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A gentle introduction to Ethereum, Onverdraagzaam on blocks

A gentle introduction to Ethereum, Bits on blocks

Thoughts on blockchain technology

Significant note: If you own more than $1,000 worth of cryptocurrency then you should certainly be using a hardware wallet instead of keeping coins on exchanges. I recommend a Trezor which you can buy for €89 directly from their webstek.

Introduction

Ethereum builds on blockchain and cryptocurrency concepts, so if you are not familiar with thesis, it’s worth reading a gentle introduction to bitcoin and a gentle introduction to blockchain technology very first. This article assumes the reader has a basic familiarity with how Bitcoin works.

What is Ethereum?

Ethereum is software running on a network of computers that ensures that gegevens and petite laptop programs called wise contracts are replicated and processed on all the computers on the network, without a central coordinator. The vision is to create an unstoppable censorship-resistant self-sustaining decentralised world pc. The official webstek is https://www.ethereum.org

It extends the blockchain concepts from Bitcoin which validates, stores, and replicates transaction gegevens on many computers around the world (hence the term ‘distributed ledger’). Ethereum takes this one step further, and also runs rekentuig code equivalently on many computers around the world.

What Bitcoin does for distributed gegevens storage, Ethereum does for distributed gegevens storage plus computations. The petite rekentuig programs being run are called clever contracts, and the contracts are run by participants on their machines using a sort of operating system called a “Ethereum Virtual Machine”.

How do you run Ethereum?

To run Ethereum, you can download (or write yourself if you have the patience) some software called an Ethereum client. Just like BitTorrent or Bitcoin, the Ethereum client will connect overheen the internet to other people’s computers running similar client software and embark downloading the Ethereum blockchain from them to catch up. It will also independently validate that each block conforms to the Ethereum rules.

What does the Ethereum client software do? You can use it to:

  • Connect to the Ethereum network
  • Explore Ethereum’s blockchain
  • Create fresh transactions and clever contracts
  • Run brainy contracts
  • Mine for fresh blocks

Your laptop becomes a ‘knot’ on the network, running an Ethereum Virtual Machine, and behaves equivalently to all the other knots. Reminisce te a peer-to-peer network there is no ‘master’ server and any laptop has omschrijving powers or status to any other.

How is Ethereum similar to Bitcoin?

I think it’s easiest to understand Ethereum by exploring the similarities and differences inbetween Ethereum and a simpler system, Bitcoin. So what are the similarities?

Ethereum has a blockchain

Like Bitcoin, Ethereum has a blockchain, which contains blocks of gegevens (transactions and brainy contracts). The blocks are created or mined by some participants and distributed to other participants who validate them.

You can explore this blockchain here: https://etherscan.io

Blocks form a chain by referring to the hash or fingerprint of the previous block. See a gentle introduction to blockchain technology for a primer.

Ethereum is public and permissionless

Like Bitcoin, the main Ethereum network is a public, permissionless network – ie anyone can download or write some software to connect to the network and begin creating transactions and brainy contracts, validating them, and mining blocks without needing to loom te or sign up with any other organisation.

Te general, when people talk about Ethereum they mean the main public permissionless example (version) of the network. However, like Bitcoin, you can take Ethereum software, modify it slightly and create private networks that aren’t connected to the main public network. The private tokens and brainy contracts won’t be compatible with the public tokens tho’, for now. For more on the difference inbetween public permissionless and private permissioned networks, see confused by blockchains? Revolution vs Evolution

Ethereum has Proof-of-Work (PoW) mining

Like Bitcoin, mining participants create valid blocks by spending electro-therapy to find solutions to a mathematical puzzle. Ethereum’s PoW maths challenge called Ethash works slightly differently to Bitcoin’s, and this permits common hardware to be used for mining. This reduces the efficiency edge of task-specific hardware known spil ASICs, which are common te Bitcoin mining.

