Jul 122017

What is Ethereum?

Steven Heap/123RF

By Will Nicol — Posted on July 4, 2017 6:30 am

If you follow tech or financial news, you’ve probably seen the name “Ethereum” popping up over the last couple years, often in connection with bitcoin. Ethereum is a rising star in the world of cryptocurrencies, entirely digital forms of currency that grew in popularity after the creation of bitcoin by a person or group calling themselves Satoshi Nakamoto in 2009. Demand for Ethereum is so high that it may even be driving up the price of graphics cards, as miners try to generate as much currency as they can. What is Ethereum exactly, and what does it mean for the future of cryptocurrency (and maybe society)? Here’s the rundown.

To start — what is a cryptocurrency?

People often refer to Ethereum as a cryptocurrency, but that isn’t precisely true. It is a platform that allows individuals to conduct transactions and draw up contracts, using a currency called “ether.” To understand what distinguishes Ethereum from a cryptocurrency like bitcoin, it helps to understand what a cryptocurrency is, as well as the concept of a blockchain.

A cryptocurrency is a form of digital currency created through encryption. A cryptocurrency has no physical form — like a banknote or coin — and it is not issued by a central bank or governmental authority. Units of cryptocurrency exist as data on the internet, and are created and managed through something called a blockchain.

A blockchain is essentially a digital ledger, shared amongst any number of computers. When transactions occur, they are recorded in blocks; in order for these blocks to go into the ledger, they must be validated by a certain number of computers on the blockchain network. Crucially, the ledger exists, in the same form, for everyone on the network. Anyone can can look at to see a complete history of every transaction that has occurred, and any changes would be visible to everyone.

The individuals who validate the transactions — which they do by having their computers solve complex computational problems — are called miners. Mining is a surprisingly intense activity, as our guide explains, that requires powerful hardware and a lot of planning. As a reward for their help in validating blocks, miners are given rewards. This is typically a specific cryptocurrency; Bitcoin miners receive bitcoin, while Ethereum miners receive ether.

When you send someone an amount of cryptocurrency, a digital signature is created to authenticate the transaction. Your public key is essentially your “address.” When someone sends you funds, they send it to your public key. When you send funds, you use your private key, which is essentially the password that grants you access to your funds, and a transaction message to create a digital signature. Miners use this signature to verify the transaction, and a new signature will be generated for every individual transaction, so the transaction can’t be repeated.

Why is this important?

Digital transactions have, historically, required third parties, such as banks, to authorize or validate the transaction. This is because money, when digital, is essentially a file, which could be copied and reused. But these more traditional intermediaries typically don’t work for free. Banks and other authorities require individuals to play in their sandbox, and pay whatever fees they demand.

Cryptocurrencies are all about skirting around financial institutions and authorities, but they still need some way to track when and how currency moves through transactions, so as to avoid problems like double spending. The currency would be useless if anyone could just create copies of their units.

Blockchains allow for peer-to-peer transactions, with no need for a third party to participate. They are inherently secure; if any data in the block were changed, computers on the network would need to revalidate it, discouraging tampering. In theory, cryptocurrencies are safe from seizure by authorities. Because they are stored nowhere in particular, and can only be accessed by a person with the private key, it would be incredibly difficult for even a government to seize them.

The broad strokes of a blockchain apply to Ethereum just as they do to bitcoin, but the two products have different goals. As mentioned, bitcoin is strictly a digital currency, designed to function as a means of payment. Ethereum takes a grander approach; it functions as a platform through which people can use ether tokens to create and run applications and, more importantly, smart contracts.

Ethereum focuses on “smart contracts”

What is a smart contract? It is a contract written in code, which the creator(s) upload to the blockchain. Any time one of these contracts is executed, every node on the network runs it, uploaded to the blockchain; thus, it is stored in the public ledger, theoretically tamper-proof.

Smart contracts are essentially structured as If-then statements; when certain conditions are met, the program carries out the terms of the contract.

