Ethereum is a platform developed on “BLOCKCHAIN TECHNOLOGY” to help in creating a decentralized application. This technology came in 2015; 6 years after Bitcoin and block chain came into existence, but have gained popularity in a very short span of time. It attempts to create a trustful platform that facilitates the transaction based applications. Ethereum uses block chain technology to replace internet third parties who stores data and keep track of the financial transactions of users. With ethereum all such servers and clouds i.e. the third parties will be replaced by thousands of nodes across the world thus forming a world computer. The basic idea behind it is that entities will no longer have control over your data only the user can make changes and not any other entity.
How is Ethereum different from Bitcoin? Ethereum and Bitcoin both are crypto currencies and both are considered to be very safe secure and transactions in both are quite transparent. The major differences are the ledger storage. Let’s look at the ledger that is recorded in both technologies when a transaction is made.
Bitcoin transaction keeps track of used as well as unused coins whereas ethereum keeps track like a bank account. Ethereum uses smart contract for all kinds of transactions. Smart contracts are the logic codes that help the digital currency to transfer from one account to other. All movement in the contracts are recorded in the ledgers of nodes.
Working of Ethereum technology: An application is created using block chain technology where hundreds of nodes are connected and acts as the witness and approving parties. Here all nodes keep a record of the network’s previous records. In Ethereum, the records of only the most recent contract state along with all ether transaction are stored. Unlike Bitcoin, which breaks the coin like the physical currency so that it could be used again by just adding all the pieces. Ethereum acts like a bank account which transfers the ether tokens to other person’s wallet.
Ethereum Virtual Machine (EVM): Ethereum Virtual Machine is a specific software that is used to read the byte code of ether. Basically, whenever a transaction has to be made, a contract is generated which is written in a contract-specific programming language which is then converted into “byte code”. It is then sent on the network where thousands of miner’s computers process it with EVM’s and approval of the transaction is done.
Future aspects of Ethereum: Block chain technology based product “Bitcoin” hit the markets in 2008 and now one Bitcoin is trading at $2561.40soit is obvious that Block Chain is the future technology. With ethereum going a step further to Bitcoin, there is absolutely no doubt that it will be one of the best future crypto currency that has already started gaining momentum. Looking at the time of its inception and its progress, it is believed that it will beat the Bitcoin in coming 10 years to emerge as the best crypto currency. With more than 1.6 billion invested in Block Chain in 2016 and over 2000% growth in the value of ethereum coin, anyone can easily predict its future.
-Kanchan Singh (Analytics & Finance)