Bitcoin vs distributed ledger vs Ethereum vs blockchain

Encryption tunnel

The next big thing?

According to Don and Alex Tapscott in their book 'Blockchain Revolution: How the technology behind Bitcoin is changing money, business, and the world', Ethereum is the second-longest public blockchain (after Bitcoin), and the fastest-growing.

According to Tapscott and Tapscott, Ethereum, which went live in July 2015, is considered "the next big thing – not just for business, but for human civilisation" by some coders, entrepreneurs and corporate strategists.

"Ethereum is like Bitcoin in that the 'ether' motivates a network of peers to validate transactions, secure the network, and achieve consensus about what exists and what has occurred," reads Blockchain Revolution. "But unlike Bitcoin it contains some powerful tools to help developers and others create software services ranging from decentralised games to stock exchanges."

Run by a Swiss non-profit organisation, this developer-friendly platform employs special computer language that can be used to write smart contracts into the Ethereum blockchain. But it's still a blockchain.

Image Credit Ethereum

Ethereum's error

All new technologies involve learning curves and teething problems, and Ethereum has been no different. In terms of creating confidence in a new technology, there's a chance that Ethereum has already blown it. In June, an anonymous coder tricked a smart contract belonging to virtual firm Distributed Autonomous Organization (DAO) into executing multiple times, extracting around $80 million (about £60 million, AU$105 million) worth of ether.

"It caused a loss of confidence, which knocked about 25% off ether's value in a few hours," explains Hrycyszyn. "In response, the people who cryptographically create the ether decided to amend the history by simply ignoring the fact that the attack had ever occurred."

Since Ethereum's contracts are defined in computer code, stored in a blockchain, and executed by Ethereum itself, Ethereum's controllers were able to 'hard fork' the ledger's history and delete the fact that there was ever an attack. That kind of intervention goes against the whole point of the blockchain's 'trustlessness' ethics in the first place.

"Arguably, the attacker simply executed the smart contract's code, as it was written," says Hrycyszyn. "Ethereum made it too easy to code a stupid contract instead of a smart contract, but a lot of very vocal people felt that the contract should have been honoured."

As a result, the future of Ethereum and smart contracts is up in the air. But the blockchain? With China and the US destined to adopt it in some form, its future seems secure.