options exchange.[46]
  • Digix[3] A value token, called DigixDAO has also been created and the token began trading on exchanges on 28 April 2016.[47][48]
  • Ujo Music. Imogen Heap used the technology with her single "Tiny Human".[49]

Enterprise software

Ethereum is also being either tested or implemented by enterprise software companies for various applications.

  • Deloitte and ConsenSys announced plans in 2016 to create a digital bank called Project ConsenSys.[50]
  • R3 Project, which connects 11 banks to distributed ledger using a private Ethereum blockchain running on Microsoft Azure.[32]
  • IBM ADEPT, an IoT system using Ethereum for smart contracts support.[51]
  • Microsoft Visual Studio is making the Ethereum Solidity language available to application developers.[52]
  • Ethereum Blockchain As a Service (EBaaS) on Microsoft Azure, which provides enterprise clients and developers with a cloud-based blockchain developer environment.[36]
  • Innovate UK provided 248,000GBP in funding to Tramonex to develop cross border payments prototype using Ethereum.[53][54]

Adoption

The New York Times noted in March 2016 that Ethereum platform adoption is still early, and that Ethereum could encounter technical and legal problems going forward that would slow the growth of the distributed computing platform. Many Bitcoin advocates say that Ethereum may "face more security problems than Bitcoin because of the greater complexity of the software."[24]

A New York Times article said, "The system is complicated enough that even people who know it well have trouble describing it in plain English".[24]

Microsoft announced a partnership with ConsenSys, a blockchain startup focused on Ethereum technology. Customers of popular cloud-based business service Microsoft Azure have access to third-party tools that "allow them to experience and build with cloud-based blockchain applications, from securities trading to cross-border payments".[2]

