Ethereum Vs. Bitcoin

Lessons > Ethereum Vs. Bitcoin
Course Content
Introduction to Ethereum
⦁ What is Ethereum? Welcome to the first lesson of our course, "Introduction to Ethereum for Beginners." Today, we will dive into the world of Ethereum and start exploring this fascinating technology. Ethereum, in the simplest terms, is an open-source, blockchain-based platform that enables developers to build and deploy decentralized applications (dApps). It was proposed in late 2013 by a cryptocurrency researcher and programmer named Vitalik Buterin and development was funded by an online crowdsale in mid-2014. The Ethereum platform has its own cryptocurrency, known as Ether (ETH), which is used primarily for two purposes: as a digital currency, like Bitcoin, and is used inside Ethereum to run applications and even to monetize work. But Ethereum is so much more than just a cryptocurrency. It's a whole ecosystem that allows developers to build and run smart contracts - self-executing contracts with the terms of the agreement directly written into code. This means that Ethereum is not just a platform but also a programming language (Turing complete) running on a blockchain, helping developers to build and publish distributed applications. Ethereum's vision is to create a "World Computer" - a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. ⦁ The History of Ethereum As we continue our journey into the world of Ethereum, it's important to understand its roots. The history of Ethereum is not just a timeline of events, but a story of innovation, collaboration, and the drive to create a decentralized future. Ethereum was conceived in 2013 by Vitalik Buterin, a programmer involved with Bitcoin. Buterin saw the potential of Bitcoin and blockchain technology but felt that it was limited in scope. Bitcoin was primarily a currency, and its blockchain could not be used for other applications. Buterin proposed a new platform, Ethereum, which would feature a general scripting language and allow developers to create any kind of application on its blockchain. Buterin's proposal was met with enthusiasm, and in January 2014, Ethereum was formally announced at the North American Bitcoin Conference in Miami. The core Ethereum team consisted of Vitalik Buterin, Mihai Alisie, Anthony Di Iorio, and Charles Hoskinson. Later, Joseph Lubin, a co-founder of Ethereum who has been a significant contributor to the ecosystem, founded ConsenSys, a blockchain technology company. In order to fund the development of Ethereum, the team decided to conduct a crowdsale of Ether, Ethereum's native cryptocurrency. The crowdsale took place between July and August 2014 and was a huge success, raising over $18 million. The development of Ethereum was divided into four stages: Frontier, Homestead, Metropolis, and Serenity. Each stage added new features and improvements to the platform. Frontier, the initial stage, was launched in July 2015. It was intended for developers and technical users, allowing them to mine Ether and create smart contracts. Ethereum has had its share of challenges along the way. One of the most significant events in Ethereum's history was the DAO attack in 2016. The DAO (Decentralized Autonomous Organization) was a complex smart contract on the Ethereum blockchain that was hacked, leading to the theft of 3.6 million Ether. This event led to a hard fork in the Ethereum blockchain, resulting in two separate chains: Ethereum (ETH) and Ethereum Classic (ETC). Despite these challenges, Ethereum has continued to grow and evolve. It has become the leading platform for decentralized applications and has paved the way for the Decentralized Finance (DeFi) movement. Today, Ethereum is not just a platform but a vibrant ecosystem of developers, innovators, and users who are shaping the future of the internet. In the next section, we will delve deeper into Ethereum's purpose and how it aims to revolutionize the world of software development and finance. So, let's move on to the next topic: Understanding Ethereum's Purpose. ⦁ Understanding Ethereum's Purpose As we continue our exploration of Ethereum, it's crucial to understand its purpose. Why was Ethereum created, and what problems does it aim to solve? Let's dive into this topic to gain a deeper understanding of Ethereum's mission and vision. Ethereum was created with the intention of taking the blockchain technology that underpins Bitcoin and adding a programming layer on top of it. This layer, known as the Ethereum Virtual Machine (EVM), allows developers to write smart contracts and decentralized applications (dApps) that can run on the Ethereum blockchain. But why is this important? To answer this question, we need to look at the problems that Ethereum is trying to solve. ⦁ Centralization: In the traditional internet, most applications and services are controlled by a few large companies. These companies can censor content, restrict access, and misuse user data. Ethereum aims to solve this problem by creating a decentralized platform where applications are run on a network of computers, not controlled by any single entity. ⦁ Trust: Traditional contracts and transactions require intermediaries, like banks and lawyers, to ensure trust between parties. With Ethereum's smart contracts, the terms are written in code and automatically executed by the blockchain, eliminating the need for intermediaries and reducing the risk of fraud. ⦁ Innovation: By providing a platform for developers to write decentralized applications, Ethereum opens up a whole new world of possibilities for innovation. Developers can create anything from decentralized finance (DeFi) applications to decentralized social networks. Ethereum's purpose, then, is to enable the creation of applications that are not only decentralized but also immutable, transparent, and free from the control of any single party. It's about taking back control from centralized authorities and giving it to the users. In essence, Ethereum seeks to be the backbone of a new, decentralized internet - often referred to as Web 3.0. In this new internet, users control their own data, applications are resistant to censorship, and trust is established not through intermediaries but through code and consensus algorithms. In the next module, we will dive deeper into the technology that makes Ethereum possible - blockchain. We'll explore what blockchain is, how it works, and how it's connected to Ethereum. So, let's move on to the next module: Understanding Blockchain and Ethereum.
0/7
Understanding Blockchain and Ethereum
Ethereum Vs. Bitcoin
Understanding Ethereum’s Currency: Ether
Decentralized Applications (DApps) on Ethereum
Smart Contracts on Ethereum
The Future of Ethereum
Official Ethereum Resources
Ethereum Blockchain For Beginners.
About Lesson

