Ethereum is a
decentralized
Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.
Conce ...
,
open-source
Open source is source code that is made freely available for possible modification and redistribution. Products include permission to use the source code, design documents, or content of the product. The open-source model is a decentralized sof ...
blockchain
A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a ...
with
smart contract
A smart contract is a computer program or a transaction protocol that is intended to automatically execute, control or document events and actions according to the terms of a contract or an agreement. The objectives of smart contracts are the re ...
functionality. Ether (
Abbreviation
An abbreviation (from Latin ''brevis'', meaning ''short'') is a shortened form of a word or phrase, by any method. It may consist of a group of letters or words taken from the full version of the word or phrase; for example, the word ''abbrevia ...
: ETH;
sign
A sign is an object, quality, event, or entity whose presence or occurrence indicates the probable presence or occurrence of something else. A natural sign bears a causal relation to its object—for instance, thunder is a sign of storm, or me ...
: Ξ) is the native
cryptocurrency
A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It i ...
of the platform. Among cryptocurrencies, ether is second only to
bitcoin
Bitcoin ( abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distr ...
in
market capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by t ...
.
Ethereum was conceived in 2013 by programmer
Vitalik Buterin
Vitaly "Vitalik" Buterin (born 1994) is a Russian-Canadian computer programmer and founder of Ethereum. Buterin became involved with cryptocurrency early in its inception, co-founding ''Bitcoin Magazine'' in 2011. In 2014, Buterin deployed Eth ...
. Additional founders of Ethereum included
Gavin Wood
Gavin James Wood (born 1980) is an English computer scientist, a founder of Ethereum and creator of Polkadot and Kusama.
Early life
Wood was born in Lancaster, England, United Kingdom. He attended the Lancaster Royal Grammar School. He gradua ...
,
Charles Hoskinson
Charles Hoskinson is an American entrepreneur who is a co-founder of the blockchain engineering company Input Output Global, Inc. (formerly IOHK), and the Cardano blockchain platform, and was a co-founder of the Ethereum blockchain platform.
E ...
,
Anthony Di Iorio
Anthony Di Iorio is a Canadian entrepreneur primarily known as a co-founder of Ethereum and an early investor in Bitcoin. Di Iorio is the founder and CEO of the blockchain company Decentral, and the associated Jaxx wallet. He also served as the fi ...
and
Joseph Lubin.
In 2014,
development
Development or developing may refer to:
Arts
*Development hell, when a project is stuck in development
*Filmmaking, development phase, including finance and budgeting
*Development (music), the process thematic material is reshaped
* Photograph ...
work began and was
crowdfunded
Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over was raised worldwide by crow ...
, and the network went live on 30 July 2015. Ethereum allows anyone to deploy permanent and immutable
decentralized application
A decentralised application (DApp, dApp, Dapp, or dapp) is an application that can operate autonomously, typically through the use of smart contracts, that run on a decentralized computing, blockchain or other distributed ledger system. Like ...
s onto it, with which users can interact.
Decentralized finance
Decentralized finance (often stylized as DeFi) offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a blockchain. DeFi platforms allow people to lend or borrow funds ...
(DeFi) applications provide a broad array of financial services without the need for typical
financial intermediaries
A financial intermediary is an institution or individual that serves as a middleman among diverse parties in order to facilitate financial transactions. Common types include commercial banks, investment banks, stockbrokers, pooled investment funds ...
like
brokerage
A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...
s,
exchanges, or
bank
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Because ...
s, such as allowing cryptocurrency users to borrow against their holdings or lend them out for
interest
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...
.
Ethereum also allows users to create and exchange
NFTs
The National Film and Television School (NFTS) is a film, television and games school established in 1971 and based at Beaconsfield Studios in Beaconsfield, Buckinghamshire, England. It is featured in the 2021 ranking by ''The Hollywood Repor ...
, which are unique tokens representing ownership of an associated asset or privilege, as recognized by any number of institutions. Additionally, many other cryptocurrencies utilize the ERC-20 token standard on top of the Ethereum blockchain and have utilized the platform for
initial coin offering
An initial coin offering (ICO) or initial currency offering is a type of funding using cryptocurrencies. It is often a form of crowdfunding, although a private ICO which does not seek public investment is also possible. In an ICO, a quantity of cr ...
s.
On 15 September 2022, Ethereum transitioned its
consensus mechanism from
proof-of-work
Proof of work (PoW) is a form of cryptographic proof in which one party (the ''prover'') proves to others (the ''verifiers'') that a certain amount of a specific computational effort has been expended. Verifiers can subsequently confirm this exp ...
(PoW) to
proof-of-stake
Proof-of-stake (PoS) protocols are a class of consensus mechanisms for blockchain
A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked togethe ...
(PoS) in an upgrade process known as "the Merge".
History
Founding (2013–2014)
![Vitalik Buterin TechCrunch London 2015 (cropped)](https://upload.wikimedia.org/wikipedia/commons/1/1c/Vitalik_Buterin_TechCrunch_London_2015_%28cropped%29.jpg)
Ethereum was initially described in late 2013 in a
white paper
A white paper is a report or guide that informs readers concisely about a complex issue and presents the issuing body's philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision. A white paper ...
by
Vitalik Buterin
Vitaly "Vitalik" Buterin (born 1994) is a Russian-Canadian computer programmer and founder of Ethereum. Buterin became involved with cryptocurrency early in its inception, co-founding ''Bitcoin Magazine'' in 2011. In 2014, Buterin deployed Eth ...
, a programmer and co-founder of ''
Bitcoin Magazine
''Bitcoin Magazine'' is one of the original news and print magazine publishers covering Bitcoin and digital currencies. ''Bitcoin Magazine'' began publishing in 2012. It was co-founded by Vitalik Buterin, Mihai Alisie, Matthew N. Wright, Vladimir ...
'', that described a way to build
decentralized
Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.
Conce ...
applications.
Buterin argued to the
Bitcoin Core
Bitcoin (abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distrib ...
developers that Bitcoin and blockchain technology could benefit from other applications besides money and that it needed a more robust language for application development
that could lead to real-world assets, such as stocks and property, to the blockchain.
In 2013, Buterin briefly worked with
eToro
eToro is an Israeli social trading and multi-asset investment company that focuses on providing financial and copy trading services. Its headquarters are located in Central Israel, and the company has registered offices in Cyprus, the Unite ...
CEO Yoni Assia on the
Colored Coins
Colored Coins is an open-source protocol built on the Bitcoin 2.0 that allows users to represent and manipulate immutable digital resources on top of Bitcoin transactions. They are a class of methods for representing and maintaining real-world ...
project and drafted its white paper outlining additional use cases for blockchain technology. However, after failing to gain agreement on how the project should proceed, he proposed the development of a new platform with a more robust scripting language—a
Turing-complete
In computability theory, a system of data-manipulation rules (such as a computer's instruction set, a programming language, or a cellular automaton) is said to be Turing-complete or computationally universal if it can be used to simulate any Tur ...
programming language—that would eventually become Ethereum.
Ethereum was announced at the North American Bitcoin Conference in Miami, in January 2014.
During the conference,
Gavin Wood
Gavin James Wood (born 1980) is an English computer scientist, a founder of Ethereum and creator of Polkadot and Kusama.
Early life
Wood was born in Lancaster, England, United Kingdom. He attended the Lancaster Royal Grammar School. He gradua ...
,
Charles Hoskinson
Charles Hoskinson is an American entrepreneur who is a co-founder of the blockchain engineering company Input Output Global, Inc. (formerly IOHK), and the Cardano blockchain platform, and was a co-founder of the Ethereum blockchain platform.
E ...
, and
Anthony Di Iorio
Anthony Di Iorio is a Canadian entrepreneur primarily known as a co-founder of Ethereum and an early investor in Bitcoin. Di Iorio is the founder and CEO of the blockchain company Decentral, and the associated Jaxx wallet. He also served as the fi ...
(who financed the project) rented a house in Miami with Buterin at which they could develop a fuller sense of what Ethereum might become.
Di Iorio invited friend
Joseph Lubin, who invited reporter Morgen Peck, to bear witness.
Peck subsequently wrote about the experience in ''
Wired
''Wired'' (stylized as ''WIRED'') is a monthly American magazine, published in print and online editions, that focuses on how emerging technologies affect culture, the economy, and politics. Owned by Condé Nast, it is headquartered in San Fra ...
''. Six months later the founders met again in
Zug
, neighboring_municipalities = Cham, Baar, Walchwil, Steinhausen, Unterägeri
, twintowns = Fürstenfeld (Austria), Kalesija (Bosnia-Herzegowina)
Zug (Standard German: , Alemannic German: ; french: Zoug it, Zugo r ...
, Switzerland, where Buterin told the founders that the project would proceed as a non-profit. Hoskinson left the project at that time and soon after founded IOHK, a blockchain company responsible for
Cardano.
Ethereum has an unusually long list of founders.
Anthony Di Iorio wrote: "Ethereum was founded by Vitalik Buterin, Myself, Charles Hoskinson, Mihai Alisie & Amir Chetrit (the initial 5) in December 2013. Joseph Lubin, Gavin Wood, & Jeffrey Wilcke were added in early 2014 as founders." Buterin chose the name Ethereum after browsing a list of elements from science fiction on
Wikipedia
Wikipedia is a multilingual free online encyclopedia written and maintained by a community of volunteers, known as Wikipedians, through open collaboration and using a wiki-based editing system. Wikipedia is the largest and most-read refer ...
. He stated, "I immediately realized that I liked it better than all of the other alternatives that I had seen; I suppose it was the fact that
tsounded nice and it had the word '
ether
In organic chemistry, ethers are a class of compounds that contain an ether group—an oxygen atom connected to two alkyl or aryl groups. They have the general formula , where R and R′ represent the alkyl or aryl groups. Ethers can again be c ...
', referring to the hypothetical invisible medium that permeates the universe and allows light to travel."
Buterin wanted his platform to be the underlying and imperceptible medium for the applications running on top of it.
Development (2014)
Formal development of the software underlying Ethereum began in early 2014 through a Swiss company, Ethereum Switzerland GmbH (''EthSuisse'').
The idea of putting executable
smart contract
A smart contract is a computer program or a transaction protocol that is intended to automatically execute, control or document events and actions according to the terms of a contract or an agreement. The objectives of smart contracts are the re ...
s in the blockchain needed to be specified before it could be implemented in software. This work was done by Gavin Wood, then the
chief technology officer, in the Ethereum Yellow Paper that specified the Ethereum Virtual Machine.
[ Subsequently, a Swiss non-profit foundation, the Ethereum Foundation (''Stiftung Ethereum''), was founded. Development was funded by an online public crowd sale from July to August 2014, in which participants bought the Ethereum value token (ether) with another digital currency, bitcoin. While there was early praise for the technical innovations of Ethereum, questions were also raised about its security and scalability.]
Launch and the DAO event (2014–2016)
Several codenamed prototypes of Ethereum were developed over 18 months in 2014 and 2015 by the Ethereum Foundation as part of their proof-of-concept
Proof of concept (POC or PoC), also known as proof of principle, is a realization of a certain method or idea in order to demonstrate its feasibility, or a demonstration in principle with the aim of verifying that some concept or theory has prac ...
series. "Olympic" was the last prototype and public beta pre-release. The Olympic network gave users a bug bounty
A bug bounty program is a deal offered by many websites, organizations and software developers by which individuals can receive recognition and compensation for reporting bugs, especially those pertaining to security exploits and vulnerabilit ...
of 25,000 ether for stress-testing the Ethereum blockchain. On 30 July 2015, "Frontier" marked the official launch of the Ethereum platform, and Ethereum created its "genesis block". The genesis block contained 8,893 transactions allocating various amounts of ether to different addresses, and a block reward of 5 ETH.
Since the initial launch, Ethereum has undergone a number of planned protocol upgrades, which are important changes affecting the underlying functionality and/or incentive structures of the platform. Protocol upgrades are accomplished by means of a hard fork.
In 2016, a decentralized autonomous organization called The DAO—a set of smart contracts developed on the platform—raised a record in a crowd sale to fund the project. The DAO was exploited in June 2016 when of DAO tokens were stolen by an unknown hacker. The event sparked a debate in the crypto-community about whether Ethereum should perform a contentious "hard fork" to reappropriate the affected funds. The fork resulted in the network splitting into two blockchains: Ethereum with the theft reversed, and Ethereum Classic
Ethereum Classic is an open source, blockchain-based distributed computing platform featuring smart contract (scripting) functionality. It supports a modified version of Nakamoto consensus via transaction-based state transitions executed on a p ...
which continued on the original chain. The hard fork created a rivalry between the two networks. After the hard fork, Ethereum subsequently forked twice in the fourth quarter of 2016 to deal with other attacks.
Continued development and milestones (2017–present)
In March 2017, various blockchain
A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a ...
startups, research groups, and ''Fortune'' 500 companies announced the creation of the Enterprise Ethereum Alliance (EEA) with 30 founding members. By May 2017, the nonprofit organization had 116 enterprise members, including ConsenSys
ConsenSys is a blockchain software technology company founded by Joseph Lubin and based in New York City.
History
Joseph Lubin founded ConsenSys in early 2015 as a software foundry to develop decentralized software services and applications ...
, CME Group
CME Group Inc. (Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, The Commodity Exchange) is an American global markets company. It is the world's largest financial derivatives exchange, and trades in asset class ...
, Cornell University's research group, Toyota Research Institute, Samsung SDS
Samsung SDS Co., Ltd. (formerly Samsung Data Systems; ), established in 1985 as a subsidiary of Samsung Group, is a provider of information technology (IT) services, including consulting services, technical services, and outsourcing services. SDS ...
, Microsoft
Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washing ...
, Intel
Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California. It is the world's largest semiconductor chip manufacturer by revenue, and is one of the developers of the x86 seri ...
, J. P. Morgan
John Pierpont Morgan Sr. (April 17, 1837 – March 31, 1913) was an American financier and investment banker who dominated corporate finance on Wall Street throughout the Gilded Age. As the head of the banking firm that ultimately became known ...
, Cooley LLP
Cooley LLP is an American international law firm, headquartered in Palo Alto, California, with offices worldwide. The firm's practice areas include corporate, litigation, intellectual property, fund formation, public markets, employment, life ...
, Merck KGaA
The Merck Group, branded and commonly known as Merck, is a German multinational science and technology company headquartered in Darmstadt, with about 60,000 employees and present in 66 countries. The group includes around 250 companies; the ma ...
, DTCC, Deloitte
Deloitte Touche Tohmatsu Limited (), commonly referred to as Deloitte, is an international professional services network headquartered in London, England. Deloitte is the largest professional services network by revenue and number of profession ...
, Accenture
Accenture plc is an Irish-American professional services company based in Dublin, specializing in information technology (IT) services and consulting. A ''Fortune'' Global 500 company, it reported revenues of $61.6 billion in 2022. Accentur ...
, Banco Santander
Banco Santander, S.A., doing business as Santander Group (, , Spanish: ), is a Spanish multinational financial services company based in Madrid and Santander in Spain. Additionally, Santander maintains a presence in all global financial centr ...
, BNY Mellon
The Bank of New York Mellon Corporation, commonly known as BNY Mellon, is an American investment banking services holding company headquartered in New York City. BNY Mellon was formed from the merger of The Bank of New York and the Mellon Finan ...
, ING
Ing, ING or ing may refer to:
Art and media
* '' ...ing'', a 2003 Korean film
* i.n.g, a Taiwanese girl group
* The Ing, a race of dark creatures in the 2004 video game '' Metroid Prime 2: Echoes''
* "Ing", the first song on The Roches' 1992 ...
, and National Bank of Canada. By July 2017, there were over 150 members in the alliance, including MasterCard, Cisco Systems
Cisco Systems, Inc., commonly known as Cisco, is an American-based multinational corporation, multinational digital communications technology conglomerate (company), conglomerate corporation headquartered in San Jose, California. Cisco develo ...
, Sberbank
PJSC Sberbank (russian: Сбербанк, initially a contraction of russian: сберегательный банк, translit=sberegatelnyy bank, lit=savings bank, link=no) is a Russian majority state-owned banking and financial services compan ...
, and Scotiabank
The Bank of Nova Scotia (french: link=no, Banque de Nouvelle-Écosse), operating as Scotiabank (french: link=no, Banque Scotia), is a Canadian multinational banking and financial services company headquartered in Toronto, Ontario. One of Canada ...
.
By January 2018, ether was the second-largest cryptocurrency in terms of market capitalization, behind bitcoin. , it maintained that relative position.
After the Constantinople upgrade on 28 February 2019, there were two network upgrades made within a month late in the year: Istanbul on 8 December 2019 and Muir Glacier on 2 January 2020.
In 2019, Ethereum Foundation employee Virgil Griffith
Virgil Griffith (born 1983), also known as Romanpoet, is an American programmer. He worked extensively on the Ethereum cryptocurrency platform, designed the Tor2web proxy along with Aaron Swartz, and created the Wikipedia indexing tool WikiSca ...
was arrested by the US government for presenting at a blockchain conference in North Korea. He would later plead guilty to in 2021.
In March 2021, Visa Inc.
Visa Inc. (; stylized as ''VISA'') is an American multinational financial services corporation headquartered in San Francisco, California. It facilitates electronic funds transfers throughout the world, most commonly through Visa-branded cred ...
announced that it began settling stablecoin
Stablecoins are cryptocurrencies where the price is supposed to be pegged to a reference asset, which is either fiat money, exchange-traded commodities (such as precious metals or industrial metals), or another cryptocurrency.
In theory, the p ...
transactions using Ethereum. In April 2021, JP Morgan Chase
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the w ...
, UBS
UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...
, and MasterCard announced that they were investing into ConsenSys
ConsenSys is a blockchain software technology company founded by Joseph Lubin and based in New York City.
History
Joseph Lubin founded ConsenSys in early 2015 as a software foundry to develop decentralized software services and applications ...
, a software development firm that builds Ethereum-related infrastructure.
There were two network upgrades in 2021. The first was "Berlin", implemented on 14 April 2021. The second was "London", which took effect on 5 August. The London upgrade included Ethereum Improvement Proposal ("EIP") 1559, a mechanism for reducing transaction fee volatility. The mechanism causes a portion of the ether paid in transaction fees for each block to be destroyed rather than given to the miner, reducing the inflation rate of ether and potentially resulting in periods of deflation.
On 27 August 2021, the blockchain experienced a brief fork
In cutlery or kitchenware, a fork (from la, furca 'pitchfork') is a utensil, now usually made of metal, whose long handle terminates in a head that branches into several narrow and often slightly curved tines with which one can spear foods ei ...
that was the result of clients running different incompatible software versions.
Ethereum 2.0
Ethereum 2.0 (Eth2) was a set of three or more upgrades, also known as "phases", meant to transition the network's consensus mechanism to proof-of-stake, and to scale the network's transaction throughput with execution sharding and an improved EVM architecture. The first of these three upgrades, also known as "phase 0", launched the proof-of-stake Beacon Chain on the 1st of December, 2020.
Following the realisation that the Beacon Chain would be delivered much earlier than the later phases of the Eth2 roadmap, proposals were made for an "early Merge", expediting the delivery of proof-of-stake to Ethereum. Most importantly, the early Merge would not require any migration from Ethereum’s applications or its users, and would continue using the heavily battle-tested mainnet Ethereum clients in conjunction with the new proof-of-stake consensus clients.
In early 2022, the “Ethereum 2.0” terminology was deprecated in an effort to highlight the existence of only one Ethereum network and one ether cryptocurrency. As a result of the effort, the Eth1 blockchain was renamed to the “execution layer”, and its associated Eth1 clients were reclassified as execution clients. Similarly, the Eth2 blockchain was renamed to the consensus layer, and its associated Eth2 clients were reclassified as consensus clients.
Design
Ethereum is a permissionless, non-hierarchical network of computers (nodes) that build and come to a consensus on an ever-growing series of "blocks", or batches of transactions, known as the blockchain
A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a ...
. Each block contains an identifier
An identifier is a name that identifies (that is, labels the identity of) either a unique object or a unique ''class'' of objects, where the "object" or class may be an idea, physical countable object (or class thereof), or physical noncountable ...
of the chain that must precede it if the block is to be considered valid. Whenever a node adds a block to its chain, it executes the transactions in the block in the order they are listed, each of which may alter the ETH balances and other storage values of Ethereum accounts. These balances and values, collectively known as the "state", are maintained on the node separately from the blockchain
A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a ...
, in a Merkle tree
In cryptography and computer science, a hash tree or Merkle tree is a tree in which every "leaf" (node) is labelled with the cryptographic hash of a data block, and every node that is not a leaf (called a ''branch'', ''inner node'', or ''inode'') ...
.
Each node communicates with a relatively small subset of the network—its "peers". Whenever a node wishes to include a new transaction in the blockchain, it sends a copy of the transaction to each of its peers, who then send a copy to each of their peers, and so on. In this way, it propagates throughout the network. Certain nodes, called miners, maintain a list of all of these new transactions and use them to create new blocks, which they then send to the rest of the network. Whenever a node receives a block, it checks the validity of the block and of all of the transactions therein and, if it finds the block to be valid, adds it to its blockchain and executes all of those transactions. Since block creation and broadcasting are permissionless, a node may receive multiple blocks competing to be the successor to a particular block. The node keeps track of all of the valid chains that result from this and regularly drops the shortest one: According to the Ethereum protocol, the longest chain at any given time is to be considered the canonical one.
Ether
Ether (ETH) is the cryptocurrency generated in accordance with the Ethereum protocol as a reward to miners in a proof-of-work
Proof of work (PoW) is a form of cryptographic proof in which one party (the ''prover'') proves to others (the ''verifiers'') that a certain amount of a specific computational effort has been expended. Verifiers can subsequently confirm this exp ...
system for adding blocks to the blockchain. Ether is represented in the state as an unsigned
Unsigned can refer to:
* An unsigned artist is a musical artist or group not attached or signed to a record label
** Unsigned Music Awards, ceremony noting achievements of unsigned artists
** Unsigned band web, online community
* Similarly, the c ...
integer
An integer is the number zero (), a positive natural number (, , , etc.) or a negative integer with a minus sign (−1, −2, −3, etc.). The negative numbers are the additive inverses of the corresponding positive numbers. In the language ...
associated with each account, this being the account's ETH balance denominated in wei (1018 wei = 1 ether). Each block, new ETH is generated by the addition of a protocol-specified amount, currently 2 × 1018 wei (equal to 2 ETH), to the balance of any account of the miner's choosing. This is known as the block reward. Additionally, ether is the only currency accepted by the protocol as payment for a transaction fee, which also goes to the miner. The block reward together with the transaction fees provide the incentive to miners to keep the blockchain growing (i.e. to keep processing new transactions). Therefore, ETH is fundamental to the operation of the network. Ether may be "sent" from one account to another via a transaction, which simply entails subtracting the ''amount to be sent'' from the sender's balance and adding the same amount to the recipient's balance.
Ether is often erroneously referred to as "Ethereum".
Ether is listed on exchanges under the abbreviation ETH. The Greek uppercase Xi character (Ξ) is sometimes used for its currency symbol.
The shift to Ethereum 2.0 may reduce the issuance rate of ether. There is currently no implemented hard cap on the total supply of Ether.