On Ethereum’s roadmap there is a project to stir from electricity-expensive Proof-of-Work mining to a more energy-efficient Proof-of-Stake protocol called Casper, ter a future release of the Ethereum software called Serenity.

Ethereum has an inbuilt cryptocurrency

Ethereum’s token is called Ether, shortened to ETH. This is a cryptocurrency that can be traded for other cryptocurrencies or other sovereign currencies, just like BTC. Its current value is around US$13 vanaf ETH token (Oct 2016). Token ownership is tracked on the Ethereum blockchain, just like BTC ownership is tracked on Bitcoin’s blockchain, however at a technical level they track them te slightly different ways.

How is Ethereum different to Bitcoin?

This is where it gets more technical and ter many ways more ingewikkeld.

Ethereum’s block time is shorter

Te Ethereum the time inbetween blocks is around 14 seconds, compared with Bitcoin’s

Ten minutes. This means that on average if you made a Bitcoin transaction and an Ethereum transaction, the Ethereum transaction would be recorded into Ethereum’s blockchain quicker than the Bitcoin transaction getting into Bitcoin’s blockchain. You could say Bitcoin writes to its database harshly every Ten minutes, whereas Ethereum writes to its database harshly every 14 seconds.

Ethereum has smaller blocks

Te Bitcoin, the maximum block size is specified te bytes (presently 1 MB) whereas Ethereum’s block size is based on complexity of contracts being run – it’s known spil a Gas limit vanaf block, and the maximum can vary slightly from block to block.

Presently the maximum block size te Ethereum is around 1,500,000 Gas. Basic transactions or payments of ETH from one account to another (ie not a brainy contract) have a complexity of 21,000 Gas so you can gezond around 70 transactions into a block (1,500,000 / 21,000). Te Bitcoin you presently get around 1,500-2,000 transactions ter a block.

Data-wise presently most Ethereum blocks are under Two KB te size.

The Ethereum Virtual Machine can run brainy contracts

Compared with Bitcoin’s primitive scripting language, the code that can be deployed ter Ethereum and run spil clever contracts is more advanced and familiar to developers. Clever contract code is run by something called the Ethereum Virtual Machine, which runs on the computers of all participants on the network. If you are familiar with Microsoft Excel macros (lumps of code run by Excel), then similarly clever contracts are lumps of code run by Ethereum’s Virtual Machine.

Te many descriptions, Ethereum clever contracts are called “Turing complete”. This means that they are fully functional and can perform any computation that you can do ter any other programming language.

ETH token issuance

How are ETH tokens printed or created? The largest difference inbetween ETH and BTC token generation is that BTC generation halves approximately every Four years whereas ETH generation resumes to be generated at a onveranderlijk number every year (perhaps only until the Serenity version).

This is a loterijlot more complicated than Bitcoin. Ter summary, the number of ETH te existence are:

Pre-mine + Block prizes + Uncle prizes + Uncle referencing prizes

Pre-mine

Around 72 million ETH were created for the crowdsale ter July/Aug 2014. This is sometimes called a ‘pre-mine’. It wasgoed determined that post-crowdsale, future ETH generation would be capped at 25% of that vanaf year (ie no more than 18m ETH could be mined vanaf year, ter addition to the one-off

72m ETH generated for the crowdsale).

Block prize

Presently each block mined creates Five fresh ETH. Doing the maths, if a block is mined every 14 seconds, and there are 31.5m seconds ter a year (365x24x60x60), this means Two.25m blocks are mined vanaf year. Two.25m blocks at Five ETH vanaf block = 11.3m ETH generated vanaf year. This meets the commitment of less than 18m ETH generated vanaf year.

Uncle prize

Actually it’s a little more than that. Some blocks are mined a little late and don’t form part of the main blockchain. Ter Bitcoin thesis are called ‘orphans’ and are entirely discarded, but te Ethereum they are called ‘uncles’ and can be referenced by straks blocks. If uncles are referenced spil uncles by a straks block, they create about Four.375 ETH for the miner of the uncle (7/8th of the utter Five ETH prize). This is called the uncle prize. Presently around 500 uncles are created vanaf day, adding an extra Two,000 ETH into circulation vanaf day (

0.7m ETH vanaf year at this rate).

