Ethereum

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Ethereum
ETHEREUM-YOUTUBE-PROFILE-PIC.png
Ethereum
Original author(s) Vitalik Buterin, Gavin Wood
Developer(s) Gavin Wood, Jeffrey Wilcke, Vitalik Buterin, et al.
Initial release 30 July 2015
Operating system Clients available for Linux, Windows, OS X, POSIX
Type Decentralized computing
License Multiple open-source licenses
Website www.ethereum.org

Ethereum is a public blockchain platform with programmable transaction functionality.[1][2] It provides a decentralized virtual machine that can execute peer-to-peer contracts using a cryptocurrency called Ether.

Ethereum was initially proposed by Vitalik Buterin in late 2013 and in 2014 he described it as "A Next-Generation Cryptocurrency and Decentralized Application Platform".[3] Development was funded by a crowd sale in August 2014.[4]

History[edit]

Ethereum was initially described in a white paper by Russian Canadian Vitalik Buterin, a programmer involved with Bitcoin, in late 2013 with a goal of building decentralized applications.[5][6][7] As opposed to other "bitcoin 2.0" projects that were being built on top of the Bitcoin protocol, Ethereum created its own blockchain to provide greater development flexibility by inclusion of a Turing complete programming language.[8] In March 2014, Ethereum was described as being part of a group of projects with the potential to extend blockchain use beyond bitcoin's peer-to-peer money system.[9] While there was early praise for the technical innovations of Ethereum, questions were also raised about its security and scalability.[8] Buterin won the World Technology Award in 2014 for the co-creation and invention of Ethereum.[10]

Initial funding for the Ethereum project was provided by a public crowdsale that occurred in July and August 2014.[4][7]

Ethereum's live blockchain was launched on 30 July 2015.[11] The Ethereum software project was initially developed by a Swiss company, Ethereum Switzerland GmbH (EthSuisse)[12] and a Swiss non-profit foundation, the Ethereum Foundation.[4]

By May 2016, the market capitalization of 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.[13]

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 diverted into a user's account.[14][15] Stephen Tual, COO of Slock.it, the company that had worked on the development of The DAO, proposed a rollback or hard fork of the Ethereum blockchain to reverse the transactions, as did Buterin; Tual and also said that the DAO would be wound up as a result.[14][16]

Ether[edit]

Ether
Currency type Cryptocurrency
 Website www.ethereum.org
Date of introduction 30 July 2015[11]
 Source Genesis block
User(s) Worldwide
Issuance model Disinflation[17][non-primary source needed]
Subunit
 10−3 finney
 10−6 szabo
 10−18 wei
Symbol Ξ[18][non-primary source needed], ETH

The value token of the Ethereum blockchain is called ether. Ether is also used to pay for transaction fees and computational services on the Ethereum network.[19]

It is traded on cryptocurrency exchanges like any other cryptocurrency;[20] Buterin himself sold 25% of his ETH holding in April 2016,[21] describing this diversification as "sound financial planning."[22]

Ether was used as the cryptocurrency for funding The DAO.[23][19]

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.[15]

Smart contracts[edit]

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,[24]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."[19][25]

Smart contracts on a public blockchain mean that bugs, including security holes, are visible to all but cannot be fixed quickly;[26] the 17 June 2016 attack on The DAO was of this sort and could not be quickly stopped.[14]

Programming languages[edit]

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.[27] 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.[27]

Performance[edit]

In Ethereum all smart contracts are stored publicly on every node of the blockchain, which has trade-offs.[28] The downside is that performance issues arise in that every node is calculating all the smart contracts in real time, resulting in slower speeds.[28] Ethereum engineers have been working on sharding the calculations, but no solution is present at this time.[28] As of January 2016, the Ethereum protocol can process 25 transactions per second.[28][dated info]

Uses[edit]

As well as being a cryptocurrency, the Ethereum platform has multiple uses. By March 2016, companies developing for the Ethereum distributed application platform included Microsoft, IBM, and JPMorgan Chase.[19]

In hypothetical uses, higher-level software could utilize Ethereum to establish an online marketplace platform.[4] or in devices that have their permitted uses embedded in them, e.g. in car hire.[29]

Applications[edit]

Ethereum has been used as a platform for decentralized applications, decentralized autonomous organizations and smart contracts.[19] [30] The scope of applications include projects related to finance, the internet-of-things, identity management,[31] farm-to-table produce, electricity sourcing and pricing, and sports betting.[19] Decentralized autonomous organizations may enable a wide range of possible business models that were previously impossible or too costly to run.[32] Notable Ethereum applications include:

  • Augur decentralized, distributed prediction market software.[33]
  • ConsenSys, a blockchain startup focused on Ethereum technology is developing both enterprise software and Dapps.[34]
  • The DAO,[35] with the objective to "provide a new decentralized business model for organizing both commercial and non-profit enterprises".[23][36]
  • Backfeed, socioeconomic platform[37]
  • Ethcore, an Ethereum-based private venture focusing on light clients and Internet of Things (IoT).[38]
  • FreeMyVunk, a gaming value platform.[39]
  • The Rudimental, an equity crowdfunding portal for arts and media.[40]
  • TransActive Grid[41]
  • Slock.It, a system for building smart locks with Ethereum.[42]
  • Etheropt, a decentralized options exchange.[43]
  • Digix[4] A value token, called DigixDAO has also been created and the token began trading on exchanges on 28 April 2016.[44][45]
  • Ujo Music.[46] Imogen Heap used the technology with her single "Tiny Human".[46]

Enterprise software[edit]

