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article imageEthereum a much more versatile competitor to Bitcoin

By Ken Hanly     Aug 30, 2017 in Technology
Ethereum involves a cryptocurrency called ether that can be transferred between accounts and used to reward participant "miners" for computations they perform and can be transferred between accounts.
Ethereum is the second most significant cryptocurrency producer but potentially it could be even more important than bitcoin in that its platform can be used for many other functions.
Ethereum has a much wider use as an open-source, public blockchain-based distributed computing platform. Wikipedia describes a blockchain as follows: A blockchain... is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block contains typically a hash pointer as a link to a previous block,[6] a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. Functionally, a blockchain can serve as "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way." For use as a distributed ledger a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority.
The term "smart contract" was used first in 1996 by Nick Szabo who described them as follows: "New institutions, and new ways to formalize the relationships that make up these institutions, are now made possible by the digital revolution. I call these new contracts "smart", because they are far more functional than their inanimate paper-based ancestors... A smart contract is a set of promises, specified in digital form, including protocols within which the parties perform on these promises" Among other functions Ethereum serves as a platform to register such contracts. It can also execute scripts.
Ethereum was proposed near the end of 2013 by Vitalik Buterin a programmer and cryptocurrency researcher. It was crowdfunded during July and and August 2014. The DAO or Digital Decentralized Autonomous Organization had a new decentralized business model for both commercial and non-profit enterprises: It was instantiated on the Ethereum blockchain, and had no conventional management structure or board of directors... The code of the DAO is open-source.
The DAO was stateless, and not tied to any particular nation state....The DAO was crowdfunded via a token sale in May 2016. It set the record for the largest crowdfunding campaign in history.
However, in June 2016 disaster struck Etherium as some users took advantage of a vulnerability in the DAO code to siphon off a third of the funds of the DAO to a third account. In July the Ethereum community decided to create a hard fork in the chain that was able to restore almost all funds to the original contract. Many users thought this violated the whole idea of the inviolability of the chain and they carried on with what is called Ethereum Classic. However, the forked Ethereum is the group who have prospered.
Ethereum has enjoyed strong corporate support through the Enterprise Ethereum Alliance (EEA). JP Morgan Chase, Microsoft, CME Group, BNY, Mellon and numerous other corporations were among those who founded EEA in February of this year. The group now consists of 86 firms including Toyota, Merck, ING and numerous others. The corporations are particularly interested in using Ethereum to develop smart contracts. Julio Faura, chair of the EEA and also head of blockchain innovation at Banco Santander claim that the enthusiasm around EEA was remarkable. He noted that the EEA had members from many different backgrounds including pharma, mobile, banking, automotive, management consulting, and hardware.
Etherium is at just over $383 dollars, a far cry from Bitcoin which is over $4,600. Nevertheless it has risen a huge amount recently. Given its obvious usefulness to giant corporations it could continue to rise. Many of those who saw bitcoin and blockchain technology as a challenge to the status quo look on as corporations are rushing to use the new technology for their own ends. Governments such as China are considering issuing their own crypto currencies and many governments are also developing laws to regulate the industry.
More about ethereum, smart contracts, cryptocurrencies
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