What is Ethereum (ETH)?
Ethereum —— A Next-Generation Smart Contract and Decentralized Application Platform
- Ethereum is a decentralized network (often referred to as “the world computer”), created by Vitalik Buterin in 2013. Its network consists of an open-source, globally decentralized computing infrastructure, which executes programs called smart contracts. This network is fueled by a cryptocurrency named ether (ETH).
- Since its ICO in 2015, Ethereum has relied on Proof of Work (PoW). Ethereum’s first block was mined in July 2015, although plans have been made to migrate to a Proof of Stake (PoS) consensus model, despite several setbacks.
- Unlike Bitcoin, Ethereum is based on an account model (vs. UTXO) to record state changes. At its core, Ethereum relies on a Virtual Machine (EVM) with two types of addresses: externally owned addresses (EOAs) and contract addresses that are deployed on the EVM.
- As of March 2020, Ethereum was the second-largest cryptocurrency by market capitalization. It has popularized the use of smart contracts, and thousands of teams are working on third-party solutions on the network for real business applications.
Ethereum is a smart contract and decentralized application platform based on blockchain technology, which does not directly "support" any application, but has a built-in Turing-complete scripting language that can theoretically create Any transaction type and application. A "smart contract" is like an automated robot that runs a specific piece of code every time it receives a transaction, and that code can execute the agreed-upon data storage or send the transaction. Compared to cryptocurrencies like Bitcoin, the core idea of Ether is simple: a blockchain with a built-in Turing-complete programming language that allows any kind of application to be created on it.
Ethereum is a new decentralized ledger protocol, not a competing coin. Ethereum has not only Bitcoin genes in its conceptual DNA, but also BitTorrent, Java and Freenet genes. From a product perspective, it is a universal global blockchain that can manage the state of financial and non-financial type applications.
Ethereum was first described in a 2013 whitepaper by Vitalik Buterin. Buterin, along with other co-founders, secured funding for the project in an online public crowd sale in the summer of 2014 and officially launched the blockchain on July 30, 2015.
Ethereum’s own purported goal is to become a global platform for decentralized applications, allowing users from all over the world to write and run software that is resistant to censorship, downtime and fraud.
Now ETH has become the second highest cryptocurrency by market capitalization, and is also known as the "second generation blockchain platform", after Bitcoin.
Ethereum Project Team
Ethereum is a non-profit project managed by the Ethereum Foundation. The goal of the Ethereum Foundation, a non-profit organization registered in Switzerland, is to manage the funds raised through the pre-sale of ETH to better serve Ethereum and the decentralized technology ecosystem. The Foundation has a Board of Directors and an Advisory Board under it. The Board of Directors of the Ethereum Foundation currently consists of five members: Ming Chen, Vitalik Buterin (founder of Ether), Lars Klawitter, Wayne Hennessy Barrett, and Vadim David Levitin, with Ming Chen as the Executive Director. The Advisory Board has two members: Stefano Bertolo, William Mougayar.
Ethereum Project Highlight
Compared to most other cryptocurrencies or blockchain technologies, Ethereum's features include the following：
- Smart contracts: Programs stored on the blockchain are run by each node, and the person who needs to run the program pays a fee to the node's miners or equity holders.
- Tokens: Smart contracts can create tokens for use by decentralized applications. Tokenization of decentralized applications aligns the interests of users, investors, and administrators. Tokens can also be used for initial token offerings.
- Uncle block: A shorter block chain that is not included in the parent chain in time because of its slowness is merged in to boost transaction volume. The technique used is related to the directed acyclic graph.
- Proof-of-stake: more efficient compared to proof-of-work, saves a lot of computer resources wasted in mining and avoids network centralization caused by special application ICs.
- Branch chains (Plasma): Use smaller branch blockchain operations and write only the final result to the main chain, which can improve the workload per unit of time.
- State channels: The principle is similar to Bitcoin's Lightning Network, which can improve transaction speed, reduce the burden on the blockchain, and improve scalability. Not yet implemented, development teams include Raiden Network and Liquidity Network.
- Sharding: Reduce the amount of data each node needs to record and improve efficiency through parallel computing (not yet implemented).
- Decentralized applications: Decentralized applications on Ethernet do not stop and cannot be shut down.
- EVM：The Ethereum Virtual Machine (EVM) is the computer software (or computation engine) that interprets bytecode instructions for the Ethereum blockchain. Specifically, the EVM handles any smart-contract logic, ranging from its deployment to the execution.
Example of popular smart contracts
Owing to the popularity of token standards such as ERC-20, Ethereum has seen hundreds of thousands of tokens issued on its network. In addition, many other token standards are either in production (e.g., ERC-721, ERC-1155) or in progress. For a more comprehensive breakdown of the token standards on Ethereum, click to know about the World of Tokenization.