The next development
exemplified in the second era blockchain framework called Ethereum was the
In December 2013, a man
named, Vitalik Buterin releases a white paper on what might turn into the
“Ethereum venture” – a blockchain platform with the ability to build
Ethereum is a blockchain
based distributed computing, public, open-source stage highlighting smart
Vitalik was a noticeable
Bitcoin lover for quite a long while and was a prime supporter of the Bitcoin
magazine in 2012. He tried to update the original Bitcoin protocol and failed
to gain agreement within the Bitcoin community, post which he gathered a team
of super programmers to develop a completely new blockchain protocol featuring
‘Smart contracts’ that would allow programmers to build scripts into the
blockchain which would act as contractual agreement and execute when the
mentioned conditions are met. He named this new blockchain ‘Ethereum’.
contract is a piece of code which is stored on the blockchain network. Anything
of value, like money, property or shares can be exchanged with the help of
smart contract in a conflict-free , transparent way while avoiding the services
of a middleman. It
defines the conditions to which all parties using the contract would agree, so
certain actions are executed if the required conditions are met. A smart
contract is saved on each computer on the network and all of them must execute
it to get the same result. In this way users can be sure that the outcome is
try to understand Smart contracts in detail by using an example:
User A want to ship a truck full of goods to User B. User Z is the trucker who
would be carrying the truck full of goods to User B. User A may have trust on
User B, but not on the trucker. On the contrary, even the trucker may not trust
the sender (User A), may be he may not pay him?
would then sign an agreement with the trucker that he would process the payment
only after the goods are received by User B. Such process would usually involve
a third party wherein legal papers and contracts are signed, printed and
smart contracts, this can be made simpler and the rules can be added in the
can use Smart contracts to sign an agreement with the trucker wherein the
program would mention a code wherein the payment would not be processed till
the delivery is confirmed by user B. Once the delivery is confirmed, the
payment would be automatically triggered and processed by smart contract.
further be modified by adding a GPS tracker attached to the truck, which would
eliminate the need for User B to confirm in this entire process and the payment
can be processed once the stated conditions are met.
To use a
smart contract on Ethereum blockchain , mini payments of Ether, the
cryptocurrency for Ethereum were required. Since smart contracts are stored on
Ethereum blockchain, anyone can access or inspect the contract for an bugs or
irregularities since its contents are public. Additionally, no one can access
the funds on the smart contracts, not even the developers.
of smart contract in the blockchain system ethereum, built small computer
programs directly into blockchain that allowed financial instruments, like loans
or bonds, to be represented, rather than only the cash-like tokens of the
bitcoin. The ethereum smart contract platform has a market
capitalization of billions of dollars and has hundreds of projects heading
towards the market.
its launch in 2014, Ethereum has grown significantly and is now considered the
second largest cryptocurrency after Bitcoin. By June 2014, the Ethereum project
was funded by a crowd sale. Investors realized how Ethereum could unlock a new
level of functionality for blockchains and were keen on investing in the same.
It has been growing ever since.