What is Ethereum?
Ethereum ( “ether” or ETH ) is a blockchain based platform for creating decentralized online services( DApps, Decentralized applications ), working on the basis of smart contracts. The concept of Etheterum was proposed by the founder of Bitcoin Magazine Vitalik Buterin in late 2013. The network was launched on July 30, 2015.
Being an open source platform, Ethereum dramatically simplifies the implementation of blockchain technology, which explains why not only of new startups, but also of the largest software developers such as Microsoft, Lufthansa, as well as the international charity organization UNICEF showed interest in the platform.
Etherium was initially described in one of Buterin’s publications in late 2013. Ethereum is often called the “next-generation Bitcoin” platform or “Bitcoin 2.0”.
In the second half of 2014, Ethereum crowdfunding has begun. Ethereum distributed the initial amount of Ether via a 42-day primary public offering, receiving 31,591 Bitcoins, which was equivalent to $18,439,086 at the time. In exchange for these Bitcoins, 60,102,216 Ether was issued. After the development has started Ethereum drew the attention of many banks as a test platform for studying smart contracts. The Ethereum blockchain platform was officially launched on July 30, 2015.
The DAO incident and the hard fork
In June 2016, an error was found in DAO code, a platform for independent management of investment capital. This vulnerability allowed the unknown to move a substantial amount of the ETH, available in The DAO which amounted to $50 million at the time. The unknown transferred Ether to a single ChildDAO. However, per DAO rules the criminal could not withdraw these funds for a whole month.
The Ethereum community discussed whether to return ETH to investors and how to make a return, while the DAO developers from Germany tried to attack the hacker back. Because of the decentralized nature of DAO and Ethereum, there was no central authority that could take action quickly, and a consensus of users was required. After a discussion that took multiple weeks, community implemented a hack to cancel the effects of the attack and return the funds stolen from DAO to investors.
As a result, part of transaction history was rejected, and the blockchain forked into Etehreum and Ethereum Classic which continues to exist as the “DAO” project.
Ethereum is the second most popular cryptocurrency in the world. In addition, the Ethereum platform can be used in various areas of finance to create a safe and trustless distributed ledger that stores transaction data. However, one of the primary use-cases is creating tokens based on the Ethereum blockchain.