Blockchain for Dummies
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The following is an excerpt from Blockchain for Dummies by author Tiana Laurence and published by Wiley. This section from chapter five outlines Ethereum etheria ethereum phase 2 how organizations can build on it.
It also covers how to create your own decentralized organization and how to set up your Ethereum wallet. Ethereum may be one of the most complex blockchains ever built. It has its own Turing-complete programming language a full-functioning programing language that allows developers to build any type of application.
The Ethereum protocol can do just about anything that your etheria ethereum phase 2 programming languages can do, except it's built inside a blockchain and has the added benefits and security that comes with that.
If you etheria ethereum phase 2 imagine a software project, it can be built etheria ethereum phase 2 Ethereum. The Ethereum ecosystem is currently the best place to etheria ethereum phase 2 decentralized applications.
They have wonderful documentation and user-friendly interfaces that get you up and running quickly. Rapid development time, security for small applications, and the ability for applications to easily interact with one another are key characteristics of this system. The Turing-complete programming language is the main feature etheria ethereum phase 2 makes the Ethereum blockchain vastly more powerful than the Bitcoin blockchain for building new programs.
Ethereum's scripting language makes things like Twitter application possible in few lines of code, and extremely secure. Smart contracts, like the one you create in Chapter 3, can also be built on Ethereum. The Ethereum protocol has opened up a whole new genre of applications. You can take just about any business, government, or organization's processes and build a digital representation of it inside of Ethereum.
Currently, Ethereum's platform is being explored to manage digital assets a new class of asset that lives online and may represent a whole digital asset such as a Bitcoin token or a digital representation of a real-world asset such as corn commoditiesfinancial instruments like mortgage-backed securitiesrecording ownership of assets such as land, and decentralized autonomous organizations DAOsa new way of organizing a business, nonprofit, government, or any other body that needs to come to agreement and work together etheria ethereum phase 2 common interest.
DAOs are built primarily on the Ethereum platform. Welcome to the future The most revolutionary and controversial manifestation of Ethereum is the self-governing and decentralized application DAPP. DAPPs were created to replace centralized management of assets and organizations. This structure has a lot of appeal because many people believe that absolute power corrupts absolutely. For those who are fearful of losing control, this type of structure has massive implications.
The game can't be censored or taken down etheria ethereum phase 2 will exist as long as Ethereum does. When things are created within Ethereum, even if there were good cause to remove a structure or organization, it's practically impossible to do so.
The power of decentralized autonomous organizations DAOs are a type of Ethereum application that represents a virtual entity within Ethereum. When you create a DAO, you can invite others to participate in the governance of the organization. The participants etheria ethereum phase 2 remain anonymous and never meet, which could trigger Know Your Customer KYC rules the process a business must go through to verifying the identity of its clients and anti-money laundering AML; the laws and regulations designed to stop the practice of generating income through illegal means compliance issues.
DAOs have been created for raising funds for investing, but they could also be designed for civic or nonprofit purposes. Ethereum gives you a basic framework for governance. It's up to the organizers to determine what's being governed. Ethereum has created templates for you to help in the creation of DAOs. What people etheria ethereum phase 2 thought was the greatest strength of The DAO became its greatest weakness. The immutable code within The DAO locked into place how the organization would be governed and how funds would be distributed.
This allowed the members to feel secure in their investment. Although the code was well reviewed, not all the bugs had been worked out. An unexpected code path in The DAO's contract allowed any sophisticated user to withdraw funds. The Ethereum community debated bitterly about etheria ethereum phase 2 it could or should reclaim the ether. The DAO hacker had not technically done anything wrong or even hacked the system.
Fundamentalists within the Ethereum community felt that code was law and, therefore, nothing should be done to recover the funds. The very thing that made Ethereum strong was also its greatest weakness. Decentralization, immutability, and autonomy meant no central authority could decide what to do quickly. There was also no one to punish for the misuse of the system. It really did not have any consumer protection measures.