Accounts
There are two types of accounts on Ethereum: user accounts (also known as externally-owned accounts) and contracts. Both types have an ETH balance, may send ETH to any account, may call any public function
Function or functionality may refer to:
Computing
* Function key, a type of key on computer keyboards
* Function model, a structured representation of processes in a system
* Function object or functor or functionoid, a concept of object-oriente ...
of a contract or create a new contract, and are identified on the blockchain and in the state by an account address.[
User accounts are the only type of account that may create transactions. For a transaction to be valid, it must be signed using the sending account's private key, the 64-character ]hexadecimal
In mathematics and computing, the hexadecimal (also base-16 or simply hex) numeral system is a positional numeral system that represents numbers using a radix (base) of 16. Unlike the decimal system representing numbers using 10 symbols, hexa ...
string from which the account's address is derived. The algorithm
In mathematics and computer science, an algorithm () is a finite sequence of rigorous instructions, typically used to solve a class of specific Computational problem, problems or to perform a computation. Algorithms are used as specificat ...
used to produce the signature is ECDSA
In cryptography, the Elliptic Curve Digital Signature Algorithm (ECDSA) offers a variant of the Digital Signature Algorithm (DSA) which uses elliptic-curve cryptography.
Key and signature-size
As with elliptic-curve cryptography in general, the b ...
. Importantly, this algorithm allows one to derive the signer's address from the signature without knowing the private key.
Contracts are the only type of account that has associated code
In communications and information processing, code is a system of rules to convert information—such as a letter, word, sound, image, or gesture—into another form, sometimes shortened or secret, for communication through a communication ...
(a set of functions and variable
Variable may refer to:
* Variable (computer science), a symbolic name associated with a value and whose associated value may be changed
* Variable (mathematics), a symbol that represents a quantity in a mathematical expression, as used in many ...
declarations) and contract storage (the values of the variables at any given time). A contract function may take arguments
An argument is a statement or group of statements called premises intended to determine the degree of truth or acceptability of another statement called conclusion. Arguments can be studied from three main perspectives: the logical, the dialectic ...
and may have return values
Return may refer to:
In business, economics, and finance
* Return on investment (ROI), the financial gain after an expense.
* Rate of return, the financial term for the profit or loss derived from an investment
* Tax return, a blank document or t ...
. In addition to control flow
In computer science, control flow (or flow of control) is the order in which individual statements, instructions or function calls of an imperative program are executed or evaluated. The emphasis on explicit control flow distinguishes an ''imper ...
statements, the body of a function may include instructions to send ETH, read from and write to the contract's storage, create temporary storage (memory
Memory is the faculty of the mind by which data or information is encoded, stored, and retrieved when needed. It is the retention of information over time for the purpose of influencing future action. If past events could not be remembered, ...
) that vanishes at the end of the function, perform arithmetic
Arithmetic () is an elementary part of mathematics that consists of the study of the properties of the traditional operations on numbers— addition, subtraction, multiplication, division, exponentiation, and extraction of roots. In the 19th ...
and hashing
Hash, hashes, hash mark, or hashing may refer to:
Substances
* Hash (food), a coarse mixture of ingredients
* Hash, a nickname for hashish, a cannabis product
Hash mark
* Hash mark (sports), a marking on hockey rinks and gridiron football fiel ...
operations, call the contract's own functions, call public functions of other contracts, create new contracts, and query information about the current transaction or the blockchain.
Addresses
Ethereum addresses are composed of the prefix "0x
" (a common identifier for hexadecimal
In mathematics and computing, the hexadecimal (also base-16 or simply hex) numeral system is a positional numeral system that represents numbers using a radix (base) of 16. Unlike the decimal system representing numbers using 10 symbols, hexa ...
) concatenated with the rightmost 20 bytes of the Keccak-256 hash of the ECDSA public key
Public-key cryptography, or asymmetric cryptography, is the field of cryptographic systems that use pairs of related keys. Each key pair consists of a public key and a corresponding private key. Key pairs are generated with cryptographic alg ...
(the curve used is the so-called ''secp256k1''). In hexadecimal, two digits represent a byte, and so addresses contain 40 hexadecimal digits, e.g. 0xb794f5ea0ba39494ce839613fffba74279579268
. Contract addresses are in the same format, however, they are determined by sender and creation transaction nonce.
Virtual machine
The Ethereum Virtual Machine (EVM) is the runtime environment for transaction execution in Ethereum. It includes a stack
Stack may refer to:
Places
* Stack Island, an island game reserve in Bass Strait, south-eastern Australia, in Tasmania’s Hunter Island Group
* Blue Stack Mountains, in Co. Donegal, Ireland
People
* Stack (surname) (including a list of people ...
, memory, and the persistent storage for all Ethereum accounts (including contract code). The EVM is stack-based, in that most instructions pop operands
In mathematics, an operand is the object of a mathematical operation, i.e., it is the object or quantity that is operated on.
Example
The following arithmetic expression shows an example of operators and operands:
:3 + 6 = 9
In the above exampl ...
from the stack and push the result to the stack. The EVM is designed to be deterministic
Determinism is a philosophical view, where all events are determined completely by previously existing causes. Deterministic theories throughout the history of philosophy have developed from diverse and sometimes overlapping motives and consi ...
on a wide variety of hardware and operating systems
An operating system (OS) is system software that manages computer hardware, software resources, and provides common services for computer programs.
Time-sharing operating systems schedule tasks for efficient use of the system and may also inc ...
, so that given a pre-transaction state and a transaction, each node produces the same post-transaction state, thereby enabling network consensus. The formal definition of the EVM is specified in the Ethereum Yellow Paper. EVMs have been implemented in C++
C++ (pronounced "C plus plus") is a high-level general-purpose programming language created by Danish computer scientist Bjarne Stroustrup as an extension of the C programming language, or "C with Classes". The language has expanded significan ...
, C#, Go, Haskell
Haskell () is a general-purpose, statically-typed, purely functional programming language with type inference and lazy evaluation. Designed for teaching, research and industrial applications, Haskell has pioneered a number of programming lan ...
