The recent hack, which I wouldnt even call a hack in DAO has led to draining of users ether into a child DAO. Yea its quite weird when you hear it. The idea that this is a hack is quite weird as the user didnt really hack but used a recursive function in which the programmer split the DAO into the child DAO which in turn will be converted to ethereum to cash out after 27 days. I think Vatalik has explained this a bit better.
This has seen the price of Ethereum to drop from $20 to $10 almost half its value. The DAO since seeing record funding has dropped value dramatically. This is not the end of ethereum or dao in my opinion but its a definite blow never the less.
The purpose of this post is to discuses what I realised with the aftermath of all this chaos. Smart contracts were presented as decentralised way of doing things on the blockchain. I had argued before that by design DAO was not that decentralised as it rested power in its developer or creator to change lots of aspects of the token itself. Hence putting power of centralisation in a decentralised blockchain. What shocked me even more was that we supporters of a uncontrolled and decentralized economy dont realize how centrailized ethereum has become. On request of Vatalik all exchanges stopped eth trading, deposits and withdrawals. If you can rest that kind of control under one person and we still call it decentralised then we have to go back and really understand the definition of that word. I dont know what is right and what is wrong. I guess this is why Satoshi Nakamoto remains anonymous, as he wants the community to decide. Same may argue that ethereums faith will be decided by the community, yes agreed but who has control over it was shown by 1 person or entity.
Since the unleashing of the bitcoin code onto the world as an open source digital asset, many have tried to fork the code and do much more with the with the underlining technology known as blockchain. While many have simply forked and the SHA256 algorithm with competing products based on other algorithms such as scrypt nscrypt and now dagger.
Ethereum creator Vitalik Buterin envisioned a sort of a programmable blockchain. Based on smart contracts its a very powerful tool. In this Article I will try to cover the basics of ethereum so that you get clear picture of what it is and why its important. I think the best words of what ethereum is are on its website “Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.” Similar to bitcoin blockchain the ethereum blockchain requires ether to make or setup contracts and build decentralized apps based on those contracts. It is important to note that ether or ehterium being used directly will be very costly, but using it as contract based setup makes it cheap, fast, secure and unstoppable.
Mining ether is one topic being googled alot recently since it has risen in price while bitcoin price has fallen of a bit. This is even more visible when the rates of bitcoins start to rise we see the fall of price in eth or ether the fuel of ethereum blockchain. Mining is done through a program called geth which is a communicator between ether network and your system. Block generation time is very small so mining is not that difficult since there are no ASICs available for this algorithm you can look into mining it with cpu or gpu. A full tutorial on how to mine eth the fuel of ethereum can be found here.
Is ethereum the new bitcoin, most certainly not. Its a reprogrammable blockchain which can be used with contracts based programming to improve and build decentralized apps with incentives.
When I got into bitcoin and started getting deeper into why its so important. I met by Partner and we would and still do have heated discussions on the importance of crypto currencies or altcoins as we would like to call them. I am more of a one currency for the world type of fan, where as my partner is more into blockchain its developments and derivatives. It brings into aspect how much we love what we do and it keeps us both on our toes to understand the eco system that is building around us. Its fun to be able to just sit daily and talk about the possibilities that come forth because we both are crypto enthusiasts in general.
We often discuses how one coin maybe better then the other or not. The pros and cons while I am looking to it from general business stand point, he looks at it more towards possible potential of the design that the coin follows. We both might be wrong but it does bring out interesting arguments. One such argument when we met early was on altcoins such as dashcoin, doge and litecoin where I pointed out (this was back in 2014) that xrp or ripple will eventually become the second largest currency and give bitcoin a run for its money. While I still believe that btc is here to stay as xrp is now becoming the poster child for closed source coins with stellar also created by the co-founder of ripple is in close for second. From finance stand point of view it was obvious back then that when the banks start realizing bitcoin and its truly remarkable concept they will opt to fight it and at the heart of that xrp or ripple will emerge, as not only will it the closed source the banks will be able to control the infrastructure while still keeping tap on whats happening.
Today we see 10 of the largest 50 banks of the world in support of xrp and recently published news that Standard Chartered is testing it, right after western union news that they were also testing ripple to bring credibility to it.
I am still of the view that bitcoin will lead the way since it was presented as a decentralized distributed ledger to the world which could only be controlled on consensus rather then an entity, xrp will be used more as a poster child to replace the old technology that is running at the hearts of the banks called “swift” and outdated systems.