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.