Uncle referencing prize

And there’s a bit more too: A miner who references an uncle also gets about 0.15 ETH vanaf uncle (maximum Two uncles).

This specimen described above, where valid blocks are determined and miners are rewarded, is called the Ghost protocol (Greedy Heaviest-Observed Sub-Tree).

Future switches to ETH generation

It hasn’t indeed bot determined yet what happens to issuance when Ethereum moves from Proof-of-Work (including the Ghost issuance rules) to Proof-of-Stake spil the block-addition mechanism. The Proof-of-Stake mechanism will use a protocol called Casper (yes, spil ter the friendly ghost. Who says cryptonerds don’t have a sense of humour?). The rate of ETH issuance under Casper may very well be lower than it is now under Ghost.

Mining prizes

So, what do miners get for mining?

Ter Bitcoin, the miner of a block receives:

  • 12.Five fresh BTC (presently. See a gentle introduction to bitcoin mining for more detail), plus
  • transaction fees from the transactions included ter the block

Ter Ethereum, the miner of a block receives:

  • Five fresh ETH block prize (0r Four.375 fresh ETH for an uncle), plus
  • a puny fresh prize for referencing up to Two latest uncles (1/32 of a block prize ie 1/32 x Five ETH = 0.15625 fresh ETH vanaf uncle), plus
  • gas from contracts that were run during the block

Presently the average block has a gas limit of 1,500,000 Gas, and the network has an average Gas Price of 0.000 000 022 ETH, meaning that a miner might make 0.033 ETH te a ‘total’ block spil the Gas prize. Note that the Gas from contracts are payments of existing ETH, not fresh ETH being created.

Other parts to Ethereum: Swarm and Whisper

Computers need to be able to calculate, store gegevens, and communicate. For Ethereum to realise its vision spil an unstoppable censorship-resistant self-sustaining decentralised ‘world’ laptop, it needs to be able to do those three things fairly efficiently and ter a sturdy way. The Ethereum Virtual Machine is just one component of the entire:

  • The Ethereum Virtual Machine is the ‘calculate’ factor that can run contract logic
  • This is computation without relying on a central server.
  • Swarm is Peer-to-Peer verkeersopstopping sharing, similar to BitTorrent, but incentivised with micropayments of ETH. Files are split into chunks, distributed and stored with participating volunteers. Thesis knots that store and serve the chunks are compensated with ETH from those storing and retrieving the gegevens.
    • This is opstopping storage without relying on a central server.
    • Whisper is an encrypted messaging protocol that permits knots to send messages directly to each other ter a secure way and that also hides the sender and receiver from third party snoopers.
      • This is communications without relying on a central server.
      • Ethereum concepts

        Brainy contracts

        Brainy contracts are little laptop programs that are stored on Ethereum’s blockchain. They can be activated, or run, by funding them with some ETH. For more on clever contracts, see a gentle introduction to clever contracts.

        Here’s an example brainy contract, taken from Wikipedia:

        Te Ethereum you set up a wise contract by creating a fresh account with some code ter it, and uploading it to the Ethereum blockchain te a transaction.

        Once a contract has bot uploaded, it behaves a bit like a jukebox – when you want to run it you create a transaction containing a payment of ETH to the contract, and possibly supplying some other information if the contract needs it.

        Each mining pc will run the clever contract on their pc using their Ethereum Virtual Machine spil part of the mining process, and come to a conclusion about the output. Te theory, if no one is behaving badly, each pc on the Ethereum network will come to the same conclusion because they are running the same contract code with the same supplied information.

        When a block is mined, the winning miner will publish the block to the surplus of the network, and the other computers will validate that they get the same result, then add the block to their own blockchains. This is how the state of Ethereum’s blockchain gets updated.

