Bitcoin is talk of the financial town. But it is better if we first understand the concept and then move forward to explain which one of them is more important, Ethereum or Bitcoin.
Blockchain is a near hack-proof way of recording information. It is difficult to alter the information in records, and it is impossible to cheat the system. It is a ledger that contains transactions but in a digital form. At the same time, blockchain technology duplicates and distributes the information across the complete network of computers (nodes) on the blockchain. Blockchain is a chain of blocks, and in that case, every block has information regarding several transactions, and every time a new transaction occurs, a record of that transaction is added to the digital ledger of every participant.
Distributed Ledger Technology (DLT) is a decentralized database that is managed by many participants. Blockchain is a kind of DLT that records transactions with a cryptographic sign, called the hash.
Every block has a hash of the previous block and next block. It means that if one block is tampered with, it would be immediately apparent. If a hacker wants to hack through the blockchain system, he or she would have to temper with every block across all the distributed copies of the chain. This effort is laborious, costly, and time-consuming, and before the hacker corrupts all the blocks, the participants get to know the change and take a new decision through consensus. Such a mechanism makes it the hack-proof solution.
Blockchain technology has many use cases. Blockchain can have its use in building a digital cryptocurrency such as bitcoin and Ethereum, secure sharing of medical data, cross-border payments, supply chain logistics monitoring, and much more.
Blockchain is the Future
Blockchain technology is growing. It is getting a lot of attention in various financial markets. With worldwide use cases available, this hack-proof system can disrupt the financial industry, and it is turning real each day. Although the first famous use case well-known, 'bitcoin', the now premium digital cryptocurrency, blockchain has grown its user base through several industries. Even though bitcoin is well known and widely used blockchain, Ethereum may bring the real disruption because it offers a whole new range of use cases, along with a digital cryptocurrency.
Ether(ETH), the Ethereum backed cryptocurrency, has a market capitalization of around $25 billion, which makes Ether the next most valuable cryptocurrency behind Bitcoin. What makes Ethereum so interesting? Let's figure it out.
What is Ethereum?
Ethereum is a blockchain. Ethereum has been tasked with creating and scripting the decentralized applications or Dapps, and smart contracts ( that can act as a contract enforcer) through Ethereum Virtual Machine (EVM). It has its cryptocurrency, i.e., Ether(ETH) used to pay the charge for the usage of the processing power of EVM, used to run Dapps (decentralized apps), and smart contracts. Smart contracts are indigenous to Ethereum and are called in the context of Ethereum only.
Ethereum founders made Ethereum harness the potential of blockchain beyond a digital cryptocurrency. Etherum provided a new feature, i.e. smart contracts. Ethereum is a self-executing and decentralized agreement that is fed or coded in a blockchain. Vitalik Buterin, a Canadian-Russian programmer was the one to propose such a platform in 2013. He further went on to release the beta version of Ethereum in 2015. The blockchains made here are made with Turing-complete languages. Turing-complete languages can simultaneously run smart contracts across all computers and achieve consensus without involving a third party such as legal system, judge, arbitration systems, etc. The Ethereum website says that Ethereum can be used to "codify, decentralize, secure and trade just about anything." By late 2014, even before the launch of the beta version of the Ethereum platform, it raised almost $18 million by crowd sale to fund the development of the Ethereum platform.
Smart Contracts in Ethereum are executed through Ethereum Virtual Machine, and it can represent financial agreements such as coupon-paying bonds, swapping, or options contracts. Ethereum can also be used for legitimate decentralized gambling, as trusted security to purchase expensive items, along with executing bets and wagers. These are just a few use cases of smart contracts. It can substantially reduce the cost of execution of a contract by removing third parties involved in social, financial, and legal agreements.
EVM is in its nascent stage, and performing smart contracts is currently expensive and limited due to processing power. Consistent with its developers, the system today is about as powerful as a late 1990s-era mobile. This situation, however, is probably going to vary because the protocol will develop further. To place this into perspective, the Personal computer on the Apollo 11 lander had less power than an iPhone; it's certainly plausible that EVM will be able to hand complex and sophisticated smart contracts with real-time functionality.
Ether works as an internal cryptocurrency within the Ethereum platform. Ether is used as a payment method to settle the outcomes of a smart contract that is executed within the protocol. Ether can also be mined, just like bitcoin, and can also be traded on cryptocurrency exchanges, just like bitcoin and traditional currencies such as the dollar or rupee. Ether is also used to pay for the computational efforts done by nodes (computers) on the blockchain.
Decentralized Autonomous Organizations (DAO) and Ethereum
Decentralized Autonomous Organizations work just like corporations. DAO's are the Corporations that can engage in economic transactions such as buying and selling, hiring, negotiating deals, budget balancing, and profit maximization. DAO powered by Ethereum can conduct all these activities without any institutional or human intervention. Some operational examples are Ocean Protocol, Moloch, Colony, Augur, etc., all of them having an Ethereum network.
The complex web of contracts that a traditional corporation engages in can be similarly implemented in Ethereum. with varying size and scope.
Dapps by Ethereum
The concept of DAO is a concept of the future, and right now the implementation may not be smooth, but Decentralized applications or Dapps by Ethereum are just the right things today.. These independent applications utilize smart contracts to run on the EVM. Some use cases of these Dapps are online legitimate online gambling apps, micro-payment platforms, and peer to peer marketplace.
One key feature of Dapps is this: Dapps are ennforceable across the decentralized network without the intervention of an overseer or central authority. That makes Dapps independent. All multi-party applications can remove an intermediatory via Ethereum Dapps. This feature can be further expanded to gaming, shopping chatting, and banking, with complete privacy.
Bitcoin revolutionary changed the concept of currency and payments by utilizing blockchain technology. But, on the other hand, Ethereum can do a lot more than just using blockchain for cryptocurrency. It can work for all applications irrespective of the shape, size, and complexity of applications. It can eliminate third party involvement in all kinds of functions without the need for a central authority or third party. All it needs is a built-in scripting language to remove the intermediatory. To pay for the efforts put by nodes, internal cryptocurrency i.e. Ether can be used. These are the Reasons Why ETHEREUM MORE IMPORTANT THAN BITCOIN.
Ethereum has the potential to create an entire ecosystem of all kinds of activities.
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