The History of Ethereum & How It Works | Bite Size Blockchain | CertiK
Vitalik Buterin, Ethereum’s co-founder envisioned a new use for blockchain after Bitcoin, one that went broader for a larger set of applications. Ethereum was built on a neutral, open-access infrastructure, controlled by no central entity.
In 2013, Buterin released a white paper for Ethereum’s blockchain using the Turing complete programming language, based on Alan Turing’s concept of a Universal Turing machine, that allows any operation to be programmed within it.
Ethereum uses smart contracts which are programs that permit users to transact with each other according to a set of predetermined rules, removing the need for third-party enforcement. These smart contracts allow developers to self-build and publish contracts onto the blockchain.
Ethereum’s native currency, Ether, operates as a store of value for its users. Ethereum allows developers to build and distribute other cryptocurrencies using the same protocol as Ether.
Ethereum consists of only one public blockchain. Developers must create a modified clone of Ethereum to use the technology on a private blockchain.
Bitcoin works through a system in which it’s possible for a group of people to reach a consensus and agree on a single valid history of transactions by including them in the blockchain.
Bitcoin miners are users who seek a business opportunity by purchasing powerful computers to solve complicated mathematical equations through what is known as proof of work.
The miners are responsible for listening to and reporting all transactions that happen on the network. Miners record the transactions by adding them in batches called blocks.
The mining analogy to gold is misleading. The purpose of mining is not to create Bitcoin but rather to process everyone’s transactions and update the database.
Bitcoin is the first successful decentralized digital currency because it was the first to solve the double-spending problem of spending the same money twice.
Double-spend attacks can happen through a 51% attack, where a hacker captures 51% of the hash power of the network. So far no such attack has occurred due to the difficulty of mining, cost of hardware, and electricity required.