Ethereum in Brief
An open-source platform for developing and executing decentralized applications, Ethereum takes blockchain technology a step beyond the provision of cryptocurrency to secure actionable code by distributing it across a network of participating machines. Applications, written mostly in the specially developed Solidity language, are run in the Ethereum Virtual Machine environment, which is wholly isolated from the network, filesystem, and other processes of the host system. Ethereum’s currency component, Ether, is spent by developers to execute their distributed applications, and compensates owners of the systems that collectively perform the operations this requires. Ether’s value against the dollar has increased thirty-fold in the past year.
Ethereum’s capacity to create secure autonomous scripts facilitates the writing of ‘smart contracts’, coded exchange mechanisms that carry out transactions of value between untrusted agents. Blockchain-distributed smart contracts have the potential to circumvent censorship and collusion and minimize counter-party risk.
Ethereum and other platforms
As the established contender in the smart contracts arena, Ethereum lays claim to the most highly developed contract engineering capacities, the largest network of participating nodes, and the most sought-after associated currency. But there are other solutions.
Rootstack (or ‘RSK’), a younger and consequently less developed platform, has the advantage of integration with the Bitcoin currency network. Bitcoin miners can volunteer their machines to perform tasks for the Rootstack sidechain without decreasing the rate at which they receive rewards for work on Bitcoin. This potential for ‘merge-mining’ promises to connect a smart contract environment to the largest pool of blockchain users in the world. It is therefore unsurprising that the Rootstack virtual machine is claimed to be six times faster than those of competing platforms.
Another young platform, Corda, is not a traditional blockchain distributed ledger, but what its developer, R3, describes as a ‘shared ledger’. (On a distributed ledger, transaction data must be broadcast to all other participants, and all participants must agree on all the facts; on a ‘shared ledger’ information about a transaction is only shared to its parties.) Corda therefore restricts the access it offers to transaction data with a view to offering privacy and scalability advantages. These priorities reflect the fact that it is built with the rapid, complex transactions financial institutions require to deal with each other specifically in mind. But shared ledgers are secure only because parties’ cryptographic and real-world identities are linked. In practice, this narrows Corda’s range of applications to transactions between accountable institutions.