Conventional ways of transaction
Conventional ways of transaction between two or more people must include a centralized organization or third party which controlled the transactions and data.The fee that is being charge on every transaction is determined by the third party. But with the introduction of Blockchain technology, the conventional way of having a centralized third party controlling every transaction and data has been eliminated therefore all the transactions’ information have been decentralized. Blockchain uses distributed database to keep ledgers information. All the transactions’ information is shared among public nodes.
Bitcoin Application
Bitcoin is a digital cryptocurrency running on a Blockchain technology. Bitcoin is used in financial institution to settle online payments
Bitcoin also enable people to buy goods and service anonymously. Several retailers now accept Bitcoin as a form of payments Some of the people transfers their assets to different countries using Bitcoin. Several companies are investing in this decentralized form of payments because it is gaining much popularity
Bitcoin relies on the peer to peer network for any transaction to be done and approved . In order for an individual to use Bitcoin one has to create a wallet account by installing in a computer or a mobile phone. An addresses which is one time used will be generated. This addresses can be shared with another party so that an individual can receive or send payment through. The Bitcoin’s balance of an individual is maintain in a public shared ledger where all the verified transaction information are stored .
Working Model of Bitcoin
In order for a Bitcoin transaction to be approved, it the transaction details will be broadcast to all the nodes that support Bitcoin transactions. Once the transaction has been approved then it’s added to public shared ledger where all the information will be shared among the public. The transaction’s now can be traced to the person who made since it’s authenticate and legit.
Scalability Issues
Since Bitcoin relies heavily on peer to peer network, handling transactions is a headache since it requires more computing powers for miners to approve every transaction. The maximum transaction in a Bitcoin network per second is only three unlike conventional methods of payment such as VISA which handles large number of transaction per second [6]. Also handling Blockchain transaction data consume a lot of storage in devices. So the more the no of transactions in the Blockchain the more the space it requires. Considering Blockchain database is distributed not everyone can be able to afford more space to accommodate the Blockchain databases.
Features and Weaknesses
Security. Bitcoin network is very secure since it employs cryptography in every transactions. It support the use of key pairs between parties therefore cannot be forge .
Reliability. Since Bitcoin relies on a Blockchain which is a distributed shared database among the nodes, downtime cannot occur at any time since they are several distributed ledgers handling transactions .
Privacy. Bitcoin allows an individual to make anonymous payment through online. Sensitive personal information for a transaction cannot propagate to any network therefore cannot leak to unauthorized or malicious attackers .
Bitcoin Application
Low cost of transactions. Bitcoin does not charge the cost of using their networks. Also the public shared ledger is distributed therefor anyone can host .
Transparency. All the approved transactions are shared on the public ledger for everyone to access .
The cons of Bitcoin include:
Price fluctuation. It’s difficult for investors to the best time of investing in thee Bitcoin.
Few institution accept payment through cryptocurrency therefore becoming hard to be adopted in the society.
Immutable Transactions. Once a transaction has been approved it cannot be reversed.
Socio Technical Aspects
Trust. Trust is one of the key factor that determines the adoption of a Bitcoin in the society. Though Bitcoin’s way of transaction forms the background of identity and verification, trust is build overtime by the Bitcoin community and its usage.
Imperative. Since the adoption of Bitcoin by the community it has been a reliable source of payment and investment. It has no restrictions like the conventional method of payment which involves a centralized third party that must approve the transactions.
Risk management. Risk is one of the key factor in predicting the future of what to invest in. In the social life people have adopted this Blockchain. Every transaction being made are transparent therefor owners cannot predict the future of it.
Ethereum Application
Ethereum is a cryptocurrency which uses a decentralized database with a smart contract. Smart contracts are the requirements that every transaction must meet in order to be approved by other nodes. Smart contracts stores information and able to interact with other contracts without any control .
Working Model of Ethereum
Ethereum is a platform used to build a decentralized applications which shares the global infrastructure. Unlike Bitcoin which concentrates only on electronic mode of payment, Ethereum can be used to build applications which uses the smart contract.
Scalability
Huge transaction cost. Deployment of application which requires the Blockchain is expensive. The computing power needed to run this application has to be met with high cost
Data. Since the transactions increase every day, handling the huge grown of data in Ethereum is becoming expensive for nodes in the network. The data is doubling every day
Database sharding. This involves one node storing some part of transaction while other one has a piece of data without requiring both to have full database. This sharding will break the database integrity and it will be very hard to achieve
Features and Weaknesses
Robust Ecosystem. Ethereum has allowed developers to build more complex application around the Blockchain.
Support from the companies. More companies are supporting the roadmap of making the Ethereum to solve complex problems in ecosystem
Smart contracts. Transaction regulation can be enforce in every transactions therefore limiting the misuse of an applications
Though Ethereum is good it has some disadvantages include:
Ethereum is a platform and never designed to be used in a specific field. This will make it ineffective unlike Bitcoin which has one goal of cryptocurrency.
Learning curve for developer is steep. It does not a reliable documentation that enable individual to learn faster.
Immutable Transactions. Once a transaction has been approved it cannot be reversed.
Socio Technical Aspects
Decentralized market. Ethereum adoption in society will enable the community to share market shares and information. This will impact the social life and the way people operates.
Trust among the people. If Ethereum application is adopted in voting, the people will trust the voting process and this will discourage chaos being experience during political seasons in any country.
Conclusion
In conclusion, adopting Blockchain by a society will contribute to a better social life and economy. Several barriers which have become building blocks for opportunities will be broken.
References
[1]R. Garratt and N. Wallace, “BITCOIN 1, BITCOIN 2, ….: AN EXPERIMENT IN PRIVATELY ISSUED OUTSIDE MONIES”, Economic Inquiry, 2018.
[2]B. G. S., “Are Regtech, Fintech, Blockchain the Future?”, KnE Social Sciences, vol. 3, no. 2, p. 61, 2018.
[3]H. Halaburda, “Blockchain Revolution Without the Blockchain”, SSRN Electronic Journal, 2017.
[4]C. Prybila, S. Schulte, C. Hochreiner and I. Weber, “Runtime verification for business processes utilizing the Bitcoin blockchain”, Future Generation Computer Systems, 2017.
[5]M. Pustišek and A. Kos, “Approaches to Front-End IoT Application Development for the Ethereum Blockchain”, Procedia Computer Science, vol. 129, pp. 410-419, 2018.
[5]M. Pustišek and A. Kos, “Approaches to Front-End IoT Application Development for the Ethereum Blockchain”, Procedia Computer Science, vol. 129, pp. 410-419, 2018.
[6]G. Hileman and M. Rauchs, “2017 Global Cryptocurrency Benchmarking Study”, SSRN Electronic Journal, 2017.
[7]”Bitcoin and Cryptocurrency Technologies Arvind Narayanan, Joseph Bonneau, Edward Felten, Andrew Miller and Steven Goldfeder.”, Network Security, vol. 2016, no. 8, p. 4, 2016.
[8]N. Nakamoto, “Centralised Bitcoin: A Secure and High Performance Electronic Cash System”, SSRN Electronic Journal, 2017.
[9]D. Bradbury, “In blocks we trust [Bitcoin security]”, Engineering & Technology, vol. 10, no. 2, pp. 68-71, 2015.
[10]M. Cyran, “Blockchain as a Foundation for Sharing Healthcare Data”, Blockchain in Healthcare Today, 2018.
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