Popular Science Corner 07 | Ethereum from World of Warcraft

Bitcoin has opened the era of blockchain 1.0. The salient feature of the 1.0 era is that it provides a different way of thinking for value transfer, that is, value transfer no longer depends on centralized institutions like banks.

During this period, as Bitcoin became more and more familiar to people, many people began to learn from Bitcoin’s ideas, so a large number of altcoins appeared.

The source code of these altcoins is similar to Bitcoin, so they are called altcoins. However, the altcoins in this period did not have any substantial breakthroughs, that is to say, they still have the shortcomings of Bitcoin, without any breakthrough improvements.

However, people do not let the problems of Bitcoin exist. Many people in the Bitcoin community hope to solve these problems through various technical means and transform the Bitcoin system to perfection.

       Among them, there is a Russian teenager named Vitalik Buterin (transliteration: Buterin), who is also eager to make up for the shortcomings of the Bitcoin system as soon as possible.

1. The evolutionary path of Internet-addicted teenagers

Speaking of it, Buterin's experience with Bitcoin was a bit dramatic. When he was 13 years old, he was a typical Internet addicted teenager, addicted to World of Warcraft and couldn't extricate himself. One day, the company of the World of Warcraft game suddenly canceled his most beloved Warlock's "Life Siphon" skill. He was very angry and contacted the company many times to restore this skill, but the game company did not agree.

So, Buterin began to reflect that in Internet games, players are actually very weak as participants, and the strong ones are game developers, who are the center of a game. One of the biggest disadvantages of this centralized service is that everything is decided by the developer. The player can only choose to accept passively, or leave.

Buterin realized the drawbacks of centralization through the "World of Warcraft" game, so he began to look for ways to break the centralization. Buterin learned about Bitcoin and blockchain from his programmer father, and became so interested in it that he decided to drop out of the University of Waterloo to travel around the world to communicate and learn with blockchain enthusiasts all over the world.

At that time, Bitcoin enthusiasts were going all out to add more functionality to Bitcoin, creating Bitcoin 2.0. But Buterin believes that building an entirely new programming language is Bitcoin's immediate priority.

As a result, Buterin, who was only 19 years old, wrote a new set of white papers, which became the prototype of the "Ethereum White Paper".

Buterin mentioned in the white paper: I hope to be able to create a variety of applications based on a general-purpose programming language, such as social networking, trading, games...

These views have been strongly echoed by the Bitcoin community, and more and more people have joined the design of Ethereum. In the end, this project was named "Ethereum" by Buterin, because "ether" is a substance that has not been confirmed under scientific theory, which implies Buterin's expectation for the project.

In June 2015, Ethereum was officially launched.

In the next two years, the cryptocurrency "Ether" spawned by Ethereum became a very popular digital asset after Bitcoin, and Buterin also changed from a fledgling boy to a blockchain god-level figure "V God".

2. The road to success of Ethereum

The price of Ethereum doubled 85 times in 2017; ICO, which was founded by Ethereum, became the hottest method of crowdfunding in 2017, raising more than 4 billion US dollars through ICO globally;

In 2017, the total market value of global electronic currency soared from US$18 billion at the beginning of the year to US$560 billion;

At the beginning of 2017, more than 20 top global financial institutions and technology companies including JPMorgan Chase, Chicago Exchange Group, Microsoft, Intel, and Accenture established the Enterprise Ethereum Alliance.

The emergence of Ethereum has activated the huge potential behind the blockchain, why do you say that?

The great thing about Ethereum is that it not only upgrades the blockchain into an operating system, so that everyone can develop application chains on this basis, but also allows everyone to issue their own tokens in a very simple way.

Unlike Bitcoin, which pre-sets the operation of the transaction system, Ethereum is a programmable blockchain. Ethereum allows users to create their own operations of varying complexity that suit their needs.

In this sense, Ethereum is a platform. This platform is equivalent to a relatively complete "system" that has been built, similar to Android and Apple. Application developers can develop software on this system.

Most of the current ICO projects are based on applications developed on Ethereum. Developers need to pay Ethereum to run projects on Ethereum. The result of this is that the more ICO projects, the richer the ecology will be, and the user base will expand, which will continue to increase the demand for Ethereum, and the price of "Ether" will rise.

3. The consensus mechanism of Ethereum

The consensus mechanism of Ethereum is also different from that of Bitcoin. As we mentioned earlier, Bitcoin determines the bookkeeping rights through the POW consensus mechanism. Although POW has a high security index, the energy consumption and cost of mining are huge, and the transaction processing speed is still very slow.

Therefore, Ethereum further enriched the technology of Bitcoin and proposed a new mining mechanism, that is, Proof of Stake (PoS).

The "Proof of Equity" proposed by Ethereum is similar to the shareholder mechanism. The more shares the person owns, the easier it is to obtain the bookkeeping rights. The core logic of the POS mechanism is: whoever holds the currency has control over the network.

It should be noted that in the POS mechanism, computing power mining still exists, and computing power is needed to solve a mathematical problem, but the difficulty of the mathematical problem is related to the "coin age" of the coin holder. The longer the difficulty, the easier the difficulty and the greater the probability of mining coins.

4. The breakthrough point of Ethereum: smart contract

The biggest feature of Ethereum is the introduction of "smart contracts". What does smart contract mean? Smart contracts define a set of transaction rules in code.

In daily life, we usually sign paper contracts, and the fulfillment of paper contracts requires supervision by a centralized institution, that is, a court. The "smart contract" proposed by Ethereum is to realize decentralized automatic execution through programs.

This account is called "smart contract account", and it will only execute according to the code. The scope of application of this technology is very wide, involving: insurance, equity, trust, etc. It can be said that this technology can be applied to any activities that require trust.

        5. Significance of Ethereum

The development of Ethereum to this day has not been smooth sailing. After the glorious period of 2017, now, facing the bear market, some initial coin offering projects are worried about being tired by the bear market, and have cashed out one after another. V God, the founder of Ethereum, is also deeply involved in various rumors. There are often rumors that he is going to withdraw from Ethereum and that he has run away.

Nevertheless, Ethereum is indeed a leap forward for blockchain technology, and it represents the blockchain 2.0 era. If the blockchain 1.0 era represented by Bitcoin provides new ideas and new methods for value transfer; then, the blockchain 2.0 era represented by Ethereum makes commercial applications of blockchain possible.