Ethereum, virtual currency can directly confront Bitcoin

Even Bitcoin has struggled, and another virtual money competitor - named Ethereum - has skyrocketed prices, reaching over 1000% in just the past three months.

Not only increasing prices, Ethereum is also attracting financial and technology giants, like JPMorgan Chase, Microsoft and IBM, who have said it as a kind of Bitcoin 2.0 .

The rise of this new kind of virtual currency has benefited from the civil war itself in the Bitcoin community, how basic Bitcoin software should be developed.

The war has slowed down Bitcoin transactions and led some people to find another virtual currency to run their business.

And Ethereum appears.

Like Bitcoin, the Ethereum system is built on a blockchain in which all transactions are stored publicly. The promise of this system is that it allows for the conversion of money and assets quickly and much cheaper than depending on a long chain of intermediaries.

But Ethereum has also gained favor because its potential is much more than Bitcoin. Not only is virtual money, this software can also help create online markets and programmable transactions known as smart contracts .

This system is complicated enough that even those who understand it are difficult to explain it in an easy-to-understand way. Having an application under development can cause farmers to sell products and pay directly to consumers. There have also been dozens of applications built on Ethereum, bringing a new direction to managing and paying for utilities, betting and even Ponzi models.

Everything is in the early stages. The first public completion of the Ethereum software has just been released, and this system may face major technical and legal issues that make Bitcoin fuzzy.

The Ethereum system is built on a blockchain in which all transactions are stored publicly.

Many Bitcoin followers claim that Ethereum will encounter more security issues than Bitcoin because of the much more complex software. To date, Ethereum has encountered fewer trials, and attacks are much less than Bitcoin. Ethereum's novel design can also make authorities more rigorous when fraudulent contracts, like the Ponzi model, can be written directly into the Ethereum system.

But the sophistication of this system has made it attractive to some of the leaders of American companies. IBM said they experimented with Ethereum to be able to control Internet of things.

Microsoft has also carried out a series of projects to make it easier to use Ethereum on its cloud computing, Azure.

' Etherum is a platform where you can solve the problems of many industries with a fairly elegant solution - the most elegant solution we've ever seen,' says Marley Gray, director of business strategy development. business at Microsoft.

Gray is responsible for Microsoft's blockchain array, the database concept that Bitcoin brings. Blockchain is designed to store data and transactions without going to any central management and storage center.

Blockchain will be maintained and updated by the network of computers in operation - quite similar to the way Wikipedia is updated and maintained by its users.

However, many corporations have created their own Ethereum network with their own blockchain, independent of the public system, and can reduce the value of the unit in the Ethereum system - named Ether - that everyone still has. are buying.

Interested in Ethereum is a sign of the passion of companies with blockchain. Most major banks have thought of using them to make transactions and money transfers faster and more efficiently. On March 29, the largest bank executives held a meeting to see the real potential of the blockchain.

Many banks have also tested versions of Etherum. Like JPMorgan, it has created a specialized tool, Masala, which allows some of their internal databases to interact with an Ethereum blockchain.

Michael Novogratz, a former executive at a private equity firm Fortress Investing Group, who directed Fortress's investment in Bitcoin, paid attention to Ethereum when he left Fortress. Novogratz said he had invested a huge amount of Ether from January. He also listened to how the financial industry talked about the development of this virtual currency.

"A lot of people are still thinking," It's still a test. ", He said. 'Perhaps in the next two to three months, that test will at least identify more things.'

From the beginning of the year, the value of an Ether unit from 1 USD jumped to 12 USD. Making the total value of Ether hit more than $ 1 billion, much larger than any virtual currency except Bitcoin, totaling more than $ 6 billion last month.

Joseph Lubin (right), founded ConsenSys, specializes in applications that run on Ethereum.Andrew Keys (left), ConsenSys business development director.

Since Bitcoin was invented, there have been many types of coins that seek to surpass Bitcoin, but no one has done it like Ethereum.

Unlike Bitcoin, which was launched in 2009 by a mysterious person named Satoshi Nakamoto, Ethereum was created by Vitalik Buterin, a Russian-Canadian boy, after he dropped out of the University of Waterloo, Ontario.

The basic goal of Ethereum is to make it possible to put agreements binding on the blockchain - smart concept contract. For example, two people can program a sports betting directly into the Etherreum blockchain. Once the score comes from a source that is both consensus, the money will automatically go to the winner. Ether can be used as a currency in this system, but Ether is also needed to pay the system for betting.

Ethereum is sometimes described as a computer shared and operated by network users where resources are allocated and paid for by Ether.

A group of seven founders helped Buterin write the software after he released the first description of the system. Buterin's group earned $ 18 million in 2014 through a presale Ether, and raised funds for the Ethereum Foundation to support software development.

Like Bitcoin, Ethereum has succeeded in attracting a network of followers to help develop the software, in the hope that their Ether will increase in price if the system is successful. Last month, 5,800 computers - or nodes - supported the system worldwide. The Bitcoin network currently has about 7,400 nodes.

ConsenSys office.

One of the co-founders of Buterin, Joseph Lubin, established ConsenSys , a Brooklyn company that hired more than 50 developers to create applications for the Ethereum system, which will have an application for music distribution. and one for a new type of financial audit.

Lubin said he was involved in Ethereum after thinking about it bringing in the promise of Bitcoin, especially when it could bring new types of contracts and online markets.

'Bitcoin has shown for sweeping vision, and Ethereum will show crystallization in how to validate that vision,' he said.

Josh Bonneau, a computer science researcher at Stanford, argued that Ethereum was the first system that caught his attention since Bitcoin.

'Bitcoin is still the safest bet, but Ethereum is definitely second, and some will say it's more likely to be popular in 10 years' , Bonneau said. 'Depends on whether there is any real market developing from it. And are there any real applications? "

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