What is the first thing that comes into mind when you think of blockchain technology? Bitcoin right? People tend to forget that bitcoin is one of the many digital currencies on the blockchain. Currently, there are over 26 active cryptocurrencies. Ethereum is one of such digital currencies. It is a public, open-source digital currency and its platform generates a blockchain called Ether. This currency was proposed by Vitalik Buterin in 2013. EVM (Ethereum Virtual Machine) is a decentralized virtual marine.
Until recently building blockchain applications, you require a complex coding, mathematics and cryptography. But with changing times, ethereum is now deployed and developed faster with decentralized applications built by the developers.
What is Ethereum?
Like any other digital currency, Ethereum is also distributed on a public blockchain network. It is a software platform that acts like both decentralized app store and decentralized internet. A system like Ethereum definitely needs a currency for resources that would help in running the application or a program. This is where “Ether” comes into the picture. It is a digital bearer asset. And the best part of this is it doesn’t require third-party access to carry on a transaction. It works as both digital currency and fuel within the network for decentralized apps.
To change anything within any apps in the Ethereum you must pay a transaction fee, for the network to process it. The transaction fees are usually based on fuel. And fuel is calculated on the basis of how much of the power is required to compute and how long will it take.
Are Bitcoin and Ethereum similar?
These two share a few similarities but different when compared closely. Bitcoin and Ethereum are cryptocurrencies but in reality, they are two different currencies heading towards two different directions. Over the years Bitcoin has established itself as a successful, stable digital currency till date. However, Ethereum is in a different league, it is a multi-purpose platform and works its SC(smart contract) applications with its digital currency, Ether. Bitcoins have a 21mln hard cap that’s the limit they can be created. Whereas, coming to Ethereum, it has the potential for an endless supply. Average mining time for a block in bitcoins take a minimum of ten minutes. But in the case of Ethereum, it is less than 12 seconds. It confirms that Ethereum makes quicker conformations compared to Bitcoins.
How different are they?
Bitcoin mining needs a lot of time, energy and electricity. It takes years of computing to generate one bitcoin. In ethereum, proof of work algorithm encourages individuals to perform more decentralized mining. Ethereum’s internal code is Touring complete. Which simply means that it can calculate anything as long as there is enough of both time and computing power to do so. Bitcoin does not have this special ability. Touring complete creates limitless possibilities for users. And its complexity solves all your privacy and security concerns.
Even though it is based on bitcoin-protocol and design but it is made in such a way that it supports applications above money systems also. It also saves entire transactions history in its respective network only like bitcoin and it also needs every node present in the network to download most recent information on smart contracts and user balances etc. It can also be recounted as transaction-based state machine. Being a transaction-based state machine means that it has the ability to read inputs and transition according to them. And every Ethereum is capable of holding more than a few thousands of transactions.
Even ethereum undergoes mining like any other digital currency. It is a process where nodes apply their computing techniques to solve a proof-of-work challenge, which in turn is a puzzle more likely mathematical. The more computing power your computer has the faster you will finish the challenge and get your block validated. So to keep it simple, a lot of people around the globe are fighting to validate or create a block.
Like any other digital currencies, ethereum offers you decentralized control, which means no third party intervention. Any purchases or transactions you do on online or offline is controlled by centralized governance. But in the case of digital currency, there is no one with the power to control or oversee your transactions. In Ethereum network the third party can not even intervene on any decentralized apps too.
It reduces chances of fraud, hacking or corruption as its network is tamper-proof. For any changes to be made to the blocks you must need validation from nodes in the network. Its cryptographic security and decentralized nature all the apps always stay online making it impossible to tamper with.
Even though Ethereum is great and provides absolute privacy and security. But there are chances that error can occur like Smart Contracts are present to make the network secure. But we tend to forget that smart contracts are codes written by humans, so they can only be as strong as the person writes them. So any mistake in the code can explode out of proportion like it can get easy for hackers to hack.
There is a lot more Etherum can offer compared to other cryptocurrencies. It offers both a decentralized network and decentralized apps, decentralizes any centralized platforms and provides the creators with a lot of potentials to build apps. These decentralized applications truly hold the potential to change relationships between audience and companies. It even provides the buyer with a chance to dig the origins of the product they’re purchasing.