What is Ethereum?
Ethereum is a blockchain that companies can use and apply to their own technology; sort of like a digital vending machine, Ethereum can trade in information and agreements. It was established in 2014 by Vitalik Buterin and a small team and has since exploded as one of the household names in cryptocurrency and blockchain. Some believe it might overtake Bitcoin later this year, primarily because unlike the contender Bitcoin, Ethereum allows for more usability than just transfers between customers.
Ether (ETH) is the token that is the main currency that works with the Ethereum blockchain. In order for the distributed application platform to work, Ether, described on the company website as a fuel, is used to pay the cryptocurrency miners to resolve code on the blockchain. As well as being an exchangeable currency, Ether can be used to pay for site fees and pay for services on the network.
The support for Ethereum can be demonstrated by the Enterprise Ethereum Alliance, a non-profit corporation that brings together Fortune 500 members with experts in the Ethereum department. Amongst its members listed on its website are a number of well-known companies such as energy giant BP, financial agency BBVA and Microsoft which at least serve to highlight an interest between mainstream technology and the potential of this blockchain.
What makes Ethereum special?
Ethereum is set up as Bitcoin’s main contender because it offers something different to the other altcoins in the market. Ethereum can deal in contracts, storing an agreement on the blockchain and fulfilling the completion of the contract once the prerequisite tasks have been completed. This means the technology can cater to businesses in a wider expanse of ways as opposed to Bitcoin or any other currency that use’s Bitcoin’s blockchain.
In 2016, a venture capital firm called DAO (Decentralised Autonomous Organisation) had gathered over $150 million through an ICO whilst using the Ethereum platform, making it the largest crowdfunding event in digital history. From the start the company was already unusual as it was run by a network of machines. However, the network was hacked by an unknown user who stole over $50 million worth of Ether and transferred it into a child account, his ability to do so was simply a result of asking the DAO to return the coins a number of times, before the system updated itself.
The value of the currency plummeted whilst the Ethereum community rallied around what to do next. As a result of debate from the team, it was eventually decided that a hard-fork would be carried out (a shift in the direction of the blockchain) so as for the money to be claimed back by the rightful investors. Conflict then erupted within the crypto-community, as some argued against the modification of the blockchain which is meant to remain unchangeable. As a result, the currency was divided into separate blockchains; the original unforked currency was named Ethereum Classic – ETC and the new modified blockchain was called, Ethereum – ETH. Both currencies have an identical code until the point of the fork and all the major contenders in the currency followed the hard-fork over to the new blockchain strand.
Alongside being a setback for Ethereum that led to substantial losses, this also revealed a setback against the concept of the blockchain in general. The possibility of a hard-fork contradicts the belief that the blockchain is a permanent function that cannot be altered – although on the contrary, nothing was technically deleted from Ethereum.
Where does the name come from?
According to co-founder Vitalik Buterin:
‘I was browsing a list of elements from science fiction on Wikipedia when I came across the name. I immediately realized that I liked it better than all of the other alternatives that I had seen; I suppose it was the fact that sounded nice and it had the word “ether”, referring to the hypothetical invisible medium that permeates the universe and allows light to travel’.
Initial release date
Crowdfunding began in 2014 and the system went live in July 2015.
Vitalik Buterin, Mihai Alisie, Anthony Di Iorio, and Charles Hoskinson are the original team that devised the cryptocurrency.
14 to 15 seconds to process a blockchain