As an example, say you want to rent a car from a service that uses Ethereum. A smart contract is generated, stipulating that if you send the required amount of funds, then the service will send you a digital key to unlock the car. The process is is carried out on the blockchain, so when you send the ether tokens, everyone on the network can see that you did so. Likewise, when the rental service sends you the key to unlock the car, everyone will see it. In this scenario, the contract might state that if the service does not send you the key, the tokens are refunded.

Since every computer on the network is keeping track of this transaction through the digital ledger, there is no way to tamper with it; if someone altered the details of the contract, every copy of the digital ledger would note this.

Every program on Ethereum will use a distinct amount of processing power, and since the program must be run by the nodes, it is important to keep superfluous activity to a minimum. This is why every contract and program on Ethereum is given a cost in “gas.” Gas is a measurement of how much processing power the program will require, and the higher the gas requirement, the more ether tokens the user will need to spend.

One of the commonly cited advantages of smart contracts is that there is no need for “middlemen” like lawyers or notaries. In theory, this means that you can carry out transactions without the waiting times inherent to paper filings, and without paying fees to whomever would typically oversee such a transaction. This is particularly important for people living in countries where the legal system is corrupt, or woefully inefficient.

Of course, the automation means that, if something goes wrong — if, for example, there is a bug in the code of the smart contract — the blockchain will still carry out the terms of the contract, which could be problematic.

A scandal involving The DAO — a decentralized autonomous organization — serves as a case study in how smart contracts can go wrong. The DAO was essentially a leaderless investment fund; members invested ether, gaining tokens that allowed them to vote on how to invest the DAO’s funds. As CoinDesk explains, the DAO was built through a series of smart contracts.

However, a vulnerability in the DAO’s code allowed one user to funnel millions of dollars worth of ether into a child DAO. A writer for Forbes compares the process to embezzlement, but notes that, because the DAO’s contract allowed for it to happen, it was not illegal; the user was working within the confines of the code.

What does it mean for the future?

In its short time in the spotlight, Ethereum has cast an enormous shadow. It is trading at around $300 as of June 28, 2017, and has grown by around 3600 percent in 2017, according to Business Insider. The platform has already attracted massive corporations like JP Morgan Chase and Microsoft, who are among the more notable members of the Enterprise Ethereum Alliance, which aims to provide “Resources for businesses to learn about Ethereum and leverage this groundbreaking technology to address specific industry use cases.”

That bodes well for Ethereum’s usage in the business world, but true believers see the platform as something more than a tool for corporation; they see it as a way to decentralize the internet, and make it more democratic.

In an interview with Wired, Ethereum creator Vitalik Buterin lays out his view of how Ethereum will disrupt the traditional power structures of the world:

“I think a large part of the consequence is necessarily going to be disempowering some of these centralized players to some extent. Because ultimately power is a zero sum game. And if you talk about empowering the little guy, as much as you want to couch it in flowery terminology that makes it sound fluffy and good, you are necessarily disempowering the big guy. And personally I say screw the big guy. They have enough money already.”

Smart contracts could free individuals from the constraints of the legal system and big business. However, technology enthusiasts often promise such utopian futures; in reality, just as social media has helped the spread of fake news, Ethereum and the automated, decentralized internet it seeks may have unintended consequences, as the DAO hacking indicates. Like other cryptocurrencies, ether is prone to wild fluctuations. While Ethereum has been riding high in 2017 for the most part, it suffered a flash crash in June, a drop which some think may have been exacerbated by false rumors of Buterin’s death. Whether Ethereum is sturdy enough to survive long term, or an ephemeral trend, remains up in the air.

Mike Prettyman Chief Information Officer Green Fire Engineered Reclamation Member GreenFire DAO Whatsapp only Phone: 1-602-315-1571 Skype: mike.prettyman Website: http://greenfirefunding.com email: greenfirereclamation@gmail.com

Dec 162016

¿Qué es Ethereum? 

