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
- Smart Contracts
- Mining The Blockchain
- Acquiring And Spending Ethers
- Running An Ethereum Node
- Running An Ethereum Mining Node
- Questions And Answers
- Videos – BBC – Vitalik Buterin Ethereum Blockchain, Ethereum The World Computer
- DEVCON1 presentations- https://ether.press/devcon1-presentations/
- The main website – Ethereum Frontier
- Ethereum Network Status
- Blockchain Explorers – www.etherchain.org, etherscan.io, live.ether.camp
- Discussions – forum.ethereum.org, www.reddit.com/r/ethereum/, www.reddit.com/r/ethtrader, starter guide on reddit, Ethereum Stack Exchange.
- Market Cap
- Exchanges – Poloniex, Kraken, many more listed at Crypto-Currency Market Capitalisation and ShapeShift.
- Source code – github.com/ethereum
- Documents – White Paper, Ethereum Frontier Guide
- State of the DApps – Distributed applications
- Ethereum Builder’s Guide – Still under heavy development but contains a lot of information.
- Sample smart contracts with source code – Etherboard, Ethereum Pyramid, Etherdice and EthereumWall .
- Other application built on the Ethereum blockchain – Etheria [etheria.world]
- Ethereum unit converter – ether.fund/tool/converter
- How decentralised is Ethereum? Top Miners (24h)
- http://etherscrape.com/blockchain – Smart contract analysis tool.
- https://etherchain.org/contracts – Ethereum smart contracts addresses.
- Wallets – MyEtherWallet [myetherwallet.com]
The Ethereum World Computer
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
- 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)
- 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
Running An Ethereum Mining Node
- 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