Ethereum

Ethereum

Ethereum
Original author(s) Vitalik Buterin, Gavin Wood
Developer(s) Gavin Wood, Jeffrey Wilcke, Vitalik Buterin, et al.
Written in C++, Go, JavaScript, Python, Java, node.js, Haskell
Operating system Linux, Windows, OS X, POSIX compliant
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 crypto asset called Ether (unofficial code ETH).[3]

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".[4] Development was funded by a crowd sale in August 2014,[5] and the genesis block, marking the initial pre-beta live release of the Ethereum project, occurred on 30 July 2015.[6][7] The Ethereum software project was initially developed by a Swiss company, Ethereum Switzerland GmbH (EthSuisse)[8] and a Swiss non-profit foundation, the Ethereum Foundation.[5]

History

Ethereum was initially described in a white paper by Russian Canadian Vitalik Buterin, a programmer and writer involved with Bitcoin, in late 2013 with a goal of building decentralized applications.[7][9][10] 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.[11] 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.[12] While there was early praise for the technical innovations of Ethereum, questions were also raised about its security and scalability.[11] Buterin won the World Technology Award in 2014 for the co-creation and invention of Ethereum.[13]

Initial funding for the Ethereum project was provided by a public crowdsale that occurred in July and August 2014.[5][6][10] This crowdsale netted 31,529 bitcoins, worth approximately $18.5 million at the time, and in exchange 60,102,216 ether were later distributed to crowdsale participants.[14] Since the funding was raised in bitcoin, the project faced early financial difficulties after the value of bitcoin plunged shortly after the completion of the crowdsale.[15]

Ethereum's live blockchain was launched on 30 July 2015.[16]

Ether

Ether
Currency type Cryptocurrency
 Website www.ethereum.org
Date of introduction 30 July 2015[16]
 Source Genesis block
User(s) Worldwide
Issuance model Disinflation[17]
Subunit
 10−3 finney
 10−6 szabo
 10−18 wei
Symbol Ξ[18], ETH

The token unit of the Ethereum platform is called ether. It is traded on cryptocurrency exchanges like any other cryptocurrency;[19] Buterin himself sold 25% of his ETH holding in April 2016,[20] describing this diversification as "sound financial planning."[21] Ether is used to pay for computational services on the Ethereum network.

Ether is mined by proof-of-work,[22] with plans to move to a proof-of-stake[23] system called Casper.[24] Block rewards are constant over time, plus the transaction fees.[22] Even though that means the number of ether are unlimited with time, the annual inflation will tend to zero.

Ethereum System

Ethereum relies on a blockchain: a continuously-growing list of transaction records cryptographically authenticated against revision, a copy distributed to all participants. Ethererum also stores smart contracts in the blockchain that it can act upon. Ethereum thus operates as a large distributed computer, executing programs on thousands of nodes located around the world.

Smart Contracts

Smart contracts are computer protocols that 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 languages, compiled into bytecode for the Ethereum Virtual Machine (EVM) before being deployed to the blockchain.[25] :286–287The virtual machine's state updates can be written in a Turing complete scripting language.[26] The Ethereum system has been described 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."[27]

Gas

The platform uses a mechanism called gas to limit contracts that might take a long time to run, charging a certain amount of ether per computation.[25]:288 Computation on the EVM is "very expensive" because every contract is run on every full Ethereum node, resulting in the consensus of the output.

Smart contracts on the blockchain

Organizations suffer from hard-to-maintain and often incompatible databases and the high transaction costs of getting them to talk to each other. Ethereum proposes to solve this problem through adding a programming language that allows users to write more sophisticated smart contracts, which essentially are a set of rules running on the blockchain.[28] Buterin said "Ethereum aims to be a superior foundational protocol, and allow other decentralized applications to build on top of it."[29]