It was a new frontier, like the software name suggested. After spending several weeks discussing the problem, the Ethereum community decided to shut down The DAO and create a new Ethereum. Etheria ethereum phase 2 process is called hard forking.
When the Ethereum community hard-forked the network, it reversed the transaction the hacker had committed. It also created a two Ethereums: Ethereum and Ethereum Classic. Not everyone was in agreement with this decision. The community continues to use Ethereum Classic. The tokens for Ethereum Classic are still traded but have lost significant market value. The new Ethereum token still hasn't regained its old high from before the hack. The decision to fork rocked the blockchain world.
It was the first time a majority blockchain project had hard-forked to make whole an investor. It called into question many of the principles that make blockchain technology so attractive in the first place. Unlike most traditional investment vehicles, where a central party makes decisions about investments, the members of a DAO control percent of the assets.
They etheria ethereum phase 2 on new investments and other decisions. This type of structure threatens to etheria ethereum phase 2 traditional financial managers. DAOs are built with code that can't be changed on the fly. The appeal of this is that malicious hackers can't monkey with the funds in a traditional sense. Hackers can still find ways to execute the code in unexpected ways and withdraw funds.
Ethereum has never been hacked. The hard fork in due to the DAO hack mentioned in the "With great power comes. The problem was it was too perfect. It became necessary to restart the system when a large amount of money and a majority of its users were threatened.
The only way to correct an action on a blockchain like Ethereum is to do a hard fork, which allows for a fundamental change to the protocol. A hard fork makes previously valid blocks and transactions invalid. Ethereum did this to protect the funds that were being pulled out of the first DAO by a user.
The DAO hack was conceptually, one of the largest bug bounties ever. That said, many scams and hacking attempts occur in the cryptocurrency space. Most of these attacks target centralized exchanges and applications. Many hackers want to steal cryptocurrency. It has real value and isn't protected in the same ways that regular money is protected by governments. The anonymous nature of cryptocurrency also makes it appealing to crooks. Catching and prosecuting these individuals is difficult.
The cryptocurrency community is fight back, however, and creating new measures to protect themselves. Hacking one place is significantly easier and cheaper than trying to overcome a decentralized network. When you read about hacking in the blockchain world, it's likely just a website or a cryptocurrency wallet that has been hacked, not the whole network. Understanding smart contracts Ethereum etheria ethereum phase 2 contracts are like contractual agreements, except there is no central party to enforce the contract.
The Ethereum protocol "enforces" smart contracts by attaching economic pressure. They can also enforce implementation of a requirement if it etheria ethereum phase 2 within Ethereum, because Ethereum can prove certain conditions etheria ethereum phase 2 or were not met. Etheria ethereum phase 2 it doesn't live within Ethereum, it's much harder to enforce. Ethereum smart contracts are not yet legally enforceable and may never be because the perception is that you don't need outside authorities enforcing etheria ethereum phase 2.
Legal systems are controlled by governments. As they stand now, governments are central authorities -- some with more or less consent etheria ethereum phase 2 democratic principles. Within an Ethereum smart contract, each participant has etheria ethereum phase 2 inalienable vote. Ethereum smart contracts do not include artificial intelligence.
This is a cool possibility in the near future. But for now, Ethereum is just software code that runs on a blockchain. Ethereum smart contracts are not safe. The DAO hack is a great example of the type of dangers that can occur. It is still early days, and putting a etheria ethereum phase 2 of money into an unproven system isn't smart. Instead, experiment with small amounts until all the bugs have been worked out of new contracts. Discovering the cryptocurrency Ether Ether is the name of the cryptocurrency for the Ethereum blockchain.
It was named after the substance etheria ethereum phase 2 was believed to permeate all space and make the universe possible.
In that sense, Ether is the substance that makes Ethereum possible. Ether incentivizes the network to secure itself through proof-of-work mining, like how the token Bitcoin incentivizes the Bitcoin network. Ether is needed to execute any code within the Ethereum network. When utilized to execute a contract in Ethereum, Ether is referred to as gas.
