The ether units of Ethereum
If both euro and dollar have their cents, and the British pound its pence, the ether, the cryptographic currency of Ethereum, has many subdivisions, from the milliether or finney to the wei, 18 decimals after the decimal point. What are they? Where do their name come from?
Concepts of Ethereum
To keep it simple, we can say that Ethereum is a decentralized computer on which decentralized applications can run, the DApps. These programs, or smart contracts, are designed to run automatically when certain conditions are reached, whether internal to the blockchain (like an information about a transaction) or external (variable not registred in the blockchain, accessed through an oracle which forms a bridge between the blockchain and the rest of the world).
Since they are written in the Ethereum blockchain, these applications are immutable (censorship, fraud or interference are impossible) and transparent (the code being public, everyone can read it and check it does what it is supposed to do).
The most known types of applications are the ICOs (for Initial Coin Offering) that permit to raise funds for projects and to manage cryptographic currencies, and the DAOs (for Decentralized Autonomous Organization) that manage automatically the whole set of operating rules of an organization (membership, hierarchy, distribution).
To make this distributed infrastructure work, some nodes of the network, which are called miners, validate the transactions and register them in the blockchain. These miners are rewarded in tokens denominated in ethers, the cryptocurrency of Ethereum.
Other nodes are responsible for running the smart contracts in the Ethereum Virtual Machine (EVM), an isolated runtime environment. Once compiled, these programs are added to the chain of blocks via a transaction. This way, both monetary transactions and smart contracts are registered in the blockchain.
The programs themselves consume monetary units, which is a way to force their efficiency and to avoid using for free the computing power of the network. This quantity, named gas has its own price in order to be decorrelated from the ether price: the cost of a smart contract would be too fluctuating if it was directly related to the cryptocurrency price. In short, we can say that the gas accounts for the amount of work done, and that its actual payment is made in ethers. The price of work (in gas) is thus separated from its value (in ether). The quantities of gas are expressed in wei, or in billionth of billionth of ether (10-18).
Table of the ether subdivisions names
International System Usual name Effigy 10-18 – attoether wei Wei Dai 10-15 – femtoether kwei or ada Ada Lovelace 10-12 – picoether mwei or babbage Charles Babbage 10-9 – nanoether gwei or shannon Claude Shannon 10-6 – microether szabo or micro Nick Szabo 10-3 – milliether finney or milli Harold Finney 1 – ether ether 103 – kiloether kether, grand or einstein Albert Einstein 106 – megaether mether 109 – gigaether gether 1012 – teraether tether
Etymology of the ether subdivisions
If the ether subdivisions names follow the conventions of the international system (like milli for a thousandth or 10-3), some denominations also have a common name based on famous persons, the effigies.
The wei (10-18) pays tribute to Wei Dai, inventor in 1998 of a protocol and its associated cryptocurrency, the b-money, an anonymous and distributed electronic money system, describing the key concepts implemented in future cryptographic protocols, including Bitcoin. He is by the way quoted in the founding article of 2008 “Bitcoin: A Peer-to-Peer Electronic Cash System” by the mythical Satoshi Nakamoto, inventor of the Bitcoin protocol.
Ada Lovelace was a mathematician from the 19th century, famous for being the first programmer in the history of computer science, since she wrote an algorithm for the analytical machine, proposal of a computer machine by Charles Babbage, in order to calculate the Bernoulli numbers. Her name was given to a computer language: Ada.
For what concerns us here, it is also given to the kwei or femtoether (10-15 ether).
Mathematician and mechanical engineer of the 19th century, the British Charles Babbage was the inventor of an analytical machine with punch cards, and of a difference engine, both forerunners of the computer. His machines could only be completely built after his death, when the necessary technologies were precise enough.
His name is given to the mwei or picoether (10-12 ether).
American mathematician, Claude Shannon founded the information theory in his 1948 article entitled “A Mathematical Theory of Communication”, theory that uses probabilities to measure the information content of a set of messages. We already find in it the concepts of information encoding, of quantitative measure of a text redundancy, of data compression, and of cryptography, in which we find asymmetrical cryptography (with public and private keys) which is of particular importance for cryptocurrencies.
His name is given to the gwei or nanoether (10-9 ether).
Nick Szabo is the inventor of both the concept and expression “smart contract” in his article “Smart Contracts: Building Blocks for Digital Free Markets” published in 1996 in the number 16 of the Extropy review. He also proposed in 1998 a decentralized digital currency mechanism, the bit gold, based on creating unfalsifiable chains of proofs of work with private keys and digital signatures.
His name is given to the micro or microether (10-6 ether).
Cryptographer and developer, Harold “Hal” Finney created in 1984 the first Reusable Proof-of-Work (RPOW) which allows the generation of tokens (or coins) proving that the work needed to mine them has been accomplished. He is also the first person to receive bitcoins from Satoshi Nakamoto during the first transaction made in this cryptocurrency in January 2009.
His name is given to the milli or milliether (10-3 ether).
If the theoretical physicist Albert Einstein is known for his work on relativity and the famous equivalence formula between mass and energy, he is credited with many quotes including the following (and probably apocryphal): “Compound interest is the most powerful force in the universe.”
This can makes an implicit reference to the Ethereum move to a proof of stake to achieve distributed consensus instead of the current proof of work in its Serenity version, which will limit the miners energy consumption.
Is it why his name was given to the kether, grand or kiloether (103 ether)?