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Ethereum, a virtual currency that rivals Bitcoin

ethereum
New virtual gold rush is underway. Even as Bitcoin, driven by internal divisions, has struggled, a rival virtual currency -Ethereum -has soared in value, climbing 1,000% over the last three months. Beyond the price spike, Ethereum is also attracting attention from giants in finance and technology, like JPMorgan Chase, Microsoft and IBM, which have described it as a sort of Bitcoin 2.0.
Unlike Bitcoin, which was released in 2009 by a mysterious creator known as Satoshi Nakamoto, Ethereum was created in a more transparent fashion by a 21-year-old Russian-Canadian, Vitalik Buterin, after he dropped out of Waterloo University in Ontario. Buterin’s team raised $18 million in 2014 through a presale of Ether, which helped fund the Ethereum Foundation, which supports the software’s development.
The rise of the relatively new virtual currency has been helped by a battle within the Bitcoin community over how the basic Bit coin software should develop. The fights have slowed down Bitcoin transactions and led some people to look for alternative virtual currencies to power their businesses. Enter Ethereum.
Like Bitcoin, the Ethereum system is built on a blockchain in which every transaction is recorded publicly. The promise of such a system is that it allows the exchange of money and assets more quickly and more cheaply than relying on a long chain of middlemen. But Ethereum has also won fans with its promise to do much more than Bitcoin. In addition to the virtual currency, the software provides a way to create online markets and programmable transactions known as smart contracts.
The system is complicated enough that even people who know it well have trouble describing it in plain English. But one application in development would let farmers put their produce up for sale directly to consumers and take payment directly from consumers. There are already dozens of functioning applications built on Ethereum, enabling new ways to manage and pay for electricity, sports bets and even ponzi schemes.
The first full public version of the Ethereum software was recently released, and the system could face some of the same technical and legal problems that have tarnished Bitcoin. Many Bitcoin advocates say Ethereum will face more security problems than Bitcoin because of the greater complexity of the software.
Thus far, Ethereum has faced much less testing, and many fewer attacks, than Bitcoin. The novel design of Ethereum may also invite intense scrutiny by authorities given that potentially fraudulent contracts, like the ponzi schemes, can be written directly into the Ethereum system.
But the sophisticated capabilities of the system have made it fascinating to some executives in corporate America. IBM said last year that it was experimenting with Ethereum as a way to control real world objects in the so-called internet of things.
Microsoft has been working on several projects that make it easier to use Ethereum on its computing cloud, Azure. “Ethereum is a general platform where you can solve problems in many industries using a fairly elegant solution -the most elegant solution we have seen to date,” said Marley Gray, a director of business development and strategy at Microsoft.

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