The Ethereum World Computer

Ethereum now in second spot in CoinMarketCap 17:30:08 26/01/2016

Ethereum now in second spot in CoinMarketCap 17:30:08 26/01/2016

Draft – Under Construction – It will be completed when I complete it.

The Ethereum cryptocurrency has gained much popularity in the past week. It’s market capitalisation has increased by over 90% in the past 7 days, taking it from the fourth to the second position on the Crypto-Currency Market Capitalisation chart. And then it lost 25% over a few hours and back to the third position in the chart.

But Ethereum is much more than a cryptocurrency. It is based on the same blockchain concept as the original Bitcoin cryptocurrency (and the 600+ other cryptocurrencies currently in existence), but there are several important differences. Like Bitcoin, the Ethereum records transactions of currency amounts in an unalterable blockchain. But one big difference from Bitcoin is that Ethereum has a virtual machine backing the blockchain. This allows programs called Smart Contracts to be executed on the blockchain. And as a software developer, this is what caught my interest when I first started reading about Ethereum.

Ethereum has also been designed to be more decentralised compared to Bitcoin, where the mining of the blockchain is concentrated among a few miners. The Ethereum mining process uses a Proof-of-Work algorithm (moving to a Proof-of-Stake algorithm mid-2016) that is ASIC resistant, allowing ordinary individuals (geeks?) to run an Ethereum mining computer in their bedroom.

There are quite a few geekwords in the paragraphs above. I’ll try to explain them in the rest of this page.


Table of contents


Ethereum Resources


The Ethereum World Computer

History

Uses

 


Smart Contracts

Trusted execution of program code


Mining The Blockchain

Mining – Proof of Work currently, moving to Proof of Stake ~ mid 2016; 5 Ethers reward per block mined; new blocks every ~ 17 seconds


Acquiring And Spending Ethers

If you are not mining the Ethereum blockchain, you will first have to acquire Bitcoins and then exchange these bitcoins at exchange (see Ethereum Resources above) for ethers. Transfer it back to your wallet.


Running An Ethereum Node

Why?

  • Helps decentralise the network
  • Node software provides you with a wallet
  • Helps you to understand the process
  • Will use a bit of additional electricity (minimal CPU usage) and disk space (small risk with additional software installed on your computer)

Requirements

  • Network connection – enough bandwidth
  • Hard disk space – chain about 7Gb currently (since first block a few months ago), will grow with time
  • Won’t earn ethers in proof-of-work stage
  • May be able to earn ethers in proof-of-stake stage with minimal hardware – just need ?1500 ethers to place as stake

Windows

Ubuntu


Running An Ethereum Mining Node

Why?

Requirements

  • Network connection – enough bandwidth and fast enough
  • Earn ethers
  • Need specialised hardware to properly compete
  • Will only be useful in the proof-of-work stage
  • Proof-of-stake stage – will need ?1500 ethers to place as stake and earn some ethers. Don’t need this specialised hardware
  • Will cost a bit on electricity, hopefully green

Questions And Answers

Hashrate

DIfficulty

Blocks

Blockchain