References

  1. ^ Gray, Jeff (7 April 2014). "Bitcoin believers: Why digital currency backers are keeping the faith". The Globe and Mail. Phillip Crawley. Retrieved 17 February 2016.
  2. ^ a b Vigna, Paul (28 October 2015). "BitBeat: Microsoft to Offer Ethereum-Based Services on Azure". The Wall Street Journal (Blog). News Corp. Retrieved 17 February 2016.
  3. ^ a b c d e Aitken, Roger (23 April 2016). "Digital Gold 'Done Right' With DigixDAO Crypto-Trading On OpenLedger". Forbes. Retrieved 28 April 2016.
  4. ^ a b "Ethereum Hard Fork Creates Competing Currencies as Support for Ethereum Classic Rises". Coindesk. Retrieved 24 July 2016.
  5. ^ a b del Castillo, Michael (25 July 2016). "Alternative Ethereum Blockchain Gains Support as Price Declines". CoinDesk. Retrieved 29 July 2016.
  6. ^ https://github.com/ethereum/wiki/wiki/White-Paper
  7. ^ "Out in the Open: Teenage Hacker Transforms Web Into One Giant Bitcoin Network". Wired. 27 January 2014. Retrieved 14 May 2016.
  8. ^ Schneider, Nathan (7 April 2014). "Code your own utopia: Meet Ethereum, bitcoin's most ambitious successor". Al Jazeera. Retrieved 21 February 2016.
  9. ^ "A Next-Generation Cryptocurrency and Decentralized Application Platform". Bitcoin Magazine. Retrieved 6 May 2016.
  10. ^ a b Finley, Klint (27 January 2014). "Out in the Open: Teenage Hacker Transforms Web Into One Giant Bitcoin Network". Wired. Retrieved 21 March 2016.
  11. ^ "The 2014 World Technology Award Winners". World Technology Network. Retrieved 19 November 2014.
  12. ^ "Ethereum Official Page". Ethereum Foundation. 2 September 2014. Retrieved 4 September 2014.
  13. ^ a b Caffyn, Grace (30 July 2015). "Ethereum Launches Long-Awaited Decentralized App Network". CoinDesk. Retrieved 12 April 2016.
  14. ^ Schmid, Valentin (10 May 2014). "The Entrepreneur: Joe Lubin, COO of Ethereum". Epoch Times. Retrieved 31 March 2016.
  15. ^ Lee, Timothy B. (24 May 2016). "Ethereum, explained: why Bitcoin's stranger cousin is now worth $1 billion". Vox. Retrieved 25 May 2016.
  16. ^ a b Popper, Nathaniel (17 June 2016). "Hacker May Have Taken $50 Million From Cybercurrency Project". The New York Times.
  17. ^ a b c Price, Rob (17 June 2016). "Digital currency Ethereum is cratering amid claims of a $50 million hack". Business Insider.
  18. ^ a b c Klint Finley for Wired. June 18, 2016 A $50 Million Hack Just Showed That The Dao Was All Too Human
  19. ^ a b Peck, Morgan (19 July 2016). ""Hard Fork" Coming to Restore Ethereum Funds to Investors of Hacked DAO". IEEE Spectrum: Technology, Engineering, and Science News. IEEE. Retrieved 20 July 2016.
  20. ^ a b Vigna, Paul (20 July 2016). "Ethereum Gets Its Hard Fork, and the 'Truth' Gets Tested". Moneybeat. The Wall Street Journal. Retrieved 20 July 2016.
  21. ^ Hertig, Alyssa (29 July 2016). "Rise of Replay Attacks Intensifies Ethereum Divide". CoinDesk. Retrieved 2 August 2016..
  22. ^ "The Issuance Model in Ethereum". Ethereum Blog.
  23. ^ Sier, Jessica (11 February 2016). "Bitcoin rival Ethereum's price skyrockets". Australian Financial Review. Retrieved 22 February 2016.
  24. ^ a b c d e f g h Nathaniel Popper for the New York Times. March 27, 2016 Ethereum, a Virtual Currency, Enables Transactions That Rival Bitcoin’s
  25. ^ Buntinx, JP (23 April 2016). "Ethereum Developer Vitalik Buterin Sold 25% Of His Coins". The Merkle. Retrieved 27 April 2016.
  26. ^ "Vitalik Buterin Sold a Quarter of His ETH Tokens". ForkLog Magazine. 26 April 2016. Retrieved 27 April 2016.
  27. ^ Jon, Evans. "Vapor No More: Ethereum Has Launched". techcrunch.com. Retrieved 25 February 2016.
  28. ^ "The great chain of being sure about things". The Economist. 31 October 2015. Retrieved 4 May 2016. All sorts of companies and public bodies suffer from hard-to-maintain and often incompatible databases and the high transaction costs of getting them to talk to each other. This is the problem Ethereum, arguably the most ambitious distributed-ledger project, wants to solve. ... Ethereum's distributed ledger can deal with more data than bitcoin's can. And it comes with a programming language that allows users to write more sophisticated smart contracts, [that among other things] allow the formation of "decentralised autonomous organisations"—virtual companies that are basically just sets of rules running on Ethereum's blockchain.
  29. ^ Peck, M. (28 May 2016). "Ethereum's $150-Million Blockchain-Powered Fund Opens Just as Researchers Call For a Halt". IEEE Spectrum. Institute of Electrical and Electronics Engineers.
  30. ^ a b Allison, Ian (30 March 2014). "Microsoft adds Ethereum language Solidity to Visual Studio". International Business Times. Retrieved 11 May 2016.
  31. ^ a b c d Allison, Ian (25 January 2016). "How are banks actually going to use blockchains and smart contracts?". International Business Times. Retrieved 4 May 2016.
  32. ^ a b Allison, Ian (20 January 2016). "R3 connects 11 banks to distributed ledger using Ethereum and Microsoft Azure". International Business Times. Retrieved 23 February 2016.
  33. ^ "What is Ethereum? • Coin Center". Coin Center. Retrieved 20 March 2016.
  34. ^ Bordet, Julián (21 March 2016). "Decentralized Autonomous Organizations: Ethereum Sparks Up Googles of Tomorrow". The Cointelegraph. Retrieved 21 July 2016.
  35. ^ "Blockchain Prediction Market Augur Enters Beta". Coindesk.com. 14 March 2016. Retrieved 29 May 2016.
  36. ^ a b Prisco, Giulio. "Microsoft Launches Ethereum Blockchain as a Service (EBaaS) at Devcon, Boosts Ethereum". Bitcoin Magazine.
  37. ^ Rennie, Ellie (12 May 2016). "The radical DAO experiment". Swinburne News. Swinburne University of Technology. Retrieved 12 May 2016. When it reaches the end of the funding phase on May 28, it will begin contracting blockchain-based start-ups to create innovative technologies. The extraordinary thing about The DAO is that no single entity owns it, and it has no conventional management structure or board of directors.
  38. ^ a b Allison, Ian (30 April 2016). "Ethereum reinvents companies with launch of The DAO". International Business Times. Retrieved 1 May 2016.
  39. ^ Vigna, Paul (16 May 2016). "Chiefless Company Rakes In More Than $100 Million". The Wall Street Journal. Retrieved 16 May 2016.
  40. ^ Weinglass, Simona (19 August 2015). "Backfeed wants to decentralize the Internet and help you earn what you deserve". Geektime.com. Retrieved 24 March 2016.
  41. ^ "Ethcore Announces Pre-release Of Its Blockchain Technology Suite 'Parity'". EconoTimes. 11 February 2016. Retrieved 24 March 2016.
  42. ^ Allison, Ian (22 December 2015). "Game-changers FreeMyVunk and Digix allow video gamers to trade virtual assets for physical gold". International Business Times. Retrieved 24 March 2016.
  43. ^ Parker (11 February 2016). "Interview with Troy Murray, CEO of The Rudimental". Sebfor.com. Retrieved 24 March 2016.
  44. ^ Rutkin, Aviva (2 March 2016). "Blockchain-based microgrid gives power to consumers in New York". New Scientist. Retrieved 24 March 2016.
  45. ^ Allison, Ian. "Ethereum-based Slock.it reveals first ever lock opened with money". International Business Times UK.
  46. ^ "Decentralized Options Exchange Etheropt Uses Automated Ethereum Smart Contract".
  47. ^ "DigixDAO Token Trading to Launch on Gatecoin". Smith+Crown. 27 April 2016. Retrieved 29 May 2016.
  48. ^ Buntinx, JP (28 April 2016). "DigixDAO DGD Assets To Be Listed on OpenLedger". The Merkle. Retrieved 29 May 2016.
  49. ^ Allison, Ian (4 October 2015). "Imogen Heap shows how smart music contracts work using Ethereum". International Business Times. Retrieved 24 March 2016.
  50. ^ Allison, Ian (3 May 2016). "Deloitte to build Ethereum-based 'digital bank' with New York City's ConsenSys". International Business Times.
  51. ^ "IBM Reveals Proof of Concept for Blockchain-Powered Internet of Things". CoinDesk.
  52. ^ "Hyperledger blockchain code almost comes together for IoT". Rethink Research. Retrieved 23 April 2016.
  53. ^ "UK Government Awards £248k for Ethereum Prototype". CoinDesk.
  54. ^ "Settlement using blockchain to Automate Foreign Exchange in a Regulated environment (SAFER)". Innovate UK.

External links

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