The Ultimate Guide: All You Need To Know About Ethereum

0

With more than 1300 cryptocurrencies out there in the crypto world, Ethereum is one of the top cryptocurrencies that stays up on the pile with Bitcoin.

Similar to Bitcoin, it is a distributed blockchain network, can be traded among the users, but there are significant differences between the two.

Bitcoin makes use of blockchain and aims at becoming an effective peer to peer electronic cash system. While Ethereum just focuses on running the programming code of the application. Moreover, in the Ethereum blockchain system, the miners work to earn Ether that is used by the various application developers to pay for the services on Ethereum network.

The other benefits of Ethereum as a decentralized platform includes- it is immutable as the third party cannot make any changes to the data. With no central point of failure, it is also well-protected against hacks and other fraudulent activities. Moreover, the internet regulatory organizations or the governments cannot take down any data as it is scattered all over the network.

So Ethereum is a blockchain application, but for a completely different purpose.

But What Is Ethereum?

What is Ethereum?

Image Credits: Ethereum

Ethereum is a public, open-source operating system, and a decentralized platform that runs smart contract functionality. It is also a network of computers that are running on the Ethereum blockchain and allow people to exchange coins.

At its simplest, it is an open software platform based on the blockchain technology that allows the developers to make and deploy the (Dapps) decentralized applications.

What Is A Smart Contract?

The Ethereum platform is built to allow the creation of smart contracts through a peer to peer network.

Smart contract is a phrase to describe a computer code that is used by the developers to program their own functionalities. They are known as the high-level programming scripts that can be written in Serpent, LLL, or Solidity.

When operating on Blockchain, a smart contract is just like a self-operating computer that has an automatic execution when specific conditions are met.

ERC20– Ethereum Request For Comments

Ethereum Decentrlized Applications

Image Credit: Ethereum

ERC20 is a standard protocol that is used for the smart contracts on the Ethereum’s blockchain for implementation of the tokens. Established on November’19, 2015, it defines a list of rules for the Ethereum tokens to allow the developers to predict the interaction between the tokens. It also includes that how the tokens should be transferred between the address and how within should be accessed.

It is also quite popular with the crowdfunding companies who work on ICO’s due to its simple deployment procedure and its high potential for interoperability with other ETH tokens.

As of May 2018, there are more than 83,400 ERC20 token contracts, and the successful ones include Bancor, Bankex, Qash that are raising over $70 million each.

What is Ether?

Ether is a cryptocurrency whose blockchain is generated by the Ethereum platform. It is known as a digital bearer asset and does not require a third party process the payment. However, it does not act only as a cryptocurrency. Instead, it also acts for the decentralized apps within the network.

As of January 2018, the total supply of Ether was 98 million, and at least 150 stores have started accepting it.

How Does Ethereum Works?

Ethereum is based on Bitcoin’s protocol and its blockchain design. The Ethereum blockchain can be considered as a transaction based state machine. As the execution of transaction starts, the machine simply transitions into another state.

Now every state of Ethereum consists of millions of transactions. These transactions are grouped into the form of blocks that are connected together to other blocks. But before the transaction is added to the ledger, it needs to be validated through a process known as mining. A lot of miners compete with each other in order to create a block. Once the miner creates a block, Ether tokens are generated and are given to the miner.  To learn more read our review, Does Ethereum work?

EVM- Ethereum Virtual Machine

Before Ethereum was created, the blockchain applications were designed to perform a limited set of operations.

Then came up the Ethereum’s innovation-EVM!

Ethereum Virtual Machine is Turing complete software that acts as the runtime environment for smart contracts.

It enables anyone to run the program, irrespective of the memory and time are given by a specific program language. So instead of building a new blockchain network for applications, ETH allows you develop thousands of different applications on one platform. And since every Ethereum node runs on this virtual machine, applications can simply work as decentralized without having to make their own blockchain.

Moreover, Ethereum Virtual Machine has also been implemented for Java, Go, Python, Ruby, JavaScript, C++, WebAssembly, and Rust.

Ethereum Blockchain Applications- DApps (Decentralized Applications)

Well, decentralized applications serve the similar purpose as that of applications, but as they are decentralized — they run on a network of nodes rather than on one central point. DApps are autonomous, secure, easier to implement, open source, and have 100% uptime. As of January 2018, there are more than 250 live DApps with more than hundred under development.

Beginner’s Guide: What is a Decentralized Application (DApp)?

How to Scale Ethereum dApps

Here are some of the most promising Ethereum applications that you’d like to take a look upon:

  • Golem: Golem is an open source, global, and a decentralized supercomputer that can be accessed by anyone. It makes use of the Ethereum based transaction system that settles the payments between providers, requestors, and developers. Every computation takes place in a sandbox environment and is isolated from the host systems.
  • OmiseGO: OmiseGO is a decentralized application that aims at solving the problems of various financial institutions. This network is scaling solution for finance on Ethereum and enables the peer to peer and transactions in real time. With the OMG network, you can simply access and manage your digital assets that are kept on the chain.
  • Augur: Augur is simply the future of forecasting. It is a decentralized, open source, and a peer to peer prediction platform that is built on the Blockchain. Though it seems like a decentralized platform on the surface, Augur comes with a promising potential of predicting the data virtually for any industry.
  • Civic: Civic aims at giving both individuals and business the tools to control and protect their identities in an effective manner. With its decentralized architecture, it provides multi-factor authentication without credentials or any kind of third party authenticator.

