Ethereum

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Ethereum is a distributed computational platform with an open source code, based on the block chain with the functional capabilities to use smart contracts. By using them, you can create decentralized online services.

The concept of a single decentralized virtual machine was offered in 2013 by Vitalik Buterin, the Russian-Canadian programmer. The network has been working since June 30, 2015, after a crowd funding campaign that allowed $ 18,439 million to be raised. In 2016, the Ethereum array was divided into two blocks, as a result of which the Ethereum Classic cryptocurrency appeared.

The Ether

All transactions inside the platform are conducted using an internal exchange unit – the ether, which can be transferred between accounts and used to compensate participating nodes while doing calculations.

At the same time, the function of the ether is not limited by payments and exchange transactions with crypto-currencies. By the intention of the creators, the ether can become a "crypto-fuel" for the execution of smart contracts. It is sold on the exchange services, the capitalization of the total amount of the ether has exceeded thirty billion dollars[1].

Inside the network, a transaction pricing mechanism called "gas" is used, which reduces spam and distributes network resources.

Working principle

The Ethereum technology allows any transactions with any assets to be registered on the basis of a distributed base of smart contracts, without recourse to traditional legal procedures.

The contract is automatically executed when a predetermined condition, which must have a specific mathematical expression, is reached. This allows users to create markets, keep registers of debts or promises, transfer funds in accordance with the instructions included in the smart contract in the past, without intermediaries and counterparties.

Interest in Ethereum

Ethereum is an open platform, which simplifies the introduction of the blockchain technology. Therefore, both large software developers (Microsoft, IBM, Acronis), and banks, including Sberbank are interested in the system.

Risks of frauds

In June 2017, the Financial Times blog published an article stating that Ethereum was used by intruders for Ponzi schemes and other forms of financial frauds. The article was based on a study conducted by the University of Cagliari, which showed signs of Ponzi schemes in nearly 10% of the 1,384 considered smart contracts. Meanwhile, only 0.05% of transactions in the network were related to such contracts.

Decentralized applications

See also


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