Ethereum is an open-source project and a public blockchain platform based on blockchain technology. It was invented by Vitalik Buterin and released in July 2015. Ethereum uses blockchain technology to allow developers to create decentralized applications (dApps) without fraud, censorship or third-party interference.
Its core innovation is a blockchain with a built-in programming language, which allows users to create and deploy decentralized applications and smart contract. Ethereum smart contracts are mainly used for the creation of various applications such as Decentralized Autonomous Organization (DAO), Decentralized Exchange (DEX), Decentralized Finance (DeFi) and Non-Fungible Token (NFT).
Ethereum is a crypto currency that is part of a decentralized system, that is to say that it is not controlled by any entity. Ethereum is different from Bitcoin because it expands its technologies to create an entirely new network that includes an internet browser, coding language, and payment system. In short, Ethereum is an open, public, Blockchain-based distributed software platform that allows developers to build and deploy decentralized applications.” The currency of the platform is called Ether. The platform was founded by Vitalik Buterin and a team of other developers.
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The history of Ethereum
Ethereum was originally described in the Ethereum whitepaper by Vitalik Buterin, a programmer involved with Bitcoin Magazine, in late 2013 with the goal of building decentralized applications. Buterin had argued that Bitcoin needed a scripting language for application development. Failing agreement, he proposed to develop a new platform with a more general scripting language.
At the time of the public announcement in January 2014, the core members of the Ethereum team were Vitalik Buterin, Mihai Alisie, Anthony Di Iorio, and Charles Hoskinson. Formal development of the Ethereum software project began in early 2014 through a Swiss company, Ethereum Switzerland GmbH (EthSuisse). Subsequently, a Swiss non-profit foundation, the Ethereum Foundation (Stiftung Ethereum), was also created. The development was funded through a public online crowdsale between July and August 2014, with participants purchasing the Ethereum (ether) value token with another digital currency, bitcoin. Although Ethereum’s technical innovations were welcomed at first, questions were also raised regarding its security and scalability.
DAO and the blockchain branch
In June 2016, an error was detected in the software code of DAO, an autonomous investment capital management platform. On June 16, this vulnerability allowed unknown parties to transfer approximately one-third of the ether available in The DAO (at the time in the amount of US$50 million) to one of the ChildDAOs, controlled solely by the attacking party. However, due to the peculiarities of the implementation of the DAO, these funds were not available for withdrawal within one month.
The Ethereum community discussed the possibility of returning ether to investors and how to implement it, and the German DAO developers tried to counter hacking, as the decentralized nature of the DAO and the ‘Ethereum means no central solution. a body that can act quickly and that requires user consensus. After a few weeks of discussions, on July 20, 2016, a disk chain was created in the Ethereum blockchain, in order to reverse the hacking and return the funds stolen from the DAO to investors. This was the first blockchain branch to return stolen funds to investors.
Following the rejection of transaction history restoration and rule changes by part of the community, Ethereum Classic was created, which continues to operate as a “the DAO” project.
The Ethereum Hard Fork
After a difficult DAO-related fork, Ethereum subsequently faced further attacks. By the end of November 2016, Ethereum had strengthened its protection against DDoS attacks, unblocked the blockchain and thwarted new spam attacks by hackers.
ethereum architecture
Ether
The value token of the Ethereum blockchain is called ether. It is listed under the code ETH and traded on cryptocurrency exchanges. It is also used to pay for transaction fees and computing services on the Ethereum network.
Tokens can be volatile depending on circumstances, such as Ether’s drop from $21.50 to $8 when the DAO was hacked on June 17, 2016. By June 2017, Ether’s value had risen to over $400, an increase of 5,000% since the start of the process.
Price volatility on a single exchange can exceed volatility on Ether token prices more generally. A “flash crash” caused by a large sell order on an exchange caused the price on that exchange to briefly drop to $0.10, with every bid being absorbed, after which the price quickly returned to over $300 .
ERC20 tokens
The ERC-20 standard protocol is a technical standard for smart contracts on Ethereum. It defines a set of rules to follow when creating new tokens on the blockchain, allowing exchanges and wallets to better integrate (more transparently) new tokens that comply with the standard. Most of the major Ethereum blockchain tokens are ERC-20 compliant.