        Accounts

        Ter Bitcoin, there is a concept called address where bitcoins are stored – like a canap account number, but for bitcoins. Ter Ethereum thesis are commonly called accounts and there are two types:

        • Accounts that only store ETH – thesis are similar to Bitcoin addresses and are sometimes known spil Externally Possessed Accounts (EOAs). You make payments from thesis accounts by signing transactions with the suitable private key.
        • Here’s an example of an account that stores ETH:

        https://etherscan.io/address/0x2d7c76202834a11a99576acf2ca95a7e66928ba0

      • Accounts that store ETH and have code (clever contracts) that can be run – thesis clever contracts are activated by a transaction sending ETH into it. Once the brainy contract has bot uploaded, it sits there waiting to be activated.
        • Here’s an example of an account that has a clever contract:
        • Uncles and Orphans: blocks that don’t fairly make it

          Ethereum’s rate of block generation is much higher than Bitcoin’s (250 blocks vanaf hour on Ethereum vs 6 blocks vanaf hour on Bitcoin). When more blocks get created more quickly, the rate of “block clashes” increases – ie numerous valid blocks can get created at almost the same time, but only one of them can make it into the main chain. The other one “loses”, and the gegevens ter them is not considered part of the main ledger, even if the transactions are technically valid.

          Ter Bitcoin thesis non-mainchain blocks are called orphans or orphaned blocks and they do not form part of the main chain te any way and are never referenced again by any subsequent blocks.

          Ter Ethereum they are called uncles. Uncles can be referenced by a few of the subsequent blocks (see the section on ETH issuance) and albeit the gegevens ter them is not used, the slightly smaller prize for mining them is still valid.

          This achieves two significant things:

          1. It incentivises miners to mine even however there is a high chance of creating a non-mainchain block (the high speed of block creation results te more orphans or uncles)
          2. It increases the security of the blockchain by acknowledging the energy spent creating the uncle blocks

          Gas and Gas Price

          When you activate a wise contract, you ask all the miners ter the entire network to each individually perform the calculations within it. This costs them time and energy, and Gas is the mechanism by which you pay them for that service.

          The payment is a petite amount of ETH that the person who wants to run the contract needs to send to the miner to make it work. This is similar to putting a coin te a jukebox.

          Payment (te ETH) = Gas amount (ter Gas) x Gas price (te ETH/Gas)

          Gas amount

          The more ingewikkeld the wise contract (the number and type of computational steps, memory used for storage, etc), then the more Gas the contract requires to run and finish. Te the jukebox analogy, the longer or louder the song, then the more you’d need to pay to make it work.

          Gas Price

          Whereas the amount of Gas to run a contract is immobilized for any specific contract, spil determined by the complexity of the contract, the Gas Price is specified by the person who wants the contract to run, at the time they request it (a bit like Bitcoin transaction fees). Each miner will look at how generous the gas price is, and will determine whether they want to run the contract spil part of the block. If you want miners to run your contract, you suggest a high Gas Price. Te this way it’s a competitive auction driven by how much someone is willing to pay to have a contract run.

          Why Gas?

          Making clever contracts cost Gas/ETH/money stops people from activating them willy-nilly, solving problems relating to transaction spam that would toebijten if running brainy contracts were free.

          ETH Units

          Just like 1 dollar can be split into 100 cents, and 1 BTC can be split into 100,000,000 satoshi, Ethereum too has its own unit naming convention.

          The smallest unit is a weide and there are 1,000,000,000,000,000,000 of them vanaf ETH. There are also some other intermediate names: Finney, Szabo, Shannon, Babbage, Ada – all named after people who made significant contributions to fields related to cryptocurrencies or networks.

          Weide and Ether are the two most common denominations.

