Author: Michael Johnson

The Ethereum Project has had the incredible privilege to launch its PoC testnet and engage the crypto-currency community over the past two months. During our experiences, we’ve encountered a lot of passionate support and wonderful questions that have helped us refine our thoughts and goals including the process we will eventually use to sell ether. This said, we have not finalized the structure and format for the ether presale and thus we do not recommend, encourage, or endorse any attempt to sell, trade, or acquire ether. We have recently become aware of peercover.com announcing a fundraising structure based in some…

Scalability is now at the forefront of the technical discussion in the cryptocurrency scene. The Bitcoin blockchain is currently over 12 GB in size, requiring a period of several days for a new bitcoind node to fully synchronize, the UTXO set that must be stored in RAM is approaching 500 MB, and continued software improvements in the source code are simply not enough to alleviate the trend. With every passing year, it becomes more and more difficult for an ordinary user to locally run a fully functional Bitcoin node on their own desktop, and even as the price, merchant acceptance…

Many of the concepts that we promote over in Ethereum land may seem incredibly futuristic, and perhaps even frightening, at times. We talk about so-called “smart contracts” that execute themselves without any need, or any opportunity, for human intervention or involvement, people forming Skynet-like “decentralized autonomous organizations” that live entirely on the cloud and yet control powerful financial resources and can incentivize people to do very real things in the physical world, decentralized “math-based law”, and a seemingly utopian quest to create some kind of fully trust-free society. To the uninformed user, and especially to those who have not even…

In the last installment of this series, we talked about what “smart contracts” (or, perhaps more accurately, “self-enforcing contracts”) are, and discussed in detail the two main mechanisms through which these contracts can have “force”: smart property and “factum” currencies. We also discussed the limits of smart contracts, and how a smart contract-enabled legal system might use a combination of human judgement and automatic execution to achieve the best possible outcomes. But what is the point of these contracts? Why automate? Why is it better to have our relationships regulated and controlled by algorithms rather than humans? These are the…

There are a lot of interesting changes to the Ethereum protocol that are in the works, which will hopefully improve the power of the system, add further features such as light-client friendliness and a higher degree of extensibility, and make Ethereum contracts easier to code. Theoretically, none of these changes are necessary; the Ethereum protocol is fine as it stands today, and can theoretically be released as is once the clients are further built up somewhat; rather, the changes are there to make Ethereum better. However, there is one design objective of Ethereum where the light at the end of…

In the past two weeks our lead C++ developer, Gavin Wood, and myself have been spending a lot of time meeting the local Ethereum community in San Francisco and Silicon Valley. We were very excited to see such a large amount of interest in our project, and the fact that after only two months we have a meetup group that comes together every week, just like the Bitcoin meetup, with over thirty people attending each time. People in the community are taking it upon themselves to make educational videos, organize events and experiment with contracts, and one person is even…

One of the main applications of Ethereum that people have been interested in is financial contracts and derivatives. Although financial derivatives have acquired a reputation as a highly risky and destabilizing device with the sole function of enriching speculators, the underlying concept in fact has a number of legitimate uses, some of which actually help people protect themselves against the volatility of financial markets. The main idea here is called “hedging”, and is best explained in the context of Bitcoin, where ordinary businesses and individuals with no desire to take massive risks end up needing to deal with high volumes…

The content of this tutorial is intended to apply to PoC5. Most of the instructions given below will not work in the older PoC4 implementations of AlethZero (C++) and Ethereal (Go) Over the last few weeks, we have made a large number of changes to the Ethereum protocol. POC4, introducing a large body of changes made by Gavin Wood and myself, was announced as an informal description two weeks ago, and has been formally specified in Gavin Wood’s “yellow paper” at http://gavwood.com/Paper.pdf. The protocol spec did change substantially, but at the same time things are solidifying; we know why we…

Ether (ETH), the cryptofuel that powers distributed applications on the Ethereum platform, will be issued at a constant annual linear rate via the block mining process. This rate is 0.3 times the total amount of ETH that will be purchased in the pre-sale. While the best metaphor for ETH is “fuel for running the contract processing engine,” for the purposes of this post, we will treat ETH purely as a currency. There are two common definitions of “inflation.”  The first relates to prices and the second relates to the total amount of money in a system – the monetary base…

The idea of releasing a new currency as a mechanism for funding protocol development is perhaps one of the most interesting economic innovations to come out of the cryptocurrency space. In the past twenty years, we have seen a growing centralization in the protocols that underlie the internet, with the rise of proprietary chat systems and social networks like Facebook, and a large part of the reason for this trend has been the need for monetization; if Facebook was cryptographically secure and decentralized, the developers would have no way to make money by data mining their users’ activities and taking…