Quoting the words here from ethereum.org, “Ethereum is a global, open-source platform for decentralized applications.” Launched in 2015, to complement bitcoin rather than competing with it, has emerged into the second most popular digital currency (Ether -ETH) only after Bitcoin (BTC), and Ethereum is the largest used blockchain around theworld. In this Ethereumlearning resource, we’ll break down some terms one by one to understand more about Ethereum.
Open source: The source code is made available for free and anyone can create new software with the given code.
Blockchain-based: The scope of blockchain goes beyond cryptocurrency. This was kept in mind to create the Ethereum foundation and uses blockchain to support everything through its apps and programming.
Decentralized: We use the internet and applications all of which are controlled or monitored by an organization. This is not the case with Ethereum which makes it hack-proof because it works as a leaderless company.
What is an Ethereum Blockchain?
To understand this in this Ethereum learning resource, we have to look at what a blockchain is. A blockchain is a kind of database shared and updated by many computers or nodes in a network. A block here means that the single smallest unit which has transaction details of a particular transaction. When ETH or Ether is sent to a user, if the data is not in a block, the transaction won’t be successful. A chain signifies that every block is connected to the previous block through a chain. Every block has information of the previous block which puts it in a chain form and to change the data of one block, the data of all the blocks in a chain has to be changed which is not possible without consensus by every node in the network. Thus it makes blockchain hackproof technology.
What is a smart contract?
This Ethereum learning resource will make it easy for you to understand. A smart contract is nothing but a transaction protocol or a computer program aimed at executing, controlling, or documenting relevant actions over the platform on its own (it will happen automatically) as per predetermined terms and conditions. The objective behind smart contracts is to eliminate the cost occurred over arbitration and enforcement, intermediates required to regulate such contracts, and putting an end to malicious intentions or accidents. Nick Szabo, a famous cryptographer gave a digital vending machine as the earliest example of the smart contract. A vendor machine removes the need for a vendor employee, in the same way, smart contracts removes the need for intermediaries. Here cryptocurrency is involved in the smart contract, therefore a smart currency can also be said cryptocurrency contract, although that defines just one aspect of what blockchain can do.
Bitcoin and Ethereum or Ether(ETH)
Although both bitcoin (BTC) and Ethereum or Ether(ETH) are cryptocurrencies both Ethereum blockchain and Bitcoin Blockchains are very different. Bitcoin blockchain was designed as a cryptocurrency, Ethereum blockchain took the ‘blockchain’ technology to more generalized purposes.
Bitcoin and Ethereum blockchain, both have the same features of a blockchain such as decentralization and anonymity of transactions, but there are some major differences in the way both function and their nature as well.
Time taken for creating a new block on the bitcoin blockchain is on an average 10 minutes, whereas in the Ethereum blockchain creating a new block takes only 12 seconds. So while you create a new bitcoin, 50 ETH would have already been produced in that time. This makes Ethereum blockchain way more efficient than Bitcoin Blockchain.
Another difference is that Bitcoin, when launched, was one of its kind and due to extensive mining, 65% of Bitcoin has already been mined whereas not even 50% of ETH has been mined as of yet.
Ethereum blockchain and bitcoin differ in purpose as well. Bitcoin is being promoted as an alternate currency and promotes itself as a better alternative to physical currency. Ethereum, on the other hand, has developed Ethereum Blockchain to facilitate smart contracts through peer to peer network and for that to happen it uses its currency.