In Ethereum all smart contracts are stored publicly on every node of the blockchain, which has trade-offs.[30] On one hand it provides the opportunity for public applications to be run in an transparent fashion, with their pure machine instructions available for anyone to read on every node.[31] As the instructions are hosted and executable on the blockchain, none of the involved parties can control or moderate the smart contract during the contract or after its terms have come to pass.[32] This is referred to as Open Execution.[33] Smart contracts operating on a public blockchain could allow organizations to cooperate without the need to trust each other. For example, a company could create invoices that automatically execute payment when a shipment arrives or share certificates which automatically send their owners dividends if profits reach a certain level.[34]

The downside is that performance issues arise in that every node is calculating all of the smart contracts in real time, resulting in slower speeds and redundant processing.[35] Ethereum engineers have been working on sharding the calculations, but no solution is present at this time.[36] Presently the Ethereum system can only process 25 transactions per second.[37]

Blockchain explorers such as Etherchain.org[38] or Ether.Camp[39][40] show contracts and their status.

Implementations

The following full-node client implementations of Ethereum are available:

Uses

The Ethereum platform has multiple uses other than the Ether cryptocurrency. Distributed Autonomous Organizations have used the Ethereum platform to raise funds and enable voting. By March 2016, companies developing for the Ethereum distributed application platform included Microsoft, IBM, and JPMorgan Chase.[27]

In hypothetical uses, higher-level software could theoretically utilize Ethereum to establish an online marketplace platform.[5] Ethereum may be suitable for implementing many different types of contracts, such as security protocol logic[25]:288 or financial derivatives.

Applications

Ethereum has been used as a platform for decentralized applications, decentralized autonomous organizations and smart contracts.[27][50] The scope of applications include projects related to finance, the internet-of-things, identity management,[51] farm-to-table produce, electricity sourcing and pricing, and sports betting.[27] Decentralized autonomous organizations may enable a wide range of possible business models that were previously impossible or too costly to run.[52] Notable Ethereum applications include:


Enterprise software

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

Cryptocurrency

Ether (ETH) can also be used in itself as a cryptocurrency, in a manner similar to Bitcoin, although it is less widely accepted. For example Augur (software) accepted ETH in its crowdfunding campaign, raising more than US $5 million in 45 days (Over 18,000 BTC and 1.1 Million Ether).[70]

Adoption challenges

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. Thus far, Ethereum has faced much less testing, and many fewer attacks, than Bitcoin."[27]

