What is the difference between bitcoin and Ethereum?
- bitcoin was created in 2009 by Satoshi Nakamoto (Anonymous). That person owns about 1 million bitcoins
- bitcoin was created as an alternative to fiat currencies (dollar, pound etc)
- bitcoin value exploded since 2013.
- both bitcoin and ethereum are decentralised crypto currencies
- Ethereum is around since 2015
- Ethereum is a decentralized platform that runs smart contracts
- Ethereum was created as a token in a software application
- Ethereum’s token is called Ether
- bitcoin is crypto currency
- Ether is a token like a gift card to get all tokens created in the platform
- both Ethereum and bitcoin are here to disrupt the financial systems
What is a blockchain?
- block chain is a chain of blocks contains information
- It was intended to timestamp documents so that they cannot get tampered
- block chain is a distributed ledger
- block contains:
- hash of the block
- hash of the previous block
- bitcoin block stores the information of sender, receiver and amount of coins
- Modifying something on the block changes the hash in the block that affects all the blocks in the chain
- First block in the block chain is called genesis block
- changing a single block makes all following blocks invalid
- Tampering blocks is impossible, block chains have a mechanism called proof of work. bitcoin block takes about 10 minutes to create a new block
- block chains makes themself secure by using distributed network
- when someone joins the networks, the person gets the copy of full blockchain. They are called nodes.
- Changes to the blocks should be approved by all the nodes
- block chain can be used in every industry to make everything secure
What is a smart-contract?
- Smart contract is just contract. It’s computer code that’s being executed by nodes on block chain.
- Smart contract will have certain tasks which are executed in IFTT (if this then that) logic.
- Real life usage:
- Buying a car:
- Traditional way is what you know, takes at least couple of days for complete transaction.
- If a car is on blockchain, all the details of it online
- See all the details of the car online. Since it’s on block chain you can get it then and there. You pay for it using crypto currency and all the ownership and everything changes then and there.
- Every node updates the new ownership details immediately
- Buying a house:
- Traditional way takes forever to get all the history etc
- If the house is on the block chain with all ownership details, history and mortgage details.
- Since it is on the blockchain then you can buy it in real-time without any delay
- You can do multi-equity buy with multi people buying the same house with equal parts
- Renting a house:
- Rental contract is on blockchain then it can automatically deduct money on the blockchain.
- Tenants gets benefited with good rental history with all the information on the blockchain.
- Buying a car: