Understanding Ethereum, Bitcoin’s Virtual Cousin – The Fresh York Times
Bitcoin has many cousins and competitors. None have grown more popular than Ethereum, a global pc network with its own virtual currency, called Ether.
What is Ethereum?
Ethereum is a global computing network operating according to rules defined by Ethereum software.
Those rules permit the Ethereum network to be programmed to finish certain types of computing tasks, with every rekentuig on the network completing the task ter parallel to ensure it is done correctly. Generally the tasks involve money.
The creator of Ethereum, Vitalik Buterin, has likened it to a global smartphone that can be programmed to operate according to the apps built on top of it. The apps are called Dapps because they are run by a decentralized network of computers.
Mr. Buterin says he chose the name because it refers to “the hypothetical invisible medium that permeates the universe and permits light to travel.” He announced Ethereum te late 2013, but it didn’t go into operation until 2015.
Ethereum is not a virtual currency?
The Ethereum network has its own virtual currency, Ether. Te the simplest sense, Ether are needed to pay the other computers on the network to finish tasks. It isn’t free to use the network.
People have also determined to buy and hold Ether, betting that it will become more valuable spil more people want to use the network and need Ether to pay for the network’s computing power.
What does Ethereum have to do with Bitcoin?
Mr. Buterin wasgoed a Bitcoin aficionado, and he wasgoed inspired by its success. But he set out to build something that could do more than Bitcoin: He dreamed to build a system that would make it possible to program more ingewikkeld financial transactions.
The collective records of the Ethereum network — of every transaction and computation it has everzwijn performed — are known spil a blockchain, just spil the collective records of all Bitcoin transactions are known spil a blockchain. But Ethereum’s blockchain database is totally independent of Bitcoin’s blockchain.
Why would you want to use this network?
Let’s say two companies want to conduct a complicated financial transaction, like lodging a stock option. Neither company trusts the other company to conduct the transaction on its computers. Both companies could hire a third party, like a stock exchange, to conduct the transaction, which is what they generally do today.
But that compels them to trust that third company and to pay that company fees. With Ethereum, they can conduct the transaction on a collective rekentuig that permits them both to check the records, ideally saving on fees.
Spil this example suggests, Ethereum has proved attractive to financial companies that have to accomplish lots of complicated financial transactions with competitors they don’t trust. Many banks are looking at how Ethereum could be used spil a central operating system for various trading markets, substituting today’s exchanges and middlemen. JPMorgan Pursue has even created its own version of Ethereum, known spil Quorum.
Other companies, like Samsung and Toyota, have experimented with Ethereum spil a way to keep track of products moving through supply chains that involve many players.
Dozens of large companies around the world came together this year to create the Enterprise Ethereum Alliance. The group is working to develop versions of the Ethereum software that are battle tested enough to be used te a corporate setting.
Does that mean the world’s fattest companies will corner the market on Ether?
The versions of the Ethereum software that companies are building will most likely be used to set up private networks that would be totally separate from the public Ethereum network and that would not use the Ether currency. Some people, however, are betting that thesis private networks will eventually be plugged back into the public network.
How do you buy Ether?
Just spil with Bitcoin, you can buy Ether from people who already own them on virtual currency exchanges. Most large countries have exchanges where a multiplicity of virtual currencies can be bought with the local currency.
How are Ether created?
Just spil with Bitcoin, Ethereum are “mined,” or created by computers joined into the Ethereum network. Thesis computers are te a wedren to finish the transactions and computing work on the network. The swifter your computers, the more likely you are to win the wedstrijd and receive a bundle of fresh Ether. There is generally a fresh winner every 15 seconds or so.
It has not yet bot determined how many Ether will ultimately be distributed, but the number is likely to be around 100 million. So far, 94 million have bot distributed.
Spil with Bitcoin, Ethereum mining serves a dual process of getting fresh Ether into the world while providing an incentive for people to join the network and help maintain the Ethereum blockchain.