As you may know, Bitcoin is not the only cryptocurrency out there. Although Bitcoin may be the most popular, there are over 1,500 other cryptocurrencies! Today we’ll shine the spotlight on Ethereum!
So what is Ethereum? It’s a bit complicated but it helps to understand the way the internet works. Companies such as Facebook, Google, or Amazon have clouds that store our personal data, passwords, and financial information. Although that may sometimes be a convenience, it also becomes a vulnerability at some point. A hacker could gain unwelcome access without our knowledge. People have claimed this vulnerability to be the “original sin” of the internet. Technologies such as the blockchain then came along and attempted to decentralize the internet. Ethereum is a new technology that has joined this movement. Instead of having clouds for our information, “nodes” were introduced so that volunteers could run the servers from across the globe, and that’s why it’s sometimes called a “world computer”. The goal of Ethereum is to provide this same service to people everywhere, allowing them to compete to offer services on top of this infrastructure. The idea is that one entity such as companies and their clouds, would no longer have control over your data, making the user in complete control of their information. If Ethereum goes as its intended to, it would return control of the data to the author and the creative rights to its author.
Ethereum basically aims to be a world computer with a potential to change the way we interact with one another (kind of like the way the internet did). Unlike Bitcoin, Ethereum is more than just a currency, it’s also a platform for building decentralized apps or DApps (pronounced D-apps). Dapps are applications that meet a certain criteria:
1. The source code of the application should be available to all (Open Source)
2. The application uses a blockchain-like cryptographic technology (Decentralized)
3. The application implements a crypto-token or digital asset system as an incentive for fueling itself. (Incentive)
4. The program comes with an algorithm or protocol that generates tokens and has a built in consensus mechanism (Algorithm/Protocol)
If these criteria are not met, then the application is not a DApp. If the applications were to meet the criteria, they would have many benefits in the economic or governance aspects such as:
- Transparent governance for communities
- Secure communications – authentication, messaging
- Secure backbone for e-commerce
- Secure payments
These are only a few of the benefits Ethereum has and they already have a lot of potential for helping not only our economy, but also our society with the way data is managed and how the users and owners have control over their own information.
Ethereum vs. Bitcoin
Now knowing where Ethereum comes from, how is it different from Bitcoin? There are several differences such as the speed of which these cryptocurrencies are created. Bitcoin creates a new block every 10 minutes on average, while Ethereum creates a new block every 15 seconds. Another difference is that bitcoin is said to cap out at 21 million while Ethereum currently has no hard cap. Although there are many other differences in regards to their respective technologies, the biggest one is that they differ in purpose. Bitcoin was created as an alternative to our regular fiat money and Ethereum was developed as a platform which oversees peer-to-peer contracts and applications with its own currency vehicle.
Which side are you on? Team Ethereum or team Bitcoin? Let us know in the comment section down below!