Ethereum

From Wikipedia, the free encyclopedia

This is an old revision of this page, as edited by Earl King Jr. (talk | contribs) at 05:17, 7 September 2016 (You must cease article ownership and lack of regard for talk page discussion regarding sources and board judgement regarding poor sourciUndid revision 738145673 by Ladislav Mecir (talk)). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

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] 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.[2]

History

Origin

Ethereum was initially described in a white paper by Vitalik Buterin,[3] a programmer involved with Bitcoin, in late 2013 with a goal of building decentralized applications.[4][5] More specifically, Buterin "had argued to the bitcoin core developers that the platform needed a more robust scripting language for developing applications." Failing to gain agreement, he proposed development of a new platform with a more general scripting language.[6]: 88  Buterin, believes that many applications could benefit from Bitcoin-like software.[4]

The Ethereum software project was initially developed in early 2014 by a Swiss company, Ethereum Switzerland GmbH (EthSuisse).[7][8] Subsequently, a Swiss non-profit foundation, the Ethereum Foundation (Stiftung Ethereum) was set up as well.[2] Development was funded by an online a public crowdsale during July–August 2014, with the participants buying the Ethereum value token (ether) with another digital currency, bitcoin.[2]

Ethereum has many characteristics of earlier blockchains like bitcoin in that it uses a value token to motivate a "network of peers to validate transactions, secure the network, and achieve consensus about what exists and what has occurred. But unlike bitcoin it contains some powerful tools to help developers and others create software services [using] a more robust scripting language for developing applications."[9]

While there was early praise for the technical innovations of Ethereum, questions were also raised about its security and scalability.[4]

Launch

Ethereum's live blockchain was launched on 30 July 2015.[10][9]

The initial version of Ethereum—called "Frontier"—uses a proof of work consensus algorithm, although a later version is expected to replace that with a proof of stake algorithm.[6]: 32 

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.[11]

The DAO and the blockchain fork

In June 2016, The DAO, a platform for the autonomous governance of investment capital, was found to contain an unexpected code path which would allow any sophisticated user to withdraw an arbitrary amount of funds from the DAO. This was indeed exploited by an unknown party on the 16th of June, who managed to move about one third of the Ether held then by the DAO (at the time valued at 50 million USD) into a clone of the DAO, a “ChildDAO” whose control was held by only this party.[12][13] As a consequence of the way the DAO was programmed, these moved funds would remain unavailable for withdrawal for about a month.[14]

The Ethereum community debated how and whether to reclaim the ether, and whether to shut down The DAO,[14] 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.[13] After a few weeks' discussion, The DAO was shut down, and Ethereum hard-forked (a backward-incompatible change[15]) to reverse the hack and return The DAO funds, with some controversy.[16] This was the first fork of any mainstream blockchain to be for the purpose of making reparations to investors in a failed enterprise.[15]

Ether

Ether
Demographics
Date of introduction30 July 2015 (genesis block)[17]
User(s)Worldwide
Issuance
Currency typeCryptocurrency
Valuation
Issuance modelDisinflation[18][non-primary source needed]

The value token of the Ethereum blockchain is called ether. It is traded on cryptocurrency exchanges like any other cryptocurrency;[19] it is also used to pay for transaction fees and computational services on the Ethereum network.[20]

Controversially, Buterin sold 25% of his ether holding in April 2016,[21] 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." [22]

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.[13]

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. Ethereum contracts can be implemented in various Turing complete scripting languages.[23] 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."[20][24]

Contracts on the public blockchain

Smart contracts on a public blockchain mean that bugs, including security holes, are visible to all but cannot be fixed quickly;[25] the 17 June 2016 attack on The DAO was of this sort and could not be quickly stopped or reversed,[12] the buggy contract only being fixed by a controversial hardfork to restore the hack transaction on the Ethereum blockchain.[16]

There is ongoing research on how to use formal verification to express and prove non-trivial properties. A Microsoft Research report notes that writing solid smart contracts can be extremely difficult in practice, using The DAO hack to illustrate this problem. They develop some tools for verifying contract and note that a large scale analysis of published contracts is likely to uncover widespread vulnerabilities.[26] Also stated in the paper, given a Solidity program and allegedly functionally equivalent EVM bytecode, it is possible to verify their equivalence.