Ethereum, es una criptomoneda y una plataforma blockchain que ofrece una máquina virtual descentralizada para contratos inteligentes.Una computadora mundial

"It is very possible that … one machine would suffice to solve all the problems … of the whole [world]" – Sir Charles Darwin, 1946

Ethereum, es una plataforma de servicios ''smart contracts'', programas y protocolos en forma de contrato, que funcionan automáticamente. Como son programados, no tienen ninguna posibilidad de cortes en el sistema, censuras, fraudes o interferencias de terceras partes.

¿Smart qué?

El término fue acuñado por el criptógrafo y jurista Nick Szabo, allá por 1996 pero no ha sido hasta hace pocos años cuando se han podido materializar gracias a tecnologías recientes como la ''blockchain'' (“cadena de bloques”).

Los ''smart contracts'', son scripts escritos con lenguajes de programación capaces de ejecutarse y hacerse cumplir por sí solos de manera autónoma sin intermediarios y sin posibilidad de censura. Pueden ser creados por una persona física, jurídica o por otro programa informático y reciben esas características gracias a existir sobre un sistema descentralizado como la ''blockchain'' en la que miles de equipos alrededor del mundo ejecutan los nodos que procesan y verifican las transacciones lo que evita que exista alguna entidad (empresa o gobierno) que pueda actuar sobre ellas.En resumen, los contratos inteligentes permiten a desconocidos comerciar o automatizar cualquier tipo de relación que se pueda expresar en un contrato tradicional, a través de internet sin la necesidad de una autoridad o intermediario.

Automatizar transacciones simples

Un pequeño ejemplo con apuestas: Alicia y Bob se apuestan 500€ por quien ganará un partido deportivo. Ambos, mandarían el equivalente en criptomonedas a una dirección controlada por el contrato inteligente. Cuando el juego haya terminado el contrato podría verificar vía API el resultado y depositaría el total en la cuenta del ganador.

Por ser programas informáticos, sería trivial añadir mayor complejidad como posibilidades y estadísticas a la apuesta. Hay servicios que procesan este tipo de transacciones, pero todas cobran una comisión. La diferencia es que los contratos inteligentes hacen todo esto de manera descentralizada, accesible para todos al menor coste posible, en el caso de ethereum el precio se llama “gas”, pequeñas partes de ether que pasan a los mineros que verifican las transacciones.

Compras online

Un ejemplo cotidiano pueden ser las compras online. Si realizas una orden de compra podrías tener un contrato entre la tienda online, una empresa de mensajería y tú, este, controlaría el proceso y ejecutaría cada pago en el momento acordado que podría ser la recepción  del paquete tras comprobar que todo está correcto.

Internet de las cosas

Tu nevera podrá realizar la compra por sí sola, usarás un taxi que se conduce solo… en el futuro, no hay duda de que todos los dispositivos estarán conectados entre sí en la denominada internet de las cosas (IOT).

Mediante microtransacciones programadas con ''smart contract'' este ejército de aparatos podrían llegar a funcionar de manera autónoma.

Alquiler de propiedades (vehículos,viviendas,etc), gestión de derechos de autor, servicios bancarios, notarios, sistemas de votación, organizaciones autónomas descentralizadas (DAO), los posibles usos de los contratos inteligentes son aún desconocidos, como fueron en principio para los creadores de internet las redes sociales antes de la aparición de facebook o la computación en la nube antes de amazon.En artículos posteriores, introduciremos los smart contract desde el punto de vista del desarrollador centrándonos en Ethereum y repasaremos los conceptos de las criptomonedas y el resto de plataformas (Bitcoin,Lisk,IOTA,NXT,etc..) cada una con sus peculiaridades y diferentes lenguajes de programación.


Ethereum: Introduction to Contracts smart ~ ITECMA.

Source: Ethereum: Introduction to Contracts smart ~ ITECMA