When discussing blockchain, Ethereum ranks next to Bitcoin. But for a totally different reason. Much of the interest the enthusiasts have for Bitcoin is related to its price – how much does 1 bitcoin cost? That’s not the case for Ethereum, although many people take a keen interest in its pricing as well.
As part of the case study, we will try and compare it to Bitcoin wherever possible.
What is Ethereum?
Ethereum prides itself as the first smart contracts platform in the world. Ethereum is a public blockchain platform using which you can build decentralized applications (DAPP).
Since the very beginning, Bitcoin had a very singular goal – to be a peer to peer electronic cash system. It aims to decentralize money and give the control to the users. On the other hand, Ethereum aims to provide a platform to build applications on the blockchain. Using Ethereum, you can create a cryptocurrency similar to Bitcoin. You can also create applications that run on a decentralized and trustless platform.
Block Size, Gas, Gas Limit
When it comes to bitcoin, there is a block size limit. This is 1 MB (megabyte) for bitcoin. However, Ethereum replaces block size with the gas.
Gas contains two components – gas limit and gas price. It indicates the unit of the amount you are willing to pay to carry out a transaction successfully.
The maximum amount of units of gas you are willing to spend on a transaction is called as “gas limit”.
You need to ensure that for the computational resources required to complete your transaction, there should be enough gas available. Else you would receive “Out of Gas” error and your transaction would fail. You might also lose your gas spent in the process. However, any unused gas will be refunded back to your Ethereum wallet.
Gas price is the amount a user is willing to spent per unit of the gas.
The cryptocurrency used on the Ethereum blockchain is called Ether (ETH). In Bitcoin, it was called Bitcoin (BTC).
Ether is cheaper when compared to Bitcoin. As of November 30, 2018 –
1 ETH = 0.028 BTC
The following graph would show a comparison of how both fare against each other.
As you can see from the image above, Bitcoin started more than 2 years before Ethereum, however, the trend of rise and fall in prices of these two cryptocurrencies have been almost similar.
There are three primary units for Ethereum. These are similar to ana, or paisa, that we have in India and cents in the USA.
These primary units are in place for certain purposes as provided below:
- Wei – for discussion around APIs and other use cases
- Gwei – for gas price
- Finney – for micropayments
This is what makes Solidity increasingly popular among the blockchain enthusiasts.
Solidity is the programming language used to code smart contracts or build decentralized applications on the Ethereum blockchain.
You can write a Solidity contract on your laptop notepad and save it using .sol. You can also use the Remix browser to code and run your smart contracts.
It is important to note here that implementing smart contracts in Bitcoin is still not possible and efforts are being made to implement the same.
The complete development of the Ethereum platform is divided into four phases. Currently, Byzantine is in place and Constantinople is planned for early 2019 release. Constantinople was scheduled for release in 2018, however failed testing led to the delay.
The following infographic will give you an understanding of each of the four planned stages.
The following infographic highlights the major Ethereum forks to take place till date
Ethereum will dominate the market as far as smart contract and decentralized applications platform is considered. More and more organizations are expected to use Ethereum for decentralized applications.
Once the Serenity phase is hard forked which will lead to Ethereum moving from Proof of Work to Proof of Stake consensus protocol, another era of blockchain will start.
The future looks exciting and interesting when it comes to Ethereum!