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. ↑ 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. ↑ "What's the Big Idea Behind Ethereum's World Computer? – CoinDesk". CoinDesk. Retrieved 2016-03-20.
  4. ↑ "A Next-Generation Cryptocurrency and Decentralized Application Platform". Bitcoin Magazine. Retrieved 2016-05-06.
  5. 1 2 3 4 5 Aitken, Roger (2016-04-23). "Digital Gold 'Done Right' With DigixDAO Crypto-Trading On OpenLedger". Forbes. Retrieved 2016-04-28.
  6. 1 2 "Ethereum Launches". Ethereum Blog. Retrieved 2016-03-21.
  7. 1 2 "Ethereum Launches Long-Awaited Decentralized App Network". CoinDesk. Retrieved 2016-03-21.
  8. ↑ Schmid, Valentin (2014-05-10). "The Entrepreneur: Joe Lubin, COO of Ethereum". Epoch Times. Retrieved 2016-03-31.
  9. ↑ Antonopoulos, Andreas M. (December 20, 2014). "#4. Keys, Addresses, and Wallets". Mastering Bitcoin: Unlocking Digital Cryptocurrencies. O'Reilly Media. p. 82. ISBN 978-1449374044.
  10. 1 2 Schneider, Nathan (7 April 2014). "Code your own utopia: Meet Ethereum, bitcoin's most ambitious successor". Al Jazeera America. Al Jazeera Media Network. Retrieved 21 February 2016.
  11. 1 2 Finley, Klint (27 January 2014). "Out in the Open: Teenage Hacker Transforms Web Into One Giant Bitcoin Network". Wired. Condé Nast. Retrieved 21 March 2016.
  12. ↑ 2014-03-28T04:01:00Z, Olga Kharif-. "Bitcoin 2.0 Shows Technology Evolving Beyond Use as Money". Bloomberg. Retrieved 2016-03-21.
  13. ↑ "The 2014 World Technology Award Winners". World Technology Network. World Technology Network. Retrieved 19 November 2014.
  14. ↑ "Crypto 2.0 Roundup: Block Chain Bloat, Ethereum Completes Presale and a Crypto Football Team". CoinDesk. Retrieved 2015-11-13.
  15. ↑ "Ethereum Creator Discloses $9 Million Funding Shortfall". CoinDesk. Retrieved 2016-03-21.
  16. 1 2 Caffyn, Grace (30 July 2015). "Ethereum Launches Long-Awaited Decentralized App Network". CoinDesk. Retrieved 12 April 2016.
  17. ↑ "The Issuance Model in Ethereum". Ethereum Blog.
  18. ↑ "The symbol for Ether is...". Ethereum Forum. 7 June 2014. Retrieved August 14, 2014.
  19. ↑ Sier, Jessica (11 February 2016). "Bitcoin rival Ethereum's price skyrockets". Australian Financial Review. Retrieved 22 February 2016.
  20. ↑ Buntinx, JP (23 April 2016). "Ethereum Developer Vitalik Buterin Sold 25% Of His Coins". The Merkle. Retrieved 27 April 2016.
  21. ↑ "Vitalik Buterin Sold a Quarter of His ETH Tokens". ForkLog Magazine. 26 April 2016. Retrieved 27 April 2016.
  22. 1 2 Buterin, Vitalik (2014-01-23). "Ethereum: A Next-Generation Cryptocurrency and Decentralized Application Platform". Bitcoin Magazine. Retrieved 9 April 2014.
  23. ↑ Demartino, Ian (26 October 2015). "Vitalik Buterin Speaks About the Ethereum Foundation, Proof-of-Stake and More". Retrieved 13 March 2016.
  24. ↑ Allison, Ian (25 February 2016). "Blockchain experts provide contrasts and predictions on consensus protocols". International Business Times. Retrieved 22 March 2016.
  25. 1 2 3 Narayanan, Arvind; Bonneau, Joseph; Felten, Edward; Miller, Andrew; Goldfeder, Steven (9 February 2016). "Bitcoin and Cryptocurrency Technologies" (PDF). cloudfront.net (Textbook draft). Retrieved 23 February 2016.
  26. ↑ Jon, Evans. "Vapor No More: Ethereum Has Launched". www.techcrunch.com. Retrieved 25 February 2016.
  27. 1 2 3 4 5 Popper, Nathaniel (2016-03-27). "Ethereum, a Virtual Currency, Enables Transactions That Rival Bitcoin’s". New York Times. Retrieved 2016-04-01.
  28. ↑ "The great chain of being sure about things". The Economist. 2015-10-31. Retrieved 2016-05-04.
  29. ↑ Buterin, Vitalik (2014-01-24). "Ethereum: A Next-Generation Cryptocurrency and Decentralized Application Platform". Bitcoin Magazine. Retrieved 2016-05-04.
  30. ↑ Allison, Ian (2016-01-25). "How are banks actually going to use blockchains and smart contracts?". International Business Times. Retrieved 2016-05-04.
  31. ↑ "A Strategy for Contract Transparency in Ethereum".
