Discussion of Ethereum
The report gives an introduction to the two crypto-currency giants that are Ethereum and Bitcoin. A decentralised software platform, Ethereum, allows Distributed Applications (DApps) and Smart Contracts to run and remain built without any fraud, downtime, interference or control from any third party [1]. It is a programming language also that helps the developers in building and publishing distributed applications. Bitcoin, a digital currency or crypto-currency, is not backed by the government or central bank of any country. It can be exchanged with the vendors who accept Bitcoin as payment for goods and services. It is one of the first digital currencies that offers instant payment by using peer to peer technology [2]. The following paragraphs emphasize on the architecture and features of Ethereum. The challenges faced by the Ethereum are also discussed in the following paragraphs. The report analyses and discusses about the application that is supported by Bitcoin in the token systems and decentralised file storage domains. The following paragraphs also illustrate the differences and similarities between the Ethereum and Bitcoin.
Ethereum is a programmable blockchain that allows users to create the operation of any complexity according to them rather than providing them with a set of pre-defined operations. The significant components of Ethereum are Miner, Ethereum Virtual Machine (EVM). Blocks, Consensus algorithm, Transactions, Accounts, mining nodes, Smart contracts, Gas and Ether. A network of thousand systems processes the program that is used with Ethereum [4]. The contracts that are written in a smart contract specific programming languages are compiled into ‘bytecode’ that is read and executed by a feature known as the Ethereum Virtual Machine (EVM). There remain several ethereum nodes and every node compiles and executes the same code. In the Ethereum block chain, the miners are used to earn a crypto token instead of mining for bitcoin, ether that fuels the network. There are many nodes that are connected to the network and they maintain and update Ethereum blockchain. The ethereum virtual machine is run by each and every node of the network and same instruction is executed by the nodes [5]. The miners are the nodes in the ethereum network that accept, propagate, verify and execute the transactions. The miners compete with each other in order to make their block added to the blockchain. Ethers are rewarded to the miners for each successful block mined by them.
Ethereum is decentralized platforms that are designed for running smart contracts. These applications run in the same manner as they are programmed without any possibility of downtime, fraud, censorship or interference by any third party [6]. The applications are operated by the implementation of a custom built blockchain and by using a largely distributed global infrastructure that is capable of exchanging the values between different parties and tracking the ownership of the property. It avails the developers with the power of creating markets, storing ledgers of commitments or debts, transferring funds that are based on the past instructions without involvement of the risk of a mediator. Ethereum has the ability of running and executing smart contracts that are a method of implementing a cryptocurrency for creating agreement between different parties on blockchain network. Smart contracts allow parties to create contracts in such a manner that there remains no requirement of presence of any third party. It works in a way that allows two or more parties who do not trust or know each other to create a contract on the Ethereum network and the contract will be executed by the network in the same way in which it was created. Therefore, it does not provide any opportunity to either party to deceive the other party.
Features of Ethereum
Ethereum allows transactions between two or more parties by allowing them to create a contract without the requirement of any third party. However, the challenge that is faced in making transaction through Ethereum is that the speed and capacity of the transaction is not too good. Ethereum is a platform which not as much efficient and faster as other crypto currencies as this issue of scalability has been suffered by many trades [7]. This is major challenge that is faced due to implementation of Ethereum as it is capable of handling about only five transactions per second that is comparatively slow. The most significant issue about Ethereum is the lack of documentation. The documentation is required for helping people in becoming developers, however there is no proper documentation of Ethereum. The online contents that are available are not updated and are out of date. The Ethereum will not be able to give efficient results as other chains that are specifically designed to remain a cryptocurrency as it is a platform. It is attempting to be ledger, super computer, smart contract generator in order to be used by many more users. This complexity in Ethereum makes it flexible, however it makes the Ethereum less efficient as compared to other crypto currencies.
A token or cryptocurrency token is a tokenized data that is related to transactions which can be transferred and stored over the internet without harming the sensitive data. The idea behind this transaction system is that each token is unique, corresponding to the essential data that is used to create transactions [8]. Therefore, it is possible to share the transaction publicly without harming the data or information. The token is the hash of transaction and therefore, it is a unique code which makes relation with a specific transaction without the requirement to contain the sensitive information regarding the transaction. This helps people in confirming the ownership of Bitcoin on the public ledger or blockchain that is a public record, without sharing the private data. Therefore, the result of this transaction system through token is that blockchain becomes full of tokens and sits next to the transaction data of public [9]. An encrypted type token identifies the transaction and it is automatically generated by the sender and the remaining data of the transaction is recorded along with it. The token is implemented or used as a transaction number as it a transaction is identified by the token and it is known as transaction ID (TXID).
Challenges faced
Storing the data:
The Bitcoin blockchain is the decentralised database for accounts, transactions and balances, however it is a challenge to store the data on a decentralised ledger due to the capacity issues [10]. The incentive layer is the most significant implemented case for the blockchain, whenever the case is regarding the relation between the data storage and Decentralised Ledger Technology (DLT). This implies that the data is not stored on the bitcoin blockchain, however the blockchain is leveraged by the network as a ledger for value exchange, automatic payments, for enabling users to make payment for storage or to access the files. Therefore, storing data through bitcoin blockchain is beneficial over any other technology as it includes lower transaction fees, fast settling time, higher privacy and record keeping [11]. The bitcoin blockchain is not used for storing data, however it provides the platform on which the decentralised network is generated or built.
The most significant between Bitcoin and Ethereum are that both of them are crypto currencies, however the Bitcoin blockchain is extremely different from the Ethereum blockchain. The Bitcoin was totally designed as a digital currency, however the Ethereum blockchain can be considered as the more general implementation of the blockchain technology [12]. Another similarity between the Ethereum and Bitcoin is that anonymous transaction is offered by the both of them and any of them is not regulated or controlled by a centralized body. However, still there is a remarkable difference in their natures and functions. The average time of the block of the Bitcoin is about ten minutes, however it is completed in just twelve seconds by the Ethereum [13]. The ways of costing the transaction is different in both the cases, the costing of a transaction varies according to the need of storage, use of bandwidth and complexity in the Ethereum. However, in Bitcoin, the transaction cost depends upon the size of block and they compete with each other equally. The more advanced features of calculating are placed in Ethereum and therefore, it becomes more unsafe towards cyber-attacks than Bitcoin due to this complexity. The purpose of the Ethereum and the Bitcoin are different as Bitcoin is set as a digital or alternate currency, however peer to peer contracts and applications are facilitated by Ethereum. This is the reason Bitcoin is considered to be the more stable digital currency, however Ethereum is about the smart contract applications [14]. The Ethereum and the Bitcoin are powered by the principle of cryptography and distributed ledgers, however there are still many technical differences between them. The Ethereum implements a programming language, Turning complete, however Bitcoin is works on the stack based language.
Applications of Bitcoin in Token systems
Conclusion:
It can be concluded from the above discussion that the Ethereum and Bitcoin are the two crypto-currency giants. The Ethereum is a decentralized software platform that allows smart contracts and Distributed Applications to run without the risk of any fraud, downtime or interference by the third party. The Ethereum is a programming language through which the developers get help for building and publishing distributed applications. The Bitcoin is digital or crypto currency that is exchanged by the vendors who accept Bitcoin as a payment for the goods and services. The Ethereum Virtual Machine reads and executes the codes that are written in smart contract specific programming language. It is a decentralized application that is designed for running smart contracts, however the Ethereum not as much faster and efficient as other crypto-currencies. The blockchain is not used for data storage, however it is used for creating a platform that generates or built decentralized network.
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