Ethereum is a currency that made smart contracts for the masses, allowing anyone to make there own currency in hours if not minutes. Easy to set up for crowd funding or a successful platform.
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Ethereum = Crypto Elixir
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Exchange Ticker (ETH)
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The Ethereum is another popularised digital asset, Created by Vitalik Buterin. Altho it will commonly be compared to Bitcoin the two differ greatly in application. The Ethereum network allows developers to create and deploy apps or dApps on the Ethereum Virtual Machine which include a very useful feature called “Smart Contracts.”
The idea of Ethereum came about late 2013 in a white paper written by Vitalik Buterin. Vitalik wanted to create a network with a general scripting language for application deployment.
The DAO Hack
The DAO hack was an infamous step in Ethereum’s history that happened around 2016. The Decentralised Autonomous Organisation ( A collection of smart contracts ) called the DAO raised 150 Million dollars in crowdfunding. The DAO was exploited and and an anonymous user claimed 50 Millions dollars worth of Ether.
This kicked off a debate, should we roll back the network and claim back the stolen funds or keep the network the way it is and let the user have the funds. The former goes against the fundamental idea that Ethereum is based on. People should not be able to modify the network and so a fork was created. Ethereum and Ethereum Classic. Ethereum classic decided to not roll back the network while Ethereum rolled the network back and forked before the funds were stolen.
You might be wondering what the difference is between Ethereum and Ether. Altho they sound similar they are not synonymous, Ethereum is the network which contains distributed applications and Ether is the token used to pay for the bandwidth used by the applications and is earnt by the miners when processing transactions.
A smart contract describes code that has been deployed to the Ethereum network. The code works as any program would, When it is deployed to network the program acts as a self autonomous part of the network. When conditions are met the program fires up and produces an autonomous unbiased result.
We have seen this been used to create casinos such as Edgeless where each game is an application run as a smart contract. It provides for a full transparency and uncheatable system in which players can see the operations and behind the scenes functions of the code.
ERC20 allow developers to create new “coins” on the Ethereum Network making it very popular for ICO’s. It is a standard used for smart contracts that make Etherium a preferred option when creating new tokens or coins.
Proof of Work vs Proof of Stake
Both of these are ways in which a blockchain can confirm that transactions are valid and honest. Proof of Work validates transactions by solving very complexed problems on the Ethereum network and shows validity of the transaction with the proof of work the computer has put in via a hashing function. Vitalik Buterin has been talking about switching to Proof of Stake as a validation process for the network since Proof of work has issues with scalability and consumes a lot of power even tho it works as a way of utilising the networks processing power there are more effective systems out there.
This is why Vitalik Buterin is working to create Proof of Stake for the Ethereum network. Proof of Stake randomly allocates the creation of the next block to a random stakeholder in the network. Proof of Work creates blocks through the mining process. Ethereum switching to Proof of Stake has been in the works for a while. It was rumored to be released around November last year, and at time of writing Proof of State is still in the works. When this is released the Ethereum network will fork again creating 3 states of Ethereum.
Ethereum is a network designed to be used for distributed application deployment for both commercial and personal use. Hopefully we see Ethereum grow to be a common adoption for every enterprise in the near future. It’s come a long way since the DOA setback and holds promise for the future of blockchains.
“Ethereum is a decentralized platform for applications that run exactly as programmed without any chance of fraud, censorship or third-party interference.”
- Smart Contracts
- More stable that other Cryptos
- Can be mined from a high end pc setup
- Some backing because so many other currencies rely on them
- Mining has become too difficult
- More susceptible to bugs
Ethereum will be the largest currency at the end of 2018 by a long way I would even go as far to say, double the market cap of bitcoin.
Screen shot this if you like. Today is the 29th of January 2018.