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#Ethereum Whitepaper Explained: A Smart Contract Revolution for the Cryptocurrency Industry

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Ethereum (ETH), the second largest cryptocurrency after Bitcoin (BTC), is a blockchain smart contract platform. Operating using the Proof-of-Stake (PoS) consensus mechanism, the decentralized, open source network serves to create and publish transparent, secure and censorship-resistant dApps. The Ethereum blockchain is the underlying software layer for smart contracts, NFTs, DAOs, DeFi, and several other Web3-related technologies.

In 2013, Vitalik Buterin failed to persuade the Bitcoin community to support decentralized applications and smart contracts on the Bitcoin network. A year later, he shared these thought in the Ethereum whitepaper. Having launched Ethereum with a crowdfunding model, Buterin revolutionized the blockchain world, unlocking the power of smart contracts for the first time.

About Ethereum Whitepaper

Ethereum emerged as a revolutionary project in the decentralization of the internet and the way people interact with each other. The foundations of the third generation of the internet, called Web3, were laid with Ethereum.

When was the Ethereum whitepaper published?

Written by Vitalik Buterin in November 2014, the Ethereum whitepaper is probably the second most important whitepaper after Satoshi Nakamoto’s BTC whitepaper.

Who published the Ethereum whitepaper?

Although the whitepaper was created by Vitalik Buterin, the Ethereum community and network were built by several co-founders, including Charles Hoskinson, who would later co-found Cardano, Gavin Wood, who would co-found Polkadot, Amir Chetrit, Anthony Di Loria, Miha Alisie, and Joseph Lubin.

Ethereum co-founder and lead developer Vitalik Buterin at TechCrunch Disrupt London. Image source: John Phillips/Getty Images for TechCrunch)

What is the name of Ethereum’s white paper?

The Bitcoin whitepaper was published under the name A Peer-to-Peer Electronic Cash System. Vitalik Buterin, on the other hand, published the Ethereum white paper with the title A Next-Generation Smart Contract and Decentralized Application Platform, highlighting the fact that the blockchain should not only serve to transfer money and store value in a decentralized manner, but also provide additional layer of functionality.

Smart contracts, NFTs and DeFi – Ethereum whitepaper explained

Ethereum provides a robust infrastructure for everyone to build decentralized application (dApps), protect digital property, share censorship-proof, develop games, simply create tokens, and transfer value. Although cryptocurrencies such as Litecoin, Namecoin and Ripple were launched after Bitcoin, these projects were all focused on storing and transferring value in general.

Ethereum, on the other hand, introduced innovative technologies combined with decentralization and security in mind. By building on the unique technology used by Bitcoin and incorporating smart contracts into the game, Ethereum aims to be the world’s decentralized computer. Called the Ethereum Virtual Machine, the system supports all Web3 use cases for developers who want to take part in the decentralized finance (DeFi) revolution.

Smart Contracts

Smart contracts are self-executing pieces of software that, once successfully programmed, can run simple or complex transactions using a wide range of triggers. One of the biggest innovations that Ethereum has brought to the blockchain industry, smart contracts act upon predetermined conditions, eliminating administrative overhead and human errors.

Smart contracts, which can be run under certain conditions, can prove the authenticity and uniqueness of transactions, and add immutable and intangible data to the blockchain. The can be thought of as a digital alternative to physical contracts that need no third party involvement to act.

ERC-20 Standard

Cryptocurrencies can have their own blockchain or be created on other blockchains. Cryptocurrencies created on the Ethereum blockchain are called ERC-20 based tokens. Based on the ERC-20 standard, tokens benefit from the security and decentralization of the Ethereum blockchain and can be used in smart contracts on the network.

NFTs

Non-fungible token (NFT) is a type of blockchain token in which ownership of various digital assets can be transcribed thanks to the smart contract technology. Most cryptocurrencies have a specific supply, for example Bitcoin is capped at 21 million coins. Hoever, each NFT is unique.

Non-fungible tokens are different from cryptocurrencies, which are a blockchain-based monetary asset class. In fact, NFTs that look like unique physical assets, such as works of art or property titles, have unique metadata and smart contract addresses. Official documents, digital art, in-game items, collectibles, physical items, computer files and more can be converted to NFTs and their authenticity digitally stored.

History of Ethereum

Here’s a timeline of important events that have taken place in the history of Ethereum, organized in a chronological order:

  • 2013: Vitalik Buterin writes the Ethereum white paper. Buterin made the white paper publicly available a few months later.
  • 2014: An initial coin offering (ICO) campaign launches, enabling investors to purchase ETH coins with BTC.
  • 2016: The Ethereum team raises $150 million trough a crowdsale to enable a new decentralized business model. Hackers managed to steal $50 million worth of ETH by exploiting a vulnerability. Later, Ethereum developers performed a hard fork of the network to recover the lost funds. This hard fork also gave birth to the Ethereum Classic (ETC) blockchain.
  • 2020: Ethereum launches the Beacon Chain, taking the first step in the process that will see the blockchain migrate from the energy-intensive Proof of Work (PoW) algorithm to the Proof of Stake consensus mechanism.
  • 2021: A certain percentage of transaction fees carried out on the Ethereum network started getting burned with the implementation of the London hard fork, making Ethereum a deflationary cryptocurrency.
  • 2022: With the Merge update, the most important milestone for Ethereum 2.0 has been reached. The second largest crypto platform now uses the highlight efficient PoS consensus mechanism, saving 99.95% of energy compared to PoW.

Closing Thoughts

Bitcoin inspired people to see what could be done with the security and transparency of blockchain technology. By leveraging this technology and creating a decentralized blockchain with smart contract functionality, Vitalik Buterin and other developers revolutionized the blockchain industry by launching Ethereum. The ETH whitepaper contains great solutions that are still valid today, 9 years after its release.

Working with decentralized nodes validating transactions, each ETH owner having a say in the management as a stakeholder, and hosting hundreds of thousands of dApps, Ethereum is the largest decentralized internet infrastructure of today and the future. Having shifted to the PoS consensus mechanism, Ethereum has become drastically more environmentally friendly and scalable, and will continue to provide users with use cases initially outlined in the original whitepaper published way back in late 2014.

   
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