  32. ↑ DeRose, Chris (2016-03-13). "Bitcoin and Public Blockchains Will Power the Smart Contracts Revolution". CoinDesk. Retrieved 2016-05-04.
  33. ↑ Carver, Jason (2016-04-06). "How "Open Execution" will replace Open Source". LinkedIn. Retrieved 2016-05-04.
  34. ↑ "The great chain of being sure about things". The Economist. 2015-10-31. Retrieved 2016-05-04.
  35. ↑ Allison, Ian (2016-01-25). "How are banks actually going to use blockchains and smart contracts?". International Business Times. Retrieved 2016-05-04.
  36. ↑ Allison, Ian (2016-01-25). "How are banks actually going to use blockchains and smart contracts?". International Business Times. Retrieved 2016-05-04.
  37. ↑ Allison, Ian (2016-01-25). "How are banks actually going to use blockchains and smart contracts?". International Business Times. Retrieved 2016-05-04.
  38. ↑ etherchain.org. "Tools – etherchain.org – The ethereum blockchain explorer". etherchain.org. Retrieved 2016-03-21.
  39. ↑ "Microsoft To Unveil Ethereum Blockchain-As-A-Service Next Month". EconoTimes. 29 October 2015. Retrieved 22 March 2016.
  40. ↑ Maras, Elliot (14 March 2016). "Ether.camp Develops Hybrid Bitcoin/Ethereum ATM". CryptoCoinsNews. Retrieved 22 March 2016.
  41. 1 2 3 4 5 6 7 http://www.ethdocs.org/en/latest/ethereum-clients/index.html
  42. ↑ "Press – Ethcore". ethcore.io.
  43. ↑ "Ethereum Venture Company Releases its Flagship Blockchain Suite". forklog.net. Retrieved 5 April 2016.
  44. ↑ Roman Mandeleil. "Ethereum J". ethereumj.io.
  45. ↑ "Ethereum(J) — Ethereum Homestead 0.1 documentation". readthedocs.org. Retrieved 5 April 2016.
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  47. ↑ "ethereumjs". ethereumjs.github.io.
  48. ↑ jamshidh. "GitHub – jamshidh/ethereum-client-haskell". GitHub. Retrieved 5 April 2016.
  49. ↑ janx. "GitHub – janx/ruby-ethereum: A Ruby implementation of Ethereum.". GitHub.
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  51. ↑ "What is Ethereum? • Coin Center". Coin Center. Retrieved 2016-03-20.
  52. ↑ "Decentralized Autonomous Organizations: Ethereum Sparks Up Googles of Tomorrow".
  53. ↑ http://www.coindesk.com/augur-beta/
  54. 1 2 Giulio Prisco. "Microsoft Launches Ethereum Blockchain as a Service (EBaaS) at Devcon, Boosts Ethereum". Bitcoin Magazine.
  55. ↑ Rutkin, Aviva (2 March 2016). "Blockchain-based microgrid gives power to consumers in New York". New Scientist. Reed Business Information. Retrieved 24 March 2016.
  56. 1 2 Allison, Ian (4 October 2015). "Imogen Heap shows how smart music contracts work using Ethereum". International Business Times. Retrieved 24 March 2016.
  57. ↑ Weinglass, Simona (19 August 2015). "Backfeed wants to decentralize the Internet and help you earn what you deserve". Geektime.com. Retrieved 24 March 2016.
  58. ↑ "Ethcore Announces Pre-release Of Its Blockchain Technology Suite ‘Parity’". EconoTimes. 11 February 2016. Retrieved 24 March 2016.
  59. ↑ 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.
  60. ↑ Parker (11 February 2016). "Interview with Troy Murray, CEO of The Rudimental". Sebfor.com. Retrieved 24 March 2016.
  61. ↑ Ian Allison. "Ethereum-based Slock.it reveals first ever lock opened with money". International Business Times UK.
  62. ↑ "Decentralized Options Exchange Etheropt Uses Automated Ethereum Smart Contract".
  63. ↑ http://www.smithandcrown.com/slock-it-and-digixdao-token-sales-launch-on-gatecoin/
  64. ↑ http://themerkle.com/digixdao-dgd-assets-to-be-listed-on-openledger/
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  66. ↑ Ian Allison (2016-05-03). "Deloitte to build Ethereum-based 'digital bank' with New York City's ConsenSys". International Business Times.
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  68. ↑ "IBM Reveals Proof of Concept for Blockchain-Powered Internet of Things". CoinDesk.
  69. ↑ http://rethink-iot.com/2016/04/01/hyperledger-blockchain-code-almost-comes-together-for-iot/, accessed 23 April 2016.
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