, Java
Java (; id, Jawa, ; jv, ꦗꦮ; su, ) is one of the Greater Sunda Islands in Indonesia. It is bordered by the Indian Ocean to the south and the Java Sea to the north. With a population of 151.6 million people, Java is the world's List ...
, JavaScript
JavaScript (), often abbreviated as JS, is a programming language that is one of the core technologies of the World Wide Web, alongside HTML and CSS. As of 2022, 98% of Website, websites use JavaScript on the Client (computing), client side ...
, Python
Python may refer to:
Snakes
* Pythonidae, a family of nonvenomous snakes found in Africa, Asia, and Australia
** ''Python'' (genus), a genus of Pythonidae found in Africa and Asia
* Python (mythology), a mythical serpent
Computing
* Python (pro ...
, Ruby
A ruby is a pinkish red to blood-red colored gemstone, a variety of the mineral corundum ( aluminium oxide). Ruby is one of the most popular traditional jewelry gems and is very durable. Other varieties of gem-quality corundum are called sa ...
, Rust
Rust is an iron oxide, a usually reddish-brown oxide formed by the reaction of iron and oxygen in the catalytic presence of water or air moisture. Rust consists of hydrous iron(III) oxides (Fe2O3·nH2O) and iron(III) oxide-hydroxide (FeO(OH ...
, Elixir
ELIXIR (the European life-sciences Infrastructure for biological Information) is an initiative that will allow life science laboratories across Europe to share and store their research data as part of an organised network. Its goal is to bring t ...
, Erlang, and soon WebAssembly
WebAssembly (sometimes abbreviated Wasm) defines a portable binary-code format and a corresponding text format for executable programs as well as software interfaces for facilitating interactions between such programs and their host environment ...
.
Gas
Gas is a unit of account
In economics, unit of account is one of the money functions. A unit of account is a standard numerical monetary unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of rela ...
within the EVM used in the calculation of a transaction fee, which is the amount of ETH a transaction's sender must pay to the miner who includes the transaction in the blockchain.
Each type of operation which may be performed by the EVM is hardcoded
Hard coding (also hard-coding or hardcoding) is the software development practice of embedding data directly into the source code of a computer program, program or other executable object, as opposed to obtaining the data from external sources or ...
with a certain gas cost, which is intended to be roughly proportional to the amount of resources (computation
Computation is any type of arithmetic or non-arithmetic calculation that follows a well-defined model (e.g., an algorithm).
Mechanical or electronic devices (or, historically, people) that perform computations are known as ''computers''. An es ...
and storage) a node must expend to perform that operation. When a sender creates a transaction, the sender must specify a ''gas limit'' and ''gas price''. The ''gas limit'' is the maximum amount of gas the sender is willing to use in the transaction, and the ''gas price'' is the amount of ETH the sender wishes to pay to the miner per unit of gas used. The higher the ''gas price'', the more incentive a miner has to include the transaction in their block, and thus the quicker the transaction will be included in the blockchain. The sender buys the full amount of gas (i.e. their ETH balance is debited the amount: ''gas limit'' × ''gas price'') up-front, at the start of the execution of the transaction, and is refunded at the end for any unused gas. If at any point the transaction does not have enough gas to perform the next operation, the transaction is reverted but the sender is still only refunded for the unused gas. In user interfaces
In the industrial design field of human–computer interaction, a user interface (UI) is the space where interactions between humans and machines occur. The goal of this interaction is to allow effective operation and control of the machine fr ...
, gas prices are typically denominated in gigawei (gwei), a subunit of ETH equal to 10−9 ETH.
This fee mechanism is designed to mitigate transaction spam, prevent infinite loops during contract execution, and provide for a market-based allocation of network resources.
Difficulty bomb
The difficulty bomb is an Ethereum protocol feature that causes the difficulty of mining a block to increase exponentially
Exponential may refer to any of several mathematical topics related to exponentiation, including:
*Exponential function, also:
**Matrix exponential, the matrix analogue to the above
* Exponential decay, decrease at a rate proportional to value
*Exp ...
over time after a certain block is reached, with the intended purpose being to incentivize upgrades to the protocol and prevent miners from having too much control over upgrades. As the protocol is upgraded, the difficulty bomb is typically pushed further out in time. The protocol has included a difficulty bomb from the beginning, and the bomb has been pushed back several times. It was originally placed there primarily to ensure a successful upgrade from proof of work to proof of stake, an upgrade that removes miners entirely from the design of the network. The period during which the mining difficulty is increasing is known as the "Ice Age".
Applications
The EVM's instruction set
In computer science, an instruction set architecture (ISA), also called computer architecture, is an abstract model of a computer. A device that executes instructions described by that ISA, such as a central processing unit (CPU), is called an ' ...
is Turing-complete
In computability theory, a system of data-manipulation rules (such as a computer's instruction set, a programming language, or a cellular automaton) is said to be Turing-complete or computationally universal if it can be used to simulate any Tur ...
.[ Popular uses of Ethereum have included the creation of fungible (ERC-20) and non-fungible (ERC-721) tokens with a variety of properties, ]crowdfunding
Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over was raised worldwide by crow ...
(e.g. initial coin offerings
An initial coin offering (ICO) or initial currency offering is a type of funding using cryptocurrencies. It is often a form of crowdfunding, although a private ICO which does not seek public investment is also possible. In an ICO, a quantity of cr ...
), decentralized finance
Decentralized finance (often stylized as DeFi) offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a blockchain. DeFi platforms allow people to lend or borrow funds ...
, decentralized exchange
Decentralized finance (often stylized as DeFi) offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a blockchain. DeFi platforms allow people to lend or borrow funds f ...
s, decentralized autonomous organizations (DAOs), games, prediction market
Prediction markets (also known as betting markets, information markets, decision markets, idea futures or event derivatives) are open markets where specific outcomes can be predicted using financial incentives. Essentially, they are exchange-trad ...
s, and gambling.
