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Ledger Start: July 30, 2015
Programming Language: Solidity
Official Website: https://ethereum.org/
Code Repository: https://github.com/ethereum
Consensus Mechanism: Proof of Stake (upgraded from original Proof of Work used for Ethereum)
Ethereum: “The World Computer”
Ethereum is a decentralized, blockchain-based cryptocurrency that was created in 2015. It is the second-largest cryptocurrency by market capitalization after Bitcoin, and has a number of unique features that set it apart from other cryptocurrencies.
Ethereum is a cryptocurrency that is the second largest in market capitalization, behind only Bitcoin in overall value.
The blocks of Ethereum’s blockchain are updated at a much faster rate than Bitcoin: every 12 seconds for Ethereum versus about 10 minutes for Bitcoin.
The video below explains what the Ethereum digital asset is and describes some of the most fundamental aspects of the coin.
Purpose of Ethereum
Ethereum came about as a response to Bitcoin. As Bitcoin’s popularity grew during the years after its creation in 2009, its shortcomings became more obvious.
Ethereum was created as a new, improved version of Bitcoin, building upon what had been learned during the first several years of the existence of the first cryptocurrency. The Bitcoin experiment validated the usefulness of using blockchain and decentralized networks to accomplish what central authorities had previously been solely responsible for.
Bitcoin was written in a language that was simple (Script, a Turing incomplete scripting language intended specifically for handling transactions) and limited in what it could do.
Ethereum’s main purpose was to become a decentralized network for applications published online.
Ethereum (the Network) Versus Ether (the Cryptocurrency)
The term Ethereum formally refers to the blockchain network that’s described on this page. Ether is the actual cryptocurrency that lives on the Ethereum network. However, Ether is often (erroneously) referred by as “Ethereum”, including on the popular exchanges.
Technical, the words Ether and Ethereum refer to two different things in the context of blockchain and cryptocurrency. Ether is abbreviated ETH.
How to Purchase Ether (ETH)
Ether is available on the most popular crypto exchanges, including:
Ether can also be purchased using Venmo, the popular payment app.
Ethereum Smart Contracts
The language used to implement the Ethereum network, Solidity, was designed for implementing smart contracts, logical if-then statements that govern the execution of legal agreements based on programmed expectations.
Smart contracts existing on the Ethereum network are self-executing, strict, immutable, and difficult to secure. Ethereum smart contracts were intended to be bullet-proof, efficient means of allowing humans to interact, but the initial intention with smart contracts has proven to be flawed. Essentially, what gives them their value (logical, programmatic implementation of contracts) also makes them vulnerable, as real-life agreements tend to have unpredictable and unforeseen contingencies that are difficult to represent programmatically.
Also, it is impossible to avoid having human error introduced into smart contracts. This vulnerability was exploited when a decentralized smart contract investment organization, called The DAO (Decentralized Autonomous Organization) was essentially “hacked” in June 2016, nearly draining $50 million worth of Ether crypto from investors in The DAO.
Ethereum has experienced consistent implementation issues with the smart contract technology built into its network. Most of the issues with Ethereum smart contracts are related to contract ambiguities that can’t be handled well programmatically, insecure Solidity language constructs, bugs in the network and smart contract implementation, and persistent attacks on those vulnerabilities.