Ethereum is considered the most promising blockchain outside Bitcoin. Its creators speak of it as the “first real global Computer”, which allows decentralized applications to be built on its platform.
Stephan Tual, former spokesman of the platform and founder of the startup Slock.it, defined the role of Ethereum in an interview with TIME in 2014: Ethereum aims to build a Web where intermediaries between the clients and the services they seek No longer exist. If I want, for example, to enter into a digital contract with you, why would I need a lawyer to do that? Let us agree on the terms of this contract. In the Ethereum infrastructure, it is not modifiable or falsifiable since its security is guaranteed by a cryptographic protocol. We save on lawyers ‘ fees while earning safely. This idea can be applied to other services such as social networks, participatory financing sites, EBay, Airbnb… We solve several current problems of the WEB.
What differences with Bitcoin?
“Bitcoin Blockchain has been designed specifically for monetary applications, while Ethereum allows you to create all types of applications,” says Ethereum founder Vitalik says Buterin.
Ethereum, whose computer code is deeply different from Bitcoin (it was written from scratch), was not built to compete frontally with Bitcoin: it is rather two different and complementary uses of technologies Blockchains. We will note the existence of ideological differences between the two communities around them: that of Bitcoin is more libertarian inspiration, centered on the monetary field (inspired by the theories of Hayek in particular), while that of Ethereum is more about creating a new, decentralized web rather than a new currency.
Microsoft therefore justifies its choice to use Ethereum for its Azure platform: while Bitcoin has many interesting uses as a crypto-currency, Ethereum brings the flexibility that many of our customers are looking for. Ethereum has a vibrant community of developers, enthusiastic and open to business applications.
In practice, the participants of the Ethereum network do not simply validate monetary transactions: They execute code from decentralized applications, say “Dapps”. In particular, this code allows the establishment of smart contracts, which are the core of Ethereum’s potential (see below).
Ethereum works with a cryptomonnaie, the ether, which has a very specific function: to pay for the execution of smart contracts, whose operation can consume important resources. The ether is therefore used to purchase “gas” (gasoline) to operate these contracts; If you are out of gas, the contract is no longer running.
Originally Ethereum, Vitalik Buterin
Ethereum was invented at the end of 2013 by Vitalik Buterin, a 19-year-old Russian-born Canadian. Initially fascinated by Bitcoin, which he discovers at the age of 17, he believes after several months of work that this one is very perfectible… hence the creation of Ethereum. In July 2014, it finalized a very first version of the protocol and raised almost 19 million million to finance the project. A year later released the Frontier version, dedicated to the testing of the developers, which constitutes phase 1 of the development of Ethereum.
“There is little difference between a Vitalik Buterin and an Elon Musk. They are passionate people, having fun in what they do. Vitalik left college, self-educated, and seems to have left to work all his life on it. In a context where one is confronted with imperatives of very short term, it has a serenity of the long time which is bluffing. In the world of contemporary technology, it’s very rare “
(Nicolas Loubet in our book “The decrypted Blockchain”)
The DevCon1, a large gathering of Ethereum developers and curious in November 2015 in London, was the big Ethereum launch. Present on site, we mentioned in our report “an atmosphere that could remind the oldest excitement of the first meetings” net “of the 1990s.
In early 2016, things are accelerating. Phase 2 of the project opened in spring 2016 with the launch of the Homestead version, announcements of business partnerships are developing (in addition to Microsoft, the consortium R3 CEV, composed of the largest banks gathered to test the possibilities of the blockchain, announced an experiment on Ethereum), and the course of ether explodes.
At the heart of Ethereum: decentralized applications (“Dapps”)
In a schematic way, the Ethereum source code can be compared to the operating system of a smartphone: from this code, various applications, called Dapps (decentralized applications), can be developed. So :
- UjoMusic wants to allow artists to place their titles on a blockchain, to define what part of each piece must return to a particular contributor of the title, and then to collect the copyrights automatically and without intermediary, thanks to Smart contracts.
- Augur offers a decentralized predictive market platform based on blockchain, again using smart contracts.
- Transactive Grid wants to allow everyone to sell and buy energy credits to their neighbour, in a peer-to-peer manner.
- Filecoin is a decentralized cloud storage service, which allows other users to rent the free space of their computer, or conversely to buy storage space on the Filecoin network, decentralized
- Golem will allow everyone to rent the unused computing power on its devices (computer, Smartphone…) For all types of applications (Big Data analyses in medical research, etc.).
Beyond decentralized applications, Ethereum is the foundation of a new method of fundraising, working with Cryptomonnaies: the Initial Coin offering (ICO). To learn more about this revolutionary method, we invite you to consult our explanatory page.
Smart contracts, a central component of Ethereum
Smart contracts are standalone programs that, when started, automatically perform predefined conditions. They work like any conditional statement of type “if – then” (if – then). The benefits: increased speed, better efficiency, and confidence in the fact that the contract will be executed as agreed. These programs are able to overcome the problems of moral hazard, and reduce the costs of verification, execution, arbitration and fraud. They have multiple applications, including insurance (read sample applications).
The advantage of implementing smarts contracts in a blockchain is the guarantee that the terms of the contract will not be modified. A smart contract that would not be in the blockchain would be a program whose terms could be changed in running.
Smart contracts pose major legal and ethical challenges, whether it be legal responsibility or consumer protection, and could be a key issue for states: it is even possible to imagine a tax collection via Smart contracts, as well as an automation of social protection benefits.
Ethereum is still being developed and needs to be improved especially in terms of its security, scalability (large-scale passage), and user experience (ease of use by all-one-each).
In order to consume less electricity, Ethereum also intends to move from the proof-of-work (traditional Bitcoin system where the blocks are validated by the miner who has the greatest computing power) to a system called proof-of-stake, less Intensive, whose outlines remain to be defined.
The ecosystem surrounding Ethereum has developed strongly in recent months, but we are still only at the beginning: startups that build Dapps are called to grow even more strongly, and new projects will emerge for uses without Still unthinking today.