Ethereum

A Next-Generation Smart Contract and Decentralized Application Platform

Satoshi Nakamoto's development of Bitcoin in 2009 has often been hailed as a radical development in money and currency, being the first example of a digital asset which simultaneously has no backing or "intrinsic value" and no centralized issuer or controller. However, another, arguably more important, part of the Bitcoin experiment is the underlying blockchain technology as a tool of distributed consensus, and attention is rapidly starting to shift to this other aspect of Bitcoin. Commonly cited alternative applications of blockchain technology include using on-blockchain digital assets to represent custom currencies and financial instruments ("colored coins"), the ownership of an underlying physical device ("smart property"), non-fungible assets such as domain names ("Namecoin"), as well as more complex applications involving having digital assets being directly controlled by a piece of code implementing arbitrary rules ("smart contracts") or even blockchain-based "decentralized autonomous organizations" (DAOs). What Ethereum intends to provide is a blockchain with a built-in fully fledged Turing-complete programming language that can be used to create "contracts" that can be used to encode arbitrary state transition functions, allowing users to create any of the systems described above, as well as many others that we have not yet imagined, simply by writing up the logic in a few lines of code.

Ethereum

The intent of Ethereum is to create an alternative protocol for building decentralized applications, providing a different set of tradeoffs that we believe will be very useful for a large class of decentralized applications, with particular emphasis on situations where rapid development time, security for small and rarely used applications, and the ability of different applications to very efficiently interact, are important. Ethereum does this by building what is essentially the ultimate abstract foundational layer: a blockchain with a built-in Turing-complete programming language, allowing anyone to write smart contracts and decentralized applications where they can create their own arbitrary rules for ownership, transaction formats and state transition functions. A bare-bones version of Namecoin can be written in two lines of code, and other protocols like currencies and reputation systems can be built in under twenty. Smart contracts, cryptographic "boxes" that contain value and only unlock it if certain conditions are met, can also be built on top of the platform, with vastly more power than that offered by Bitcoin scripting because of the added powers of Turing-completeness, value-awareness, blockchain-awareness and state.

What is Ethereum

If Bitcoin is the floppy disk of blockchain, Ethereum is the CD: it’s an evolution of the technology.

Today, companies own and manage all your data. Photos, records, your notes, everything.

Tomorrow, in Ethereum’s vision for the future, you own that data, thanks to ‘BLOCKCHAIN’ .

How? Through Smart Contracts. These little bits of code allow people to exchange money, property, shares, anything of value without the need for a middleman i.e. those companies that currently own and manage your data.

Who Invented Ethereum?

A Russian/Canadian computer programmer called Vitalik Buterin wrote the white paper Ethereum is based on.

A brief history

• 📝2013 — Vitalik Buterin produces a white paper explaining the concept of Ethereum

• 🗣️January 2014 — Ethereum is publicly announced

• ₿ July 2014 — Ethereum launches an ICO using Bitcoin to buy Ether

• 😭June 2016 — $50 million of Ether was stolen from a crowdsale and Ethereum developers agree to reverse the decision by creating a ‘hard fork’

• 👨‍👩‍👧‍👦March 2017 — a group of companies including Toyota, Samsung, Microsoft, Intel and J.P. Morgan establish Enterprise Ethereum Alliance, a non-profit designed to make Ethereum suitable for big business.

What’s so special about Ethereum?

Ethereum is taking the technology Bitcoin is built on and making it more than just a currency. It allows developers to build apps — they’re called Dapps or ‘distributed apps’ in the Ethereum world — which bundle those smart contracts together into an easy-to-use interface.

How is Ether produced?

In a similar way to how Bitcoin works, miners create Ether by creating blocks and solving puzzles.

Roughly every 15 seconds, a new block is added to the Ethereum blockchain, with the computer or miner that solves the puzzle at the heart of the block being rewarded with Ether.