Ethereum virtual machine
The Ethereum Virtual Machine (EVM) is the execution environment for smart contracts in Ethereum. The formal definition of MEV is specified in the Ethereum Yellow Paper, original version by Gavin Wood. It is sandboxed and completely isolated from the network, file system or other host computer system processes. Each Ethereum node on the network runs an EVM implementation and executes the same instructions. Ethereum VMs have been implemented in C++, Go, Haskell, Java, JavaScript, Python, Ruby, Rust, and WebAssembly (under development).
smart contract ethereum
Ethereum smart contracts or translated into French “intelligent contracts” are deterministic exchange mechanisms controlled by digital means allowing the direct transaction of value between untrusted agents. They can be used to facilitate, verify and enforce the trading or execution of procedural instructions and potentially circumvent censorship, collusion and counterparty risk. In Ethereum, smart contracts are treated as standalone scripts or stateful decentralized applications that are stored in the Ethereum blockchain for later execution by the MVE. Instructions included in Ethereum contracts are paid for in ether (or more technically “gas”) and can be implemented in a variety of full Turing scripting languages.
Contracts on the public blockchain
As smart contracts can be public, this offers the possibility to prove the functionality, for example independent and fair casinos.
A problem with using smart contracts on a public blockchain is that all bugs, including security vulnerabilities, are visible to everyone but cannot be fixed quickly. The June 17, 2016 DAO attack is an example of this. It could not be quickly stopped or reversed.
Research is ongoing on how to use formal verification to express and prove non-trivial properties. A Microsoft Research report noted that writing strong smart contracts can be extremely difficult in practice, using the DAO hack to illustrate this problem. The report describes the tools developed by Microsoft to verify contracts and indicates that a large-scale analysis of published contracts is likely to reveal widespread vulnerabilities. The report also indicates that it is possible to verify the equivalence of a Solidity program and the EVM code.
Ethereum programming languages:
Smart contracts are high-level programming abstractions that are compiled into EVM bytecode and deployed to the Ethereum blockchain for execution. They can be written in Solidity (a language library with similarities to C and JavaScript), Serpent (similar to Python), LLL (low-level language resembling Lisp), and Mutan (Go-based, but deprecated). There is also a research language under development called Viper (strongly typed decidable language derived from Python).
Performance of Ethereum:
In Ethereum, all smart contracts are publicly stored on each blockchain node, which involves trade-offs. The downside is that there are performance issues because each node calculates all the smart contracts in real time, which reduces speeds. Ethereum engineers worked on the accuracy of the calculations, but no solution had been detailed as of early 2016. As of January 2016, the Ethereum protocol could process 25 transactions per second. In September 2016, Buterin presented proposals to increase scalability. Buterin and Joseph Poon (a co-author of the Bitcoin Flash Network white paper) announced in 2017 their intention to launch a scaling solution called Plasma, which creates strings of “child” strings to the main “main” string of strings. The Plasma Project is not devoid of skeptics. In particular, Vlad Zamfir (lead researcher of Ethereum) questioned the viability of this project.
Ethereum supply increase rate
Ether supply is expected to increase by 14.75% in 2017, and an existing algorithm is expected to gradually decrease to 1.59% by 2065. However, a new implementation of Ethereum called “Casper” is based on a proof of stake rather than proof. work should reduce the inflation rate from 0.5% to 2%.
Proposed uses
Many uses have been proposed for the Ethereum platform, including those that are impossible or impossible. Use case proposals focused on finance, the Internet of Things, farm-to-table products, electricity purchases and prices, and sports betting. Ethereum is (as of 2017) the leading blockchain platform for first-offer coin projects, with a market share of over 50%.
Ethereum ecosystem
Introducing ConsenSys Academy: Why Code on Ethereum
The projects listed in this section are not exhaustive and may be out of date.