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.[47]
  • R3 Project, which connects 11 banks to distributed ledger using a private Ethereum blockchain running on Microsoft Azure.[30]
  • IBM ADEPT, an IoT system using Ethereum for smart contracts support.[48]
  • Microsoft Visual Studio is making the Ethereum Solidity language available to application developers.[49]
  • Ethereum Blockchain As a Service (EBaaS) on Microsoft Azure, which provides enterprise clients and developers with a cloud-based blockchain developer environment.[34]
  • Innovate UK provided 248,000GBP in funding to Tramonex to develop cross border payments prototype using Ethereum.[50][51]

Adoption[edit]

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."[19]

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".[19]

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 tools that "allow them to experience and build with cloud-based blockchain applications, from securities trading to cross-border payments...".[2]

References[edit]

  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 Next-Generation Cryptocurrency and Decentralized Application Platform". Bitcoin Magazine. Retrieved 6 May 2016. 
  4. ^ 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. 
  5. ^ "Out in the Open: Teenage Hacker Transforms Web Into One Giant Bitcoin Network". Wired. 27 January 2014. Retrieved 14 May 2016. 
  6. ^ Antonopoulos, Andreas M. (20 December 2014). "#4. Keys, Addresses, and Wallets". Mastering Bitcoin: Unlocking Digital Cryptocurrencies. O'Reilly Media. p. 82. ISBN 978-1449374044. 
  7. ^ a b Schneider, Nathan (7 April 2014). "Code your own utopia: Meet Ethereum, bitcoin's most ambitious successor". Al Jazeera. Retrieved 21 February 2016. 
  8. ^ 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. 
  9. ^ Kharif, Olga. "Bitcoin 2.0 Shows Technology Evolving Beyond Use as Money". Bloomberg. Retrieved 21 March 2016. 
  10. ^ "The 2014 World Technology Award Winners". World Technology Network. Retrieved 19 November 2014. 
  11. ^ a b Caffyn, Grace (30 July 2015). "Ethereum Launches Long-Awaited Decentralized App Network". CoinDesk. Retrieved 12 April 2016. 
  12. ^ Schmid, Valentin (10 May 2014). "The Entrepreneur: Joe Lubin, COO of Ethereum". Epoch Times. Retrieved 31 March 2016. 
  13. ^ Lee, Timothy B. (24 May 2016). "Ethereum, explained: why Bitcoin's stranger cousin is now worth $1 billion". Vox. Retrieved 25 May 2016. 
  14. ^ a b c Popper, Nathaniel (17 June 2016). "Hacker May Have Taken $50 Million From Cybercurrency Project". The New York Times. 
  15. ^ a b Price, Rob (17 June 2016). "Digital currency Ethereum is cratering amid claims of a $50 million hack". Business Insider. 
  16. ^ Catalin Cimpanu for Softpedia June 18, 2016 "DAO Ether Trading Platform to Shut Down Following Ongoing Cyber-Heist...DAO creator says platform is shutting down'
  17. ^ "The Issuance Model in Ethereum". Ethereum Blog. 
  18. ^ "The symbol for Ether is...". Ethereum Forum. 7 June 2014. Retrieved 14 August 2014. 
  19. ^ 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
  20. ^ Sier, Jessica (11 February 2016). "Bitcoin rival Ethereum's price skyrockets". Australian Financial Review. Retrieved 22 February 2016. 
  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. ^ a b Allison, Ian (30 April 2016). "Ethereum reinvents companies with launch of The DAO". International Business Times. Retrieved 1 May 2016. 
  24. ^ Jon, Evans. "Vapor No More: Ethereum Has Launched". techcrunch.com. Retrieved 25 February 2016. 
  25. ^ "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. 
  26. ^ 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. 
  27. ^ a b Allison, Ian (30 March 2014). "Microsoft adds Ethereum language Solidity to Visual Studio". International Business Times. Retrieved 11 May 2016. 
  28. ^ 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. 
  29. ^ "The great chain of being sure about things". The Economist. 31 October 2015. 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. ^ "What is Ethereum? • Coin Center". Coin Center. Retrieved 20 March 2016. 
  32. ^ "Decentralized Autonomous Organizations: Ethereum Sparks Up Googles of Tomorrow". 
  33. ^ "Blockchain Prediction Market Augur Enters Beta". Coindesk.com. 14 March 2016. Retrieved 29 May 2016. 
  34. ^ a b Prisco, Giulio. "Microsoft Launches Ethereum Blockchain as a Service (EBaaS) at Devcon, Boosts Ethereum". Bitcoin Magazine. 
  35. ^ 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. 
  36. ^ Vigna, Paul (16 May 2016). "Chiefless Company Rakes In More Than $100 Million". The Wall Street Journal. Retrieved 16 May 2016. 
  37. ^ Weinglass, Simona (19 August 2015). "Backfeed wants to decentralize the Internet and help you earn what you deserve". Geektime.com. Retrieved 24 March 2016. 
  38. ^ "Ethcore Announces Pre-release Of Its Blockchain Technology Suite ‘Parity’". EconoTimes. 11 February 2016. Retrieved 24 March 2016. 
  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. ^ a b 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. ^ "IBM Reveals Proof of Concept for Blockchain-Powered Internet of Things". CoinDesk. 
  49. ^ "Hyperledger blockchain code almost comes together for IoT". Rethink Research. Retrieved 23 April 2016. 
  50. ^ "UK Government Awards £248k for Ethereum Prototype". CoinDesk. 
  51. ^ "Settlement using blockchain to Automate Foreign Exchange in a Regulated environment (SAFER)". Innovate UK. 

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