Ethereum is a public blockchain platform with programmable transaction functionality. It provides a
decentralized virtual machine that can execute peer-to-peer contracts
using a cryptocurrency called Ether (unofficial
code ETH).
Ethereum was initially proposed by Vitalik Buterin in late 2013 and in 2014 he described it
as "A Next-Generation Cryptocurrency and Decentralized Application
Platform".Development was funded by a crowd sale in August 2014.
Organizations suffer from
hard-to-maintain and often incompatible databases and the high transaction
costs of getting them to talk to each other. Ethereum proposes to solve this
problem through adding a programming language that allows users to write more
sophisticated smart contracts, which essentially are a set of rules running on
the blockchain.
Smart contracts
Smart contracts are applications with a state
stored in the blockchain. They can facilitate, verify, or enforce the
negotiation or performance of a contract, or that make a contractual clause
unnecessary. Ethereum contracts can be implemented in various Turing complete scripting languages, compiled
into bytecode for the Ethereum Virtual Machine (EVM) before being
deployed to the blockchain. The
platform charges a certain amount of ether per computation. The Ethereum system has been described
as "a single shared computer that is run by the network of users and on
which resources are parceled out and paid for by Ether."
As the instructions are hosted and
executable on the blockchain, none of the involved parties can control or
moderate the smart contract during the contract or after its terms have come to
pass. Smart contracts operating
on a public blockchain could allow organizations to cooperate without the need
to trust each other. For example, a company could create invoices that
automatically execute payment when a shipment arrives or share certificates
which automatically send their owners dividends if profits reach a certain
level.
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