Ethereum & Bitcoin – Two Provocative Concepts and What Sets Them Apart
BY: MATEI GAVRIL ON THURSDAY, SEPTEMBER 28, 2017
As Internet connected devices develop, the way people are exchanging data and value has been upgraded. Cryptocurrency opens new ways to fund projects through the sales of cryptocoins or tokens, taking over the economic world, along with the two power names: Bitcoin and Ethereum.
The first digital currency that was launched is Bitcoin. It went against the current by integrating two parameters: a safe, decentralized database with efficient security enforced by cryptography, and a sound transaction system capable of sending and saving money across the world without the involvement of a third party.
Together with the implementation of blockchain technology, Bitcoin uses peer-to-peer protocol that allows online payments to be sent directly from one party to another without going through a financial institution, or centralized administrative system.
Peer-to-peer, or P2P, is a decentralized communications system in which each party has the same attributes, and either party can initiate a communication session. It is different from the client-server model, in which the client makes a service request and the server fulfills the request. With P2P, each node functions as both a client and a server.
Another important feature introduced, was the proof-of-work mechanism. It is defined as a piece of data that helps people on the blockchain verify any activity. This mechanism also prevents double spending in the network, a common online problem.
However, Bitcoin has its drawbacks. One of them is its limited functionality, an issue which was intentionally created for security reasons.
Nowadays, Ethereum is gaining in both popularity and value. It is perceived as an updated version Bitcoin, that uses a wider variety for event information.
Ethereum was launched in 2015, and its currency reached its greatest value so far, at more than $420 USD, being almost one tenth of Bitcoin’s value.
Ethereum is a new blockchain, open-source, public computing platform that has the advantage of simplifying the process of creating blockchain applications.
The Nomad Community played their cards right being launched inside the Ethereum Blockchain, and are now the first Digital Nomad platform.
Through a decentralized digital public record of transactions that are kept secure, anonymous, tamper proof and unchangeable, the Nomad Community has gained respect and popularity.
Similar to Bitcoin, Ethereum implemented a decentralized software platform, but the latter introduced the idea of Smart Contracts. Basically, they are a piece of code that can facilitate the exchange of money, content, property, shares, or anything of value. With a Smart Contract you have much more variety on event information.
You can create any kind of financial contracts like bonds or insurance, without paying millions in legal fees. Plus, the protocol incorporated defines financial rules, with a clear cryptographic way of verifying transactions.
Besides being a platform, Ethereum is also a programming language (Turing complete) running on a blockchain, helping developers to build and publish distributed applications. A Turing complete language allows for anything to be done as long as there is enough time and enough computing power.
How is Ethereum compared to Bitcoin?
First of all, Bitcoin is a crypto-currency, while Ethereum is actually a platform, and it has shown that it has tremendous potential because you can run apps on its network.
As Ethereum creator Vitalik Buterin explains:
“The idea is that there exists this magic computer in the cloud, and anyone can send programs to it, anyone can run programs on it, and those programs can talk to each other.” Inventor of Ethereum, Vitalik Buterin
Second of all, Ethereum is possibly faster and more user-friendly. Bitcoin’s average block time is about 10 minutes, while Ethereum’s aims to be 12 seconds. It relates “blocks”, or records of transactions, more quickly than Bitcoin, and some of its users consider that this efficiency makes it easier to use.
Both Bitcoin and Ethereum have revolutionized the online world, but they are different. They do not focus on the same market applications or services. Bitcoin facilitates cash transactions, while the other has more complex functions, designed for running decentralized apps, a.k.a. smart contracts.
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