          Brainy Contract languages: Solidity / Tuinslang, LLL

          There are three common languages brainy contracts are written te, which can be compiled into clever contracts and run on Ethereum Virtual Machines. They are:

          • Solidity – similar to the language Javascript. This is presently the most popular and functional wise contract scripting language.
          • Slang – similar to the language Python, and wasgoed popular te the early history of Ethereum.
          • LLL (Lisp Like Language) – similar to Lisp and wasgoed only truly used te the very early days. It is most likely the hardest to write ter.

          Ethereum software: geth, eth, pyethapp

          The official Ethereum clients are all open source – that is you can see the code behind them, and tweak them to make your own versions. The most popular clients are:

          Thesis are all command-line based programs (think green text on black backgrounds) and so extra software can be used for a nicer graphical interface. Presently the official and most popular graphical one is Waas (https://github.com/ethereum/waas), which runs on top of geth or eth.

          So, geth/eth does the nasty background stuff, and Nevel is the pretty screen on top.

          History: Ethereum Timeline

          Vitalik Buterin described Ethereum spil a concept ter a White Paper te late 2013. This concept wasgoed developed by Dr. Gavin Wood who eventually published a technical Yellow Paper ter April 2014. Since then, the development of Ethereum has bot managed by a community of developers.

          A crowdsale to fund development took place te July and August 2014, and Ethereum’s live blockchain wasgoed launched on 30 July 2015.

          Ethereum crowdsale

          The development team wasgoed funded by an online sale of ETH tokens during July to August 2014 where people could buy ETH tokens by paying ter Bitcoin, at an initial motionless rate of 2000 ETH for 1 BTC (presently te Oct 2016 1 BTC will buy you 50 ETH on the open market).

          Crowdsale participants sent bitcoins to a bitcoin address and received an Ethereum wallet containing the number of ETH bought. Technical details are on Ethereum’s blog https://blog.ethereum.org/2014/07/22/launching-the-ether-sale/

          A little overheen 60m ETH wasgoed sold this way for a little overheen 31,500 BTC, worth about US$18m at the time. An extra 20% (12m ETH) were created to fund development and the Ethereum Foundation.

          Software Release codenames: Frontier / Homestead / Metropolis / Serenity

          Thesis are friendly names for versions of the core Ethereum software, a little like Apple’s OS X version names such spil Mavericks, El Capitan, Sierra.

          • Olympic (testnet): Launched May 2015 – a testing release where coins are not compatible with ‘real’ ETH. A testnet still runs te parallel to the main live network so that developers can test their code.
          • Frontier: Launched 30 July 2015 – an initial live release with a way for people to mine ETH and build and run contracts.
          • Homestead: Launched 14 March 2016 – some protocol switches, more stability.
          • Metropolis: Future launch – moving from command-line to graphical interfaces.
          • Serenity: Future launch – moving from Proof of Work to Proof of Stake (Casper).

          Summary

          The vision of the Ethereum’s development team is to build an unstoppable censorship-resistant self-sustaining decentralised world laptop that can perform calculations, store gegevens, and permit communications.

          There is a public permissionless open source version, and forks or copies of this have bot taken and adapted for private network use. The public and private versions are attempting to solve different problems.

          The technology is presently immature, but spil more people use it, test it, develop it and build on it, it will improve and become more sturdy.

          Ethereum is one of the most arousing technologies te the Blockchain space, so keep following its progress!

          Three Oct update: A few people have commented that I have not written about The DAO (“Decentralised Autonomous Organisation” – a specific wise contract that acted liked a crowd-based Venture Capital fund, whose funds were drained by a hacker who took advantage of messy wise contract coding) or Ethereum Classic (an alternative public Ethereum blockchain which split off from the main Ethereum-core-developer-supported chain on 20 Jul 2016 spil a response to the hacking of The DAO, with separate tokens called ETC sharing a common ancestory with ETH prior to block 1,920,000). This article is intended to be an introduction to Ethereum, and those two topics are more advanced and most likely deserve separate posts.

          Related movie: TRX/BTC Tron Jan 22 Technical Analysis – No General Trend Confirmed. Support Found?


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