Ethereum is the second-largest cryptocurrency after Bitcoin. It is based on a similar blockchain platform as that of Bitcoin. But on this platform, blockchain is more programmable as it allows users to create new decentralized applications, termed as DApps.
The operating system of Ethereum features smart contract functionality and enables the creation of smart contracts and decentralized applications.
Ethereum was introduced in the year 2013. It was initially described in a white paper by Vitalik Buterin with a goal of building decentralized applications. Buterin is a cryptocurrency researcher and programmer involved with Bitcoin Magazine.
Buterin earlier argued for a scripting language for application development of Bitcoin. When he failed to gain approval, he proposed development of a new platform with a more general scripting language.
Vitalik chose the name Ethereum after browsing articles about elements and science fiction on Wikipedia. He said that when he found the name he immediately understood that he liked it better than all of the other alternatives. He liked the word also because it had the word ‘ether’, which refers to the hypothetical invisible medium that saturates the universe and allows light to travel.
The Cryptocurrency- Ether
Ethereum platform created the cryptocurrency named Ether. Ether is used to pay back mining nodes for computations performed. Every Ethereum account has an ether balance and it can be transferred from one account to another.
Ethereum Virtual Machine
Ethereum provides a decentralized virtual machine termed as the Ethereum Virtual Machine (EVM). EVM can produce scripts using an international network of public nodes.
Smart Contracts on Ethereum
Buterin designed the Ethereum Virtual Machine with the purpose that any transaction over its blockchain network should be self-executed once agreed by both contracting parties. Also, it should get recorded on a public blockchain ledger. This self-execution makes these contracts smart. Hence, this opened up a new world for businesses and also a new economy.
Benefits of Decentralized Ethereum Platform
Decentralized applications run on the blockchain, so they benefit from all of its features. Following are its properties:
- Immutable – Any third party cannot make any changes to data.
- Secure – Secured with cryptography, the applications are protected from hacking and fraudulent activities.
- Tamper-proof – Apps are based on a network formed on the principle of consensus which makes censorship impossible.
- Zero downtime – The apps never go down and can not be switched off.
In 2016, a Decentralized Autonomous Organization named The DAO, raised a record US$150 million in a crowd sale to fund its project. The project was of development of a set of smart contracts on the platform. In June, The DAO was exploited when an unknown hacker took US$50 million in Ether. The incident led to a debate about whether Ethereum should perform a controversial “hard fork” to recollect the affected funds.
As a result of the debate, Ethereum separated into two separate blockchains. Ethereum (ETH) continued on the forked blockchain with theft reversed, while Ethereum Classic (ETC) continued on the original blockchain.
After The DAO’s hard fork, Ethereum afterward forked twice to deal with other attacks in the fourth quarter of 2016. By the end of November 2016, Ethereum increased its DDoS protection and prevented further attacks by hackers.
So, in this blog, we saw what is Ethereum, how it got originated, the ideas behind it, purpose, etc. So, in simple terms, we can say that Ethereum is an open platform that allows developers to create and use decentralized applications such as smart contracts. Ethereum can be thought of as a programmable Bitcoin. Vitalik Buterin saw the possible uses of Bitcoin’s principal blockchain technology in expanding the blockchain community. Ethereum cryptocurrency has currently the second-highest coin market capitalization.