Ethereum Wallet
These cryptocurrency wallets support Ethereum:
- Trezor
- Jaxx
- KeepKey
- Ledger Nano S
- MyEtherWallet
- MyCrypto
- HelioWallet
Ethereum Decentralized Applications:
- Digital signatures guaranteeing the authenticity and proof of the existence of documents: the Luxembourg Stock Exchange has developed such a system
- token and cryptocurrency exchanges like etherdelta
- Slock.It develops smart locks
Digital tokens pegged to fiat currencies: decentralized capital. The Spanish bank Santander is also involved in such a project - Gold-linked digital tokens: Digix
- Improved digital rights management for music: Imogen Heap used technology
- Prediction market platforms: Augur, GnosisStox
Crowdfunding platforms: the DAO - Social media platforms with economic incentives: Backfeed, Akasha
- Decentralized marketplaces: FreeMyVunk, Etheropt, TransActive Grid
- Remittances: Everex
- Online Game: Etheroll
- Electric car charging management: RWE
- Secure Identity Systems for the Internet: uPort
- Labor economics: Blocklancer, Ethlance
Enterprise software
Ethereum-based software and custom networks, independent of the Ethereum public chain, are currently being tested by software vendors. Interested parties include Microsoft, IBM, JPMorgan Chase, Deloitte, R3, Innovate UK (cross-border payments prototype).
Enterprise Ethereum Alliance (EEA)
In March 2017, various blockchain startups, research groups, and Fortune 500 companies announced the creation of the Enterprise Ethereum Alliance (EEA), which has 30 founding members.
As of May, the nonprofit had 116 corporate members – including ConsenSys, CME Group, Cornell University Research Group, Toyota Research Institute, Samsung SDS, Microsoft, Intel, JP Morgan, Cooley LLP, Merck KGaA , Deloitte, Accenture, Banco Santander, BNY. Mellon, ING Group and National Bank of Canada.
The goal of the EEA is to coordinate the development of an open source reference standard and a private “authorized” version of the Ethereum blockchain, capable of serving the common interests of companies in the banking, management, consulting, automotive, healthcare, technology, tech, mobile, entertainment and other industries, while working with developers in the Ethereum ecosystem. Some alliance members have also expressed a desire to investigate and collaborate on hybrid architectures to potentially anchor private blockchains into the public Ethereum blockchain, although concerns remain over security. , compliance and regulations involved in the transition of such licenses. “blockchains.
As of July 2017, the alliance had over 150 members, including recent additions from MasterCard, Cisco Systems and Scotiabank. (Mastercard wanted their name out of the press release.)
Authorized Ethereum-based blockchain variants are in use and under consideration for various projects.
JP Morgan Chase is developing an authorized variant of the Ethereum blockchain called “Quorum”. It is designed to reconcile private and public life in the field of mixing derivatives and payments. The idea is to satisfy regulators who need transparent access to financial activities, while protecting the privacy of parties who do not wish to reveal their identity or transaction details to the general public. The Royal Bank of Scotland has announced the establishment of a clearing and settlement mechanism based on the distributed ledger and Ethereum smart contract platform.
Economic sense
Ethereum technology makes it possible to record all transactions involving any assets on the basis of a distributed contract base such as the blockchain, without resorting to traditional legal procedures. This possibility is competitive with the existing transaction recording system. According to The Economist, “smart contract” technology marks a new era in financial technology.
Bacchanalia technologies can be successfully combined with remote banking services of the type provided by SMS. Due to its low cost, this opportunity is particularly attractive for developing countries, according to The Economist.
Software implementation
Smart contracts in Ethereum are presented as classes that can be implemented in different languages, including visual programming, and compiled into bytecode for an Ethereum Virtual Machine (EVM) before sending it to the blockchain. Virtual machine state change can be recorded in full Turing scripting language.
Unlike the bitcoin protocol scripting language, EVMS supports loops, so the platform uses a mechanism called gas to limit contracts that can take a long time to execute.
Academic and professional reception
Stanford’s Dan Boneh and Carnegie Mellon’s Vipul Goyal told CNBC that some of their respective students are starting their own cryptocurrency projects. Cornell University, UC Berkeley and Technion – Israel Institute of Technology formed the Initiative for Cryptocurrencies and Contracts (aka IC3) and this entity joined the Enterprise Ethereum Alliance.
Criminal use
A finance blogger on FT Alphaville pointed out that criminals are using Ethereum to run Ponzi schemes and other forms of investment fraud. The article was based on an article by the University of Cagliari, according to which the number of Ethereum smart contracts facilitating Ponzi schemes represented almost 10% of the 1,384 smart contracts examined. However, he also estimated that only 0.05% of transactions on the network were related to such contracts.
Speculation
CBS noted in 2017 that price increases in Ethereum (as well as Litecoin and Bitcoin) were creating excitement to invest in this up-and-coming technology.