Ethereum Vs. Bitcoin

Welcome to our course, where we will be exploring the relationship between Ethereum and Bitcoin. Both Ethereum and Bitcoin are well-known cryptocurrencies, but they serve different purposes and have different features. In this section, we will delve into the similarities and differences between these two blockchain giants.

Similarities

Let’s start with the similarities. Both Ethereum and Bitcoin:

⦁ Are based on blockchain technology: Both Ethereum and Bitcoin use blockchain technology to maintain a decentralized, distributed ledger of all transactions.
⦁ Use Proof of Work (PoW): Both Ethereum and Bitcoin currently use a consensus algorithm called Proof of Work (PoW) to validate transactions and add new blocks to the blockchain. However, Ethereum is planning to transition to Proof of Stake (PoS) with Ethereum 2.0.
⦁ Are open-source: Both Ethereum and Bitcoin are open-source projects, meaning that their source code is freely available for anyone to view, use, modify, and distribute.
⦁ Have a native cryptocurrency: Bitcoin has BTC, and Ethereum has Ether (ETH). These cryptocurrencies are used to facilitate transactions within their respective networks.
Differences

Now, let’s move on to the differences. Ethereum and Bitcoin differ in the following ways:

⦁ Purpose: Bitcoin was created as a digital alternative to traditional money, with the goal of providing a decentralized currency. Ethereum, on the other hand, was designed as a platform to facilitate peer-to-peer contracts and applications via its own currency.
⦁ Capabilities: Bitcoin is primarily a currency, and its blockchain is used to track ownership of digital assets (i.e., BTC). Ethereum, however, was built with a more complex blockchain that can run smart contracts. This allows developers to create decentralized applications (dApps) on the Ethereum platform.
⦁ Block time: Bitcoin’s average block time is about 10 minutes, while Ethereum’s is approximately 15 seconds, which means that Ethereum transactions tend to be confirmed faster than Bitcoin transactions.
⦁ Supply: Bitcoin has a capped supply of 21 million coins, meaning that there will never be more than 21 million BTC in existence. Ethereum, on the other hand, does not have a maximum supply limit for Ether.
Understanding these similarities and differences will help you grasp the unique value propositions of Ethereum and Bitcoin. In the next section, we will delve deeper into the world of cryptocurrencies to further enhance your understanding. Stay tuned!

Understanding Cryptocurrencies

Now that we’ve explored the similarities and differences between Ethereum and Bitcoin, it’s time to delve deeper into the world of cryptocurrencies.

What is a Cryptocurrency?
A cryptocurrency is a digital or virtual form of currency that uses cryptography for security. It operates independently of a central bank and is built on blockchain technology, which ensures that transactions are secure, transparent, and immutable.

Key Features of Cryptocurrencies

⦁ Decentralization: Cryptocurrencies are not controlled by any central authority, such as a government or financial institution. This decentralization makes them immune to government interference or manipulation.
⦁ Anonymity: While all transactions are transparent and can be tracked on the blockchain, the identities of the parties involved in the transactions are often pseudonymous, providing a level of privacy.
⦁ Security: Cryptocurrencies use cryptographic techniques to secure transactions and control the creation of new units. This makes them extremely secure and resistant to fraud.
⦁ Limited Supply: Most cryptocurrencies, like Bitcoin, have a limited supply. This scarcity can drive up the value of the cryptocurrency over time.
Types of Cryptocurrencies

While Bitcoin and Ethereum are the most well-known, there are thousands of different cryptocurrencies, often referred to as altcoins (alternative coins). Some of the popular ones include Ripple (XRP), Litecoin (LTC), and Cardano (ADA). Each of these cryptocurrencies has its own unique features and uses.

How Cryptocurrencies Work Cryptocurrencies work by using a technology called blockchain. Blockchain is a decentralized ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without the need for a central clearing authority.

Importance of Cryptocurrencies Cryptocurrencies have the potential to revolutionize the financial world. They can provide financial services to those who are unbanked, reduce the cost of cross-border transactions, and give people more control over their money. Moreover, the underlying blockchain technology has countless other potential applications, from supply chain management to secure voting systems.

In the next part of this module, we will focus on Ethereum’s native cryptocurrency, Ether. We will explore what it is, how to acquire it, and its various uses. So, stay tuned for more exciting insights into the world of Ethereum and cryptocurrencies!

Join the conversation
Previous
Next
Bookmark