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Ethereum History

thereum is an open source blockchain project proposed by Vitalik Buterin in 2014 with some 11.9 million premined Ether coins available for crowdfunding. It went live on 30 July 2015.

Vitalik Buterin felt the need to create Ethereum to harness the potential of Blockchain by letting other developers to create applications as Bitcoin is limited to peer-to-peer electronic cash system only, which is just one use case of Blockchain.

Ethereum is known as Blockchain 2.0 as it is a modified version of consensus model given by Bitcoin. Following are the capabilities provided by Ethereum, which make it Blockchain 2.0:-

1. Smart Contract development support

2. DApps (Decentralized Applications) support

3. Assets Management

Difference between Ethereum and bitcoin blockchain:-

Blockchain is the underlying technology of Bitcoin. Bitcoin is just an application of Blockchain. As a technology can have multiple uses in many fields e.g. Internet has many uses like email, Web etc., Blockchain also has multiple use cases, which can not be fulfilled by Bitcoin only.

Ethereum was founded by Vitalik Buterin to harness the potential of Blockchain technology by letting others to create DApps(Decentralized Applications).

Bitcoin network works as peer to peer electronic cash system without any centralized authority and miners work to earn bitcoins as a reward by validating transactions.

In Ethereum blockchain ether works as a token that fuels the network and every transaction that changes the blockchain state has some cost associated with it which is paid in ether. Apart from mining, ether is paid as a currency by DApps to process the transactions.

So Bitcoin blockchain network is concerned with identification and tracking of digital currency while Ethereum blockchain network is more concerned with running DApps and processing transactions .

Smart Contracts:-

A computer scientist and cryptography expert named Nick Szabo in 1994 first used the term smart contract, smart contract refers to a self-executable code, which digitally facilitate and enforce a contract.

In Blockchain, Smart Contract refers to the executable Program running on Blockchain network. Bitcoin code is also a Smart Contract only. The beauty of Ethereum is that it lets developers to write and deploy their own Smart Contract which can be used for a number of application e.g: CrowdFunding contracts, Legal Contracts, Voting applications, Lottery application, Healthcare records, Financial Domain Applications etc.

Blockchain is the ideal platform to run these Smart Contracts as these Smart Contracts are stored in Immutable decentralized ledger and executed without intervention from any third party.

Currently a lot of applications are focused on Blockchain specific use cases. E.g.

Supply Chain Management

1. Identity Management

2. HealthCare Records

3. Assets Management

4. Legal Contracts.

Ether and Gas:-

Ether and Gas are often confusing terms used in Ethereum eco system. Gas is the term used to refer the unit that measures the amount of computational effort to execute some transaction in Ethereum Blockchain. In Ethereum Blockchain, smart contracts are coded in Solidity and every line of code that changes state of contract requires some amount of Gas.

Gas is there to incentivize the miners who are validating the transactions. Each transaction consumes different amount of gas on Ethereum platform depending on the instructions executed by the transaction.

There is a simple analogy between Gas and Ether, Gas can be understood as a fuel to run the transactions and Ether is the price that has to be paid for that amount of Gas.

There is no fixed conversion rate between Gas and Ether. Depending on the network traffic or several other factors, the price is changed. The sender of the transaction has to specify the maximum amount of gas that he is willing to pay for the transaction.

#blockchain #ethereum