ETHER:THE CRYPTO-FUEL

FOR THE ETHEREUM

NETWORK
BY
Chiron Singhi (16010126421)
Paavni Jain (16010126456)
Prakruti J Shah (16010126447)
 WHAT IS ETHER?

• Ether is a necessary element — a fuel — for operating the distributed

application platform Ethereum.
• It is a form of payment made by the clients of the platform to the machines
executing the requested operations.
• Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency
researcher and programmer. Development was funded by an
online crowdsale that took place between July and August 2014.
• Ethereum is not just a blockchain; it’s a decentralized programmable
blockchain-based software platform
• Ethereum allows you to build and execute smart contracts and Distributed
Autonomous Applications (DApps), without censorship, downtime, or any
third party.
 HOW ARE ETHERS CREATED?

• The total supply of ether and its rate of issuance was decided by the
donations gathered on the 2014 presale. The results were roughly:
• 60 million ether created to contributors of the presale
• 12 Million (20% of the above) were created to the development fund, most
of it going to early contributors and developers and the remaining to
the Ethereum Foundation
• 3 ethers are created every block (roughly 15 seconds) to the miner of the
block
• 0.625-2.625 ethers are sometimes sent to another miner if they were also able
to find a solution but his block wasn't included (called uncle/aunt reward)
 FUTURE OF COIN AND ASSOCIATED
BLOCKCHAIN

• Ethereum has a separate blockchain that has several significant technical

differences from Bitcoin’s blockchain.
• The entire Ethereum system is supported by a global system of so-called
‘nodes.’ Nodes are volunteers who download the entire Ethereum’s
Blockchain to their desktops and fully enforce all the consensus rules of the
system, keeping the network honest and receiving rewards in return.
• Every node on Ethereum network also needs to download the most recent
state, or the current information, of each smart contract within the network,
every user’s balance and all the smart contract code and where it’s stored.
 FUTURE OF COIN AND ASSOCIATED
BLOCKCHAIN

• Smart Contracts are designed to automatically perform transactions and other

specific actions within the network with parties that you don’t necessarily trust. The
terms for both parties to fulfill are pre-programmed into the contract. The
completion of these terms then triggers a transaction or any other specific action.
• Ethereum’s Blockchain technology itself has a potential of revolutionizing web-
based services as well as industries with long-established contractual practices.
Ethereum developers are planning a switch from a Proof-of-Work consensus model
to a Proof-of-Stake consensus model in the future. Ethereum only just started gaining
mainstream media’s and general public’s attention. A lot of experts agree that it is a
disruptive technology that is set to not only completely change the way Internet
works but also revolutionize services and industries that have been existing for
hundreds of years. Overall, opinions on the future of Ethereum among
cryptocurrency experts are generally positive.
 FUTURE OF COIN AND ASSOCIATED
BLOCKCHAIN

• Essentially, the Ethereum Blockchain can be described as a transaction-

based state machine. When transactions are executed, the machine
transitions into another state. Every state of Ethereum consists of millions of
transactions.
• Those transactions are grouped to form ‘blocks,’ with each and every block
being chained together with its previous blocks. But before the transaction
can be added to the ledger, it needs to be validated, that goes through a
process called mining.
• Mining is a process when a group of nodes apply their computing power to
completing a ‘proof of work’ challenge, which is essentially a mathematical
puzzle. Miners are a backbone of the Ethereum network, as they not only
confirm and validate transactions and any other operations within the
network but also generate new tokens of the network’s currency.
 CONTRACT SPECIFICATIONS DETAILS
FOR TRADING

• In 2016, as a result of the exploitation of a flaw in the Decentralised

Autonomous Organisation (DAO) project's smart contract software, and
subsequent theft of $50 million worth of Ether, Ethereum was split into two
separate blockchains – the new separate version became Ethereum (ETH)
with the theft reversed, and the original continued as Ethereum Classic (ETC).
• The value of the Ethereum currency grew over 13,000 percent in 2017, to
over $1400. By September 2018, it had fallen back to $105-200.
• Ethereum’s average block mining time is 12 seconds, which means they
have quick confirmations and has an endless supply unlike bitcoin, which is
21 million.
 IS THE ETHER SUPPLY INFINITE?

• No. According to the terms agreed by all parties on the 2014 presale,
issuance of ether is capped at 18 million ether per year (this number equals
25% of the initial supply).
• This means that while the absolute issuance is fixed, the relative inflation is
decreased every year. In theory, if this issuance was kept indefinitely then at
some point the rate of new tokens created every year would reach the
average amount lost yearly (by misuse, accidental key lost, the death of
holders etc) and there would reach an equilibrium.
 IS THE ETHER SUPPLY INFINITE?

• But the rate is not expected to be kept: sometime in 2018-2019 Ethereum will
be switched from Proof of Work to a new consensus algorithm under
development, called Casper that is expected to be more efficient and
require less mining subsidy.
• The exact method of issuance and which function it will serve is an area of
active research, but what can be guaranteed now is that (1) the current
maximum is considered a ceiling and the new issuance under casper will not
exceed it (and is expected to be much less) and (2) whatever method is
ultimately picked to issue, it will be a decentralized smart contract that
will not give preferential treatment to any particular group of people and
whose purpose is to benefit the overall health and security of the network.
THANK – YOU