Programming languages

Main article: Solidity

The Ethereum Virtual Machine (EVM) works on a protocol defined in the Ethereum Yellow Paper by Gavin Wood.[27] 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.[28] 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.[28]

Performance

In Ethereum all smart contracts are stored publicly on every node of the blockchain, which has trade-offs.[29] The downside is that performance issues arise in that every node is calculating all the smart contracts in real time, resulting in slower speeds.[29] Ethereum engineers have been working on sharding the calculations, but no solution is present at this time.[29] As of January 2016, the Ethereum protocol could process 25 transactions per second.[29][needs update]

Uses

The Ethereum platform has multiple proposed uses concerning smart contracts, but it is mostly used for its cryptocurrency. Previously-established interested parties included Microsoft, IBM, and JPMorgan Chase.[20]

Higher-level software can utilize Ethereum to establish an online marketplace platform.[2]

Applications

Ethereum is used as a platform for decentralized applications, decentralized autonomous organizations and smart contracts, with "dozens of functioning applications built" on it by March 2016 according to the New York Times.[20][30] The intended scope of applications include projects related to finance, the internet-of-things, farm-to-table produce, electricity sourcing and pricing, and sports betting.[20] Decentralized autonomous organizations may enable a wide range of possible business models that were previously impossible or too costly to run.[31] Notable Ethereum applications include:

  • Decentralized investment funding: The DAO[32] with the objective to "provide a new decentralized business model for organizing both commercial and non-profit enterprises".[33][34] The DAO was funded with Ether.[20][33]
  • Socioeconomic platform: Backfeed[35]
  • Internet of Things (IoT): Light clients by Ethcore, an Ethereum-based private venture.[36] Chronicled has introduced an Ethereum blockchain-based physical asset verification platform. Chip companies, physical IP creators and manufacturers authenticate embedded Bluetooth low energy and Near field communication chips.[37] First product is shoes with a smart tag.[38]
  • Gaming value platform: FreeMyVunk.[39]
  • Equity crowdfunding portal for arts and media: The Rudimental.[40]
  • Energy market: TransActive Grid enable people to buy and sell renewable energy to their neighbors[41]
  • Smart locks: Slock.It,[42] who also built The DAO.[14]
  • Decentralized options exchange: Etheropt.[43]
  • Value token pegged to gold: DigixDAO, by Digix.[2] The token began trading on exchanges on 28 April 2016.[44][45]
  • Releasing music as a digital contract: Imogen Heap, Ujo Music, used the technology with her single "Tiny Human".[46]

Enterprise software

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

  • Deloitte and ConsenSys announced plans in 2016 to create a digital bank called Project ConsenSys.[47]
  • R3 Project, which connects 11 banks to distributed ledger using a private Ethereum blockchain running on Microsoft Azure.[30]
  • Microsoft Visual Studio is making the Ethereum Solidity language available to application developers.[48]
  • Ethereum Blockchain As a Service (EBaaS), on Microsoft Azure, which provides enterprise clients and developers with a cloud-based blockchain developer environment.[49]

/projects?ref=720735|title=Settlement using blockchain to Automate Foreign Exchange in a Regulated environment (SAFER)|work=Innovate UK}}</ref>

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."[20]

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".[20]

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".[1]

Ethereum Classic

As of 11 August 2016, both Ethers are actively traded.[50]