Contract source code
Ethereum's smart contracts are written in high-level
High-level and low-level, as technical terms, are used to classify, describe and point to specific goals of a systematic operation; and are applied in a wide range of contexts, such as, for instance, in domains as widely varied as computer scienc ...
programming languages and then compiled
In computing, a compiler is a computer program that translates computer code written in one programming language (the ''source'' language) into another language (the ''target'' language). The name "compiler" is primarily used for programs that ...
down to EVM bytecode
Bytecode (also called portable code or p-code) is a form of instruction set designed for efficient execution by a software interpreter. Unlike human-readable source code, bytecodes are compact numeric codes, constants, and references (norma ...
and deployed to the Ethereum blockchain. They can be written in Solidity
Solidity is an object-oriented programming language for implementing smart contracts on various blockchain platforms, most notably, Ethereum. It was developed by Christian Reitwiessner, Alex Beregszaszi, and several former Ethereum core contri ...
(a language library with similarities to C and JavaScript
JavaScript (), often abbreviated as JS, is a programming language that is one of the core technologies of the World Wide Web, alongside HTML and CSS. As of 2022, 98% of Website, websites use JavaScript on the Client (computing), client side ...
), Serpent (similar to Python
Python may refer to:
Snakes
* Pythonidae, a family of nonvenomous snakes found in Africa, Asia, and Australia
** ''Python'' (genus), a genus of Pythonidae found in Africa and Asia
* Python (mythology), a mythical serpent
Computing
* Python (pro ...
, but deprecated), Yul (an intermediate language that can compile to various different backends—EVM 1.0, EVM 1.5, and eWASM are planned), LLL (a low-level Lisp
A lisp is a speech impairment in which a person misarticulates sibilants (, , , , , , , ). These misarticulations often result in unclear speech.
Types
* A frontal lisp occurs when the tongue is placed anterior to the target. Interdental lisping ...
-like language), and Mutan ( Go-based, but deprecated). There was also a research-oriented language under development called Vyper (a strongly-typed Python
Python may refer to:
Snakes
* Pythonidae, a family of nonvenomous snakes found in Africa, Asia, and Australia
** ''Python'' (genus), a genus of Pythonidae found in Africa and Asia
* Python (mythology), a mythical serpent
Computing
* Python (pro ...
-derived decidable language
In mathematics, logic and computer science, a formal language (a set of finite sequences of symbols taken from a fixed alphabet) is called recursive if it is a recursive subset of the set of all possible finite sequences over the alphabet of the ...
). Source code and compiler information are usually published along with the launch of the contract so that users can see the code and verify that it compiles to the bytecode that is on-chain.
One issue related to using smart contracts on a public blockchain is that bugs, including security holes, are visible to all but cannot be fixed quickly. One example of this is the 2016 attack on The DAO, which could not be quickly stopped or reversed.
ERC-20 tokens
The ERC-20 (Ethereum Request-for-Comments #20) Token Standard allows for fungible
In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable, and each of whose parts is indistinguishable from any other part. Fungible tokens can be exchanged or replaced; for exam ...
tokens on the Ethereum blockchain
A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a ...
. The standard, proposed by Fabian Vogelsteller in November 2015, implements an API
An application programming interface (API) is a way for two or more computer programs to communicate with each other. It is a type of software interface, offering a service to other pieces of software. A document or standard that describes how ...
for tokens within smart contract
A smart contract is a computer program or a transaction protocol that is intended to automatically execute, control or document events and actions according to the terms of a contract or an agreement. The objectives of smart contracts are the re ...
s. The standard provides functions that include the transfer of tokens from one account to another, getting the current token balance of an account, and getting the total supply of the token available on the network. Smart contracts that correctly implement ERC-20 processes are called ERC-20 Token Contracts, and they keep track of created tokens on Ethereum. Numerous cryptocurrencies have launched as ERC-20 tokens and have been distributed through initial coin offerings
An initial coin offering (ICO) or initial currency offering is a type of funding using cryptocurrencies. It is often a form of crowdfunding, although a private ICO which does not seek public investment is also possible. In an ICO, a quantity of cr ...
. Fees to send ERC-20 tokens must be paid with ether.
Non-fungible tokens (NFTs)
Ethereum also allows for the creation of unique and indivisible tokens, called non-fungible token
A non-fungible token (NFT) is a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership. The ownership of an NFT is recorded in the b ...
s (NFTs). Since tokens of this type are unique, they have been used to represent such things as collectibles, digital art, sports memorabilia, virtual real estate, and items within games. The first NFT project, Etheria, a 3D map of tradable and customizable hexagonal tiles, was deployed to the network in October 2015 and demonstrated live at DEVCON1 in November of that year. In 2021, Christie's
Christie's is a British auction house founded in 1766 by James Christie (auctioneer), James Christie. Its main premises are on King Street, St James's in London, at Rockefeller Center in New York City and at Alexandra House in Hong Kong. It is ...
sold a digital image with an NFT by Beeple
Michael Joseph Winkelmann (born 20 June 1981), known professionally as Beeple, is an American digital artist, graphic designer, and animator known for selling NFTs. In his art, he uses various mediums to create comical, phantasmagoric works that ...
for , making him the third-most-valuable living artist in terms of auction
An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition ex ...
prices at the time, although observers have noted that both the buyer and seller had a vested interest in driving demand for the artist's work. Land, buildings, and avatars in blockchain-based virtual worlds can also be bought and sold as NFTs, sometimes for hundreds of thousands of dollars.
Decentralized finance
Decentralized finance (DeFi) offers traditional financial instrument
Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity or a contractual right to receive or deliver in the form ...
s in a decentralized architecture, outside of companies' and governments' control, such as money market funds which let users earn interest. DeFi applications are typically accessed through a Web3
Web3 (also known as Web 3.0) is an idea for a new iteration of the World Wide Web which incorporates concepts such as decentralization, blockchain technologies, and token-based economics. Some technologists and journalists have contrasted it w ...
