Ethereum, unlike bitcoin, is more than just a decentralized payment network. It not only serves as a means to send and receive payments but also provides the possibility of building applications with the help of smart contract functionality. But what are smart contracts in the first place?
Basically, a smart contract:
- Works on its own (self-executing)
- Requires no third party (or middleman)
- Is automatic.
- Cannot be corrupted because it runs only when desired conditions are met.
From a technical perspective, a smart contract can be defined as a computer protocol that verifies and enforces the negotiation of a contract between entities. Such a contract could be intended to exchange property, money, data or anything that can be facilitated with the help of a smart contract.
Let’s say I’m the bursar of a college and you have to pay a tuition fee to me (with ether)
First, we make an agreement with regards to the latest date for paying the said fee. (assuming I’ve provided you with the digital entry key). If you don’t receive the receipt on or before the prearranged date, funds cannot be released from your wallet. But if the receipt reaches in time (on or before the agreed date), I’ll receive the fee at my end and you also get the receipt.
Since every transaction takes place on a public network, there is no room for fraud because copies of the transaction are available on many computers (nodes) on the ethereum network.
The thousands of dapps that have already been built on the ethereum network is a clear signal that it has come to stay. Not only that, it will continue to revolutionize the world; making it one of the most important blockchains to date.
Note that the ethereum network uses ether as it’s base cryptocurrency to transfer value between accounts and also to compensate miners within the platform.
Some basic differences between ethereum and bitcoin.
– The rate of coins produced by the bitcoin network tends to halve after every 4 years, but for ethereum, coins are generated at a steady rate and only changes in the event of a hard fork.
-The block time for ethereum is 14 to 15 seconds while that of bitcoin is 10 minutes.
-While bitcoin transaction fees are typically determined in satoshis per byte, that of ether ( ethereum’ gas) is often measured in Gwei.
-Transaction fees for ethereum are generally less than those of bitcoin. For example, the highest transaction fee on the ethereum network – ever, lies between $4 to $5 while that of bitcoin stands at a whopping $52.
-While bitcoin transactions differ in terms of transaction size in bytes, that of ethereum vary by a number of factors namely: required storage, computational complexity, and amount (use) of bandwidth
Interesting facts about ethereum.
The first ethereum fork ( ethereum classic) occurred in 2016.
The first ethereum fork occurred in the aftermath of the DAO (decentralized autonomous organization) hack. A hacker ( often called the DAO hacker) found a loophole in the system and decided to make away with $50 million worth of ether. The DAO comp provided customers with an opportunity to determine which dapps will get funded on the ethereum network
Ethereum is the go-to platform for most ICOs.
Ethereum provides a suitable platform for developers to build different kinds of dapps ( decentralized applications). As such, it has become the go-to platform for launching ICOs. In fact, more than 75% of all ICOs have been launched on the ethereum network ( at the time of writing this)
There is no cap on the available amount of ether.
Cryptocurrencies like bitcoin, ripple, and many others have a fixed cap but that is not the case with ethereum; It has no cap. What is clear though is that 18 million ether can be mined each year but the total number of mineable ether is generally unknown.
Benefits of ethereum.
Of all the blockchain networks that exist today, ethereum has proven to be by far the most ambitious. Some experts even consider it to be the most important decentralized platform because of the numerous applications that run on it. This tells how beneficial ethereum has and will continue to be. Below are a few of these benefits.
- The numerous tokens and ICOs that require ether to carry out their transactions has increased the demand for ether. This, in turn, makes the cryptocurrency (ether) a very good asset for investors.
- Ethereum is highly accessible to developers and because it is also easy to understand, it has attracted a lot of programmers around the world.
- Ethereum is a great platform for fundraising because it helps companies to easily gain maximum exposure through targeted promotion.