While Bitcoin has been dominant for a long time in the cryptocurrency scene, it is certainly not the only one. Ethereum is a cryptocurrency related project that has attracted a lot of attention because of its addition applications and features.
Ethereum: More than just money
The first thing to know about Ethereum is that it’s not just a digital currency. It’s a blockchain-based platform with many aspects. Ethereum features smart contract, the Ethereum Virtual Machine (EVM) and it uses its currency (Ether) for peer-to-peer contracts.
The smart contracts with Ethereum use blockchain stored applications for contract negotiation and facilitation. The advantages to these contracts are that the blockchain provides a decentralized way of verifying and enforcing them. The decentralized aspect makes it tough for fraud or censorship. Ethereum smart contracts aim at providing greater security than provided by traditional contracts and to bring down the associated costs.
Ether, the Ethereum blockchain based cryptocurrencies powers the smart contract applications. Ether and other crypto-assets are held in the Ethereum Wallet. This wallet allows you to create and use smart contracts.
Implement smart contracts with your own cryptocurrency
With Ethereum you can create digital tokens that you can use to represent virtual shares, assets, proof of membership and more. The smart contracts are compatible with any type of wallet, in addition to exchanges that use a standard coin API. You can copy the code from Ethereum website, and then you can use the tokens for various purposes, including the representation of shares, forms of voting, and fundraising. Either you can have a fixed amount of tokens in circulation or have an amount that fluctuates based on predetermined rules.
You do not need Kickstarter when you have Ethereum
One of the great features of Ethereum is that provides developers with a means of raising funds for various applications. For a new project, you can set up a contract and look for pledges from the community. The money that is raised is then held until the goal is reached or until an agreed upon date. The funds are then released back to the contributors if the goals aren’t met, or go on to the project if it’s successful. By kicking out Kickstarter, it means that the third party is taken out, together with their rules, as well as the fees that they charge.
Skip the traditional management structure with democratic autonomous organizations
Besides for helping you to source funding, Ethereum can also help to provide the organizational structure for getting your idea off the ground. You can collect proposals from those who have backed your project and then you can hold votes on how is best to proceed. All this means that you can skip the expense of a traditional structure, like hiring managers and doing paperwork. Also, Ethereum protects your project from outside influences, while its decentralized network means that you will not face downtime.
The finer details: Differences between Bitcoin and Ethereum
Many small aspects differ between the two blockchain-based projects. The average block time of Bitcoins is about 10 minutes, while Ethereum average block time aims to be 12 seconds. Ethereum’s GHOST protocol enables this quick time. A quicker block time means that the confirmations are also quicker. However, there are also more orphaned blocks.
Another main difference between Ethereum and Bitcoin is their monetary supply. More than two-thirds of all the available Bitcoin has already been mined, with the majority going to the early miners. Ethereum raised its launch capital through a pre-sale, and only approximately half of its coming will have been mined by its fifth year since it started.
The reward for mining Bitcoin is halved about every four years. Currently, the reward is valued at 12.5 bitcoins. Ethereum rewards miners all based on its proof-of-work algorithm called Ethash, with five ether given for each block. Ethash, a memory hard hashing algorithm, encourages decentralized mining by individuals, instead of the use of more centralized ASICs as with Bitcoin.
Ethereum and Bitcoin also cost their transactions in different ways. With Ethereum, it is called Gas, and the costing of transactions all depends on their storage needs, bandwidth usage and complexity. In Bitcoin, the transactions are limited according to the block size, and they compete equally with each other.
Ethereum has a Turing complete internal code. This means that anything can get calculated with enough power and enough time. But Bitcoin does not have this capability. While there are advantages to the Turing-complete, its complexity also brings security complications, which contributed in June to the DAO attack.
Ethereum and Bitcoin: Two very different beasts
While many people will compare the cryptocurrency aspect of both Bitcoin and Ethereum, in reality, they are very different and have different intentions. While Bitcoin has emerged as a relatively stable digital currency, Ethereum aims to encompass more, with ether just an element of its smart contract applications.