-enabled browser extension or application, such as MetaMask
MetaMask is a software cryptocurrency wallet used to interact with the Ethereum blockchain. It allows users to access their Ethereum wallet through a browser extension or mobile app, which can then be used to interact with decentralized applica ...
, which allows users to directly interact with the Ethereum blockchain through a website. Many of these DApps can connect and work together to create complex financial services.
Examples of DeFi platforms include MakerDAO
Dai (or DAI, formerly Sai or SAI) is a stablecoin on the Ethereum blockchain whose value is kept as close to one United States dollar (USD) as possible through a system of smart contracts and the decentralized participants those contracts incen ...
and Compound. Uniswap
Uniswap is a decentralized cryptocurrency exchange that uses a set of smart contracts (liquidity pools) to execute trades on its exchange. It's an open source project and falls into the category of a DeFi product (Decentralized finance) because i ...
, a decentralized exchange
Decentralized finance (often stylized as DeFi) offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a blockchain. DeFi platforms allow people to lend or borrow funds f ...
for tokens on Ethereum grew from in liquidity to in 2020. As of October 2020, over was invested in various DeFi protocols. Additionally, through a process called "wrapping", certain DeFi protocols allow synthetic versions of various assets (such as bitcoin, gold, and oil) to be tradeable on Ethereum and also compatible with all of Ethereum's major wallets and applications.
Enterprise software
Ethereum-based software and networks, independent from the public Ethereum chain
A chain is a serial assembly of connected pieces, called links, typically made of metal, with an overall character similar to that of a rope in that it is flexible and curved in compression but linear, rigid, and load-bearing in tension. A c ...
, are being tested by enterprise software
Enterprise software, also known as enterprise application software (EAS), is computer software used to satisfy the needs of an organization rather than individual users. Such organizations include businesses, schools, interest-based user groups, ...
companies. Interested parties include Microsoft
Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washing ...
, IBM, JPMorgan Chase
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the ...
, Deloitte
Deloitte Touche Tohmatsu Limited (), commonly referred to as Deloitte, is an international professional services network headquartered in London, England. Deloitte is the largest professional services network by revenue and number of profession ...
, R3, and Innovate UK
Innovate UK is the United Kingdom's innovation agency, which provides money and support to organisations to make new products and services. It is a non-departmental public body operating at arm's length from the Government as part of the United ...
(cross-border payments prototype). Barclays
Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services.
Barclays traces ...
, UBS
UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...
, Credit Suisse
Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
, Amazon
Amazon most often refers to:
* Amazons, a tribe of female warriors in Greek mythology
* Amazon rainforest, a rainforest covering most of the Amazon basin
* Amazon River, in South America
* Amazon (company), an American multinational technology c ...
, Visa
Visa most commonly refers to:
*Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Visa Plus, an interbank network
*Travel visa, a document that allows ...
, and other companies are also experimenting with Ethereum.
Permissioned ledgers
Ethereum-based permissioned blockchain variants are used and being investigated for various projects:
* In 2017, JPMorgan Chase
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the ...
proposed developing JPM Coin
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the w ...
on a permissioned-variant of Ethereum blockchain dubbed "Quorum". It is "designed to toe the line between private and public in the realm of shuffling derivatives and payments. The idea is to satisfy regulators who need seamless access to financial goings-on while protecting the privacy of parties that don't wish to reveal their identities nor the details of their transactions to the general public."
* The Royal Bank of Scotland
The Royal Bank of Scotland plc (RBS; gd, Banca Rìoghail na h-Alba) is a major retail and commercial bank in Scotland. It is one of the retail banking subsidiaries of NatWest Group, together with NatWest (in England and Wales) and Ulster Bank ...
announced that it built a Clearing and Settlement Mechanism (CSM) based on the Ethereum distributed ledger and smart contract platform.
Performance
The downside is that performance issues arise because every node calculates all the smart contracts in real-time. , the Ethereum protocol could process about 25 transactions per second; this didn't change after the proof-of-stake implementation. In comparison, the Visa
Visa most commonly refers to:
*Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Visa Plus, an interbank network
*Travel visa, a document that allows ...
payment platform processes 45,000 payments per second. This has led some to question the scalability of Ethereum. On 19 December 2016, Ethereum exceeded one million transactions in a single day for the first time. Visa has also signaled interest in processing NFT and Ethereum transactions.
Ethereum engineers have been working on sharding
A database shard, or simply a shard, is a horizontal partition of data in a database or search engine. Each shard is held on a separate database server instance, to spread load.
Some data within a database remains present in all shards, but so ...
the calculations, and the next step (Ethereum 2) was presented at Ethereum's Devcon 3 in November 2017.
Ethereum's blockchain uses Merkle tree
In cryptography and computer science, a hash tree or Merkle tree is a tree in which every "leaf" (node) is labelled with the cryptographic hash of a data block, and every node that is not a leaf (called a ''branch'', ''inner node'', or ''inode'') ...
s for security reasons, to improve scalability, and to optimize transaction hashing. As with any Merkle tree implementation, this allows for storage savings, set membership proofs (called "Merkle proofs"), and light client synchronization. The network has faced congestion problems, such as in 2017 in relation to ''CryptoKitties
''CryptoKitties'' is a blockchain game on Ethereum developed by Canadian studio Dapper Labs, a company spun-off from Axiom Zen, that allows players to purchase, collect, breed and sell virtual cats. It is one of the earliest attempts to deploy bloc ...
''.
Regulation
In August 2022 the Digital Commodities Consumer Protection Act
The Digital Commodities Consumer Protection Act (DCCPA) is a proposed United States federal law to regulate the trading of cryptocurrencies and related digital assets. It would place the regulation of crypto assets under the authority of the Com ...
announced that the government would be treating Ethereum and other cryptocurrencies as commodities
In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.
The price of a comm ...
and be regulated by the Commodity Futures Trading Commission
The Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options.
The Commodity Exchange Ac ...
(CFTC).
Notes
References
External links
*
{{Currency symbols
2015 software
Blockchains
Cross-platform software
Cryptocurrency projects
Currencies introduced in 2015
*
Bytecodes