Ethereum: Decentralized Platform

A decentralized platform that runs smart contracts. Ethereum can deal with anything that has value. Smart contract authors have to be very careful to not introduce bugs that can be hacked.


Differences between Ethereum and Bitcoin:

  • Bitcoin was designed to be just a digital currency. Because of smart contracts, Ethereum has much larger capabilities.

  • Smart contracts: bundles of code on the blockchain

  • Ethereum has faster block times, but creates more orphan blocks. Faster confirmations of contracts.

  • Mining: more than 2/3 of BTC has already been mined.

Ether: used to pay for transaction on the Ethereum blockchain.


History:

  • Created by Vitalik Buterin had ideas of a scripting language for BTC. Nobody supported his idea so he created a new project and ran a crowd sale. Gave out 11.9 million ether to investors. They raised 150 million dollars. The most of any crowd sale in history.

  • Once the DAO was on the blockchain, it got hacked. The hacker made off of $50 million worth of Ether. There was a bug in the code. Vitalik Buterin came up with a way to stop the hackers. They did a hard fork. Lots of Ethereum users didn't agree with the hard fork, because they feel like blockchains can't be changed even to recover stolen funds.

Using Ethereum

  • Keys: public and private keys. The public keys are given to people when they want to send you ether. The private key is a unique line of code that proves your identity to Ethereum.

  • Wallets: before you buy ether, you need a wallet to store your private keys. Ether is stored on the blockchain.

  • Desktop wallets: on your pc. Wallets generate your keys for you.

  • Hardware wallets: immune to viruses designed to steal from software wallets

  • Mobile wallets: Lite wallet. Not secure

  • Paper wallet: a piece of paper that creates keys for you. guard them with your life. Make multiple copies and store them in many places. Safety deposit boxes.

  • Mist browser: Wallet and browser. Provides a complete view of the blockchain.

How to buy and send Ether

  • Coinbase

  • Ethereum meetups to buy peer to peer

  • Buy bitcoin first, then trade it into Ether

Etheruem and Security

  • Blockchain hacks. No BC is invulnerable.

  • Browsers have vulnerabilities.

  • 51% attach. The hacker takes over the transactions and become top dog.

  • BTC got hacked in 2010. It was caught fast so it didn't lose money. A hacker was able to create a 184 billion transaction. They patched it right away. They've since been hacked again.

How can I loose all my ether

  • Hack

  • Email provider loses it's database.

  • Someone with administrator rights.

  • Exchange disappears along with the money. Mt Gox: the largest exchange that did this.

  • You let in a Trojan: Prevalent hiding in porn.

  • Fooled by an email: Spoof

  • You lose your keys. Very common


How to keep Ether secure:

  • Wallets. No online wallets. Don't be using any old wallet online. Software wallets are only as secure as your computer.

  • Cold storage: For savings. Untouched

  • Hot wallets: for paying day to day expenses.

  • Splitting up finances. Don't put all your money in one place.

  • Choose the right exchange. Most exchanges are centralized. If the higher ups start leaving, you leave too. If there are technical problems on the site, the developers aren't on top of things. Be familiar w/ the fine print:

  • how coins are purchased

  • exchange fees

  • what others are saying about it