References

  1. ^ 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.
  2. ^ 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.
  3. ^ https://github.com/ethereum/wiki/wiki/White-Paper
  4. ^ a b c Finley, Klint (27 January 2014). "Out in the Open: Teenage Hacker Transforms Web Into One Giant Bitcoin Network". Wired. Retrieved 21 March 2016.
  5. ^ Schneider, Nathan (7 April 2014). "Code your own utopia: Meet Ethereum, bitcoin's most ambitious successor". Al Jazeera. Retrieved 21 February 2016.
  6. ^ a b Tapscott, Don; Tapscott, Alex (May 2016). The Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World. ISBN 978-0670069972. {{cite book}}: |access-date= requires |url= (help)
  7. ^ Schmid, Valentin (10 May 2014). "The Entrepreneur: Joe Lubin, COO of Ethereum". Epoch Times. Retrieved 31 March 2016.
  8. ^ "Company Overview of Ethereum Switzerland GmbH". Bloomberg. 20 August 2016. Retrieved 20 August 2016. The company was founded in 2014 and is based in Baar, Switzerland. {{cite web}}: Check |archiveurl= value (help); Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  9. ^ a b Tapscott, Don; Tapscott, Alex (May 2016). The Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World. p. 87. ISBN 978-0670069972. July 30, 2015, ... Ethereum ... went live. ... Ethereum is like bitcoin in that its ether motivates a network of peers to validate transactions, secure the network, and achieve consensus about what exists and what has occurred. But unlike bitcoin it contains some powerful tools to help developers and others create software services ranging from decentralized games to stock exchanges. ... a more robust scripting language for developing applications. {{cite book}}: |access-date= requires |url= (help)
  10. ^ http://www.nytimes.com/2016/03/28/business/dealbook/ethereum-a-virtual-currency-enables-transactions-that-rival-bitcoins.html?_r=0 Retrieved September-2-2016
  11. ^ Lee, Timothy B. (24 May 2016). "Ethereum, explained: why Bitcoin's stranger cousin is now worth $1 billion". Vox. Retrieved 25 May 2016.
  12. ^ a b Popper, Nathaniel (17 June 2016). "Hacker May Have Taken $50 Million From Cybercurrency Project". The New York Times.
  13. ^ a b c Price, Rob (17 June 2016). "Digital currency Ethereum is cratering amid claims of a $50 million hack". Business Insider.
  14. ^ a b c Klint Finley for Wired. June 18, 2016 A $50 Million Hack Just Showed That The Dao Was All Too Human
  15. ^ 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.
  16. ^ 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.
  17. ^ Caffyn, Grace (30 July 2015). "Ethereum Launches Long-Awaited Decentralized App Network". CoinDesk. Retrieved 12 April 2016.
  18. ^ "The Issuance Model in Ethereum". Ethereum Blog.
  19. ^ Sier, Jessica (11 February 2016). "Bitcoin rival Ethereum's price skyrockets". Australian Financial Review. Retrieved 22 February 2016.
  20. ^ 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
  21. ^ Buntinx, JP (23 April 2016). "Ethereum Developer Vitalik Buterin Sold 25% Of His Coins". The Merkle. Retrieved 27 April 2016.
  22. ^ "Vitalik Buterin Sold a Quarter of His ETH Tokens". ForkLog Magazine. 26 April 2016. Retrieved 27 April 2016.
  23. ^ Jon, Evans. "Vapor No More: Ethereum Has Launched". techcrunch.com. Retrieved 25 February 2016.
  24. ^ "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.
  25. ^ 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.
  26. ^ "Short Paper: Formal Verification of Smart Contracts" (PDF). http://research.microsoft.com/. Microsoft. Retrieved 25 August 2016. {{cite web}}: External link in |website= (help)
  27. ^ Ethereum Yellow Paper by Gavin Wood
  28. ^ a b Allison, Ian (30 March 2016). "Microsoft adds Ethereum language Solidity to Visual Studio". International Business Times. Retrieved 11 May 2016.
  29. ^ 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.
  30. ^ 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.
  31. ^ Bordet, Julián (21 March 2016). "Decentralized Autonomous Organizations: Ethereum Sparks Up Googles of Tomorrow". The Cointelegraph. Retrieved 21 July 2016.
  32. ^ 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.
  33. ^ a b Allison, Ian (30 April 2016). "Ethereum reinvents companies with launch of The DAO". International Business Times. Retrieved 1 May 2016.
  34. ^ Vigna, Paul (16 May 2016). "Chiefless Company Rakes In More Than $100 Million". The Wall Street Journal. Retrieved 16 May 2016.
  35. ^ Weinglass, Simona (19 August 2015). "Backfeed wants to decentralize the Internet and help you earn what you deserve". Geektime.com. Retrieved 24 March 2016.
  36. ^ "Ethcore Announces Pre-release Of Its Blockchain Technology Suite 'Parity'". EconoTimes. 11 February 2016. Retrieved 24 March 2016.
  37. ^ Young, Joseph. "Chronicled Introduces New Ethereum-Powered IoT Open Registry". Nasdaq.
  38. ^ "MAJOR RELEASES THE PERFECT REEBOK PHASE 1 FOR THE 4TH OF JULY". SBD. http://sneakerbardetroit.com/. {{cite web}}: External link in |publisher= (help)
  39. ^ 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.
  40. ^ Parker (11 February 2016). "Interview with Troy Murray, CEO of The Rudimental". Sebfor.com. Retrieved 24 March 2016.
  41. ^ Rutkin, Aviva (2 March 2016). "Blockchain-based microgrid gives power to consumers in New York". New Scientist. Retrieved 24 March 2016.
  42. ^ Allison, Ian. "Ethereum-based Slock.it reveals first ever lock opened with money". International Business Times UK.
  43. ^ "Decentralized Options Exchange Etheropt Uses Automated Ethereum Smart Contract".
  44. ^ "DigixDAO Token Trading to Launch on Gatecoin". Smith+Crown. 27 April 2016. Retrieved 29 May 2016.
  45. ^ Buntinx, JP (28 April 2016). "DigixDAO DGD Assets To Be Listed on OpenLedger". The Merkle. Retrieved 29 May 2016.
  46. ^ Allison, Ian (4 October 2015). "Imogen Heap shows how smart music contracts work using Ethereum". International Business Times. Retrieved 24 March 2016.
  47. ^ Allison, Ian (3 May 2016). "Deloitte to build Ethereum-based 'digital bank' with New York City's ConsenSys". International Business Times.
  48. ^ "Hyperledger blockchain code almost comes together for IoT". Rethink Research. Retrieved 23 April 2016.
  49. ^ Prisco, Giulio. "Microsoft Launches Ethereum Blockchain as a Service (EBaaS) at Devcon, Boosts Ethereum". Bitcoin Magazine.
  50. ^ Vigna, Paul (1 August 2016). "The Great Digital-Currency Debate: 'New' Ethereum Vs. Ethereum 'Classic'". The Wall Street Journal: Moneybeat. Retrieved 4 August 2016.

External links

Retrieved from "https://en.wikipedia.org/w/index.php?title=Ethereum&oldid=738146070"