Ethereum can also be used to build the ‘Decentralized Autonomous Organizations.’ DAO is an autonomous and decentralized organization that runs by code written on the Ethereum blockchain.

The people who purchase tokens own DAO’s. But instead of acting as a token, they act as contributions that give people voting rights.

History of Ethereum

To understand the history of ethereum, we must begin from the very beginning.

2013 – Ethereum White Paper

In 2013, the infrastructure for the new coin was laid. Vitalik Buterin who was then working as a programmer for Bitcoin described the ethereum concept. Vitalik wrote the first white paper describing it. Later in the same year, he proposed a prototype with a general programming language.

2014 – Ethereum Announcement

In January 2014, during the North American Bitcoin Conference, Mr Vitalik announced the concept. He also named the co-developers of ethereum i.e. Jeffrey Wilckle and Dr Gavin Wood.

In April the same year, he published ethereum’s formal specifications in the yellow paper. Vitalik also coded the first fully functional programming language. This was later used as the prototype for ethereum.

By July 2014, the first sale of Ether was done. The capital that was raised was used to clear legal depts. By August the same year, $14 million had been raised from the Ether sale.

In Sept 2014, the ethereum ICOs buyers were rewarded with 60 million Ether. The remaining ETH was sent to ether’s non-profit foundation in Switzerland.

In November 2014, a DEVCON-0 meeting was organized in Berlin. This event brought together the developers of ethereum from all parts of the world. In the meeting, the various aspects of ethereum technology were discussed. From the event, the various presentations made ethereum more scalable, secure and reliable.

2015 – Developers Support Ethereum

In April 2015, the DEVgrant program was launched. The programme was meant to reward both the developers and supporters of ethereum. The programme helped to fund the ethereum projects and platform.

In late July 2015, the first ethereum milestone was released. The Frontier, a smart contract, greatly improved the ethereum ecosystem.

In November the same year, the DEVCON-1 event was held in London. The event took five days. The event was attended by more than 400 participants and more than 100 presentations were made. The event was more successful than that of 2014 because established companies like Microsoft, IBM and USB were in attendance.

Also, in the DEVCON-1 meeting the blockchain technology came to the limelight. Ethereum was forefront with the technology and it was a major boost.

2016 – Ethereum Public Sale & Splits

In March 2016, improvements were done to the ethereum network. The upgrade was done by the Homestead which is an improvement protocol.

In May the same year, Ethereum got a great boost through media coverage. The increased coverage led to the raise of 150 million dollars in a general public sale.

In June 2016, ethereum was hacked for the first time. The hackers claimed to have stolen more than 50 million dollars worth of ether. This led to numerous disputes in the same month.

In July the same year, due to the disputes witnessed in June, the ethereum network was split into two divisions. The two divisions were: Ethereum (ETH) & Ethereum Classic (ETC).

Ethereum resorted to decentralized decision making, extra protocols and conflict resolution strategies. Ethereum classic, on the other hand, resorted to code law, blockchain immutability and the essential rebellion.

The split further led to the disassociation of developers, ethereum founders, business partners, users and miners from ethereum classic.

2017 – Enterprise Ethereum Alliance

In February 2017, the EEA (enterprise ethereum alliance) was formed. In this alliance, Microsoft in association with established banks and technology geeks advanced for the acceptance of ethereum blockchain technology.

In May the same year, two more EEA had been formed. With the increase in alliances, more and more high profile organizations and companies were added.

This alliance has led to believe that bitcoin is likely to be replaced by ethereum this year – 2018.

The DAO Hack

What is the DAO hack?

As already stated, DAO is a decentralized autonomous organization! It runs on open source code and is not tied to any management, government, or a managing community.

In 2016, this set of smart contracts raised a total of $150 million in a crowdsale to fund the project. But it somehow got exploited in June when US$50 million in Ether got claimed by an anonymous entity.

But why did the hack actually happen?

It happened due to the DAO’s split function. On June 17th, 2016, an unknown person took advantage of a lapse in the split function.  He allowed the hackers to repeat their request for the withdrawal of tokens before the system registered it as $50 million.

After this hack, the community took 28 days to come up with the solution that ended up being a “fork.”

This hack simply brought a split in the Etherum community, and it got divided into two separate blockchains- Ethereum (ETH), and the original continued as Ethereum Classic (ETC).

Check out our Comparisons:

Final Thoughts

Well, despite the DAO hack, Ethereum is moving forward and also shows up a promising future. It is making full use of blockchain technology and is also ensuring the decentralization of the world’s economy.


About Author

Brenda has an extensive background in teaching but has since transitioned into a full-time cryptocurrency & blockchain writer. She is interested in cryptocurrency trading. Besides writing, Brenda is interest in enriching her mind through reading, Exercising and spending valuable time with family and friends.

Leave A Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.