A look into Blockchain, Bitcoin and Etherium

               Up until Blockchain, we used centralized banking systems owned by corporations or entities to carry out our monetary transactions. The advent of bitcoin gave birth to the electronic ledger which is known as Blockchain. The name also hints on how this ledger works. The scope of this report is to analyse Bitcoin and Ethereum as this new technological as well as sociological advancement that has the capacity to change the way we use internet. It elaborates them with respect to Purpose, workability, scalability, weaknesses and socio-technical aspects.

Analysis of Bitcoin and Ethereum

In 2009, bitcoin was created by an unknown person or a group called Santosh Nakamoto [1]. In his whitepaper, he proposed an algorithmic self-policing system that could maintain a value in a ledger through cross checking of its credibility by multiple nodes on the network. This system would be de-centralized working on the internet on the concept of peer to peer public key cryptography also used by BitTorrent [1]. The computing power required to maintain the system comes from miners, which are granted bitcoins as part of reward as they put/process a new block in the ledger [2]. These miners are also granted transaction fees for every evaluation of a transaction. This makes the system sustainable with enough attraction for profit to maintain [2].

The Blockchain comprise of all the addresses and balances of the coin available on the network and every node on the network has a copy of the Blockchain that help authenticates value accuracy and denies alien inputs. These qualities allow it to be a viable solution towards decentralization and is being crowned as the Fifth disruptive computing paradigm after Mainframe, PC, Internet and Social-Mobile [1]. Bitcoin is what set this ball rolling. The founder of bitcoin, Satoshi Nakamoto whose identity is still a mystery, published a whitepaper on the 31^st of October 2008. This extremely famous whitepaper proposed advent of this online currency.

              After Satoshi kickstarted the bitcoin Blockchain, the debate about decentralized online currency started in full swing, and not long after, people started talking about how the Blockchain can be used for applications which are more than just money. In 2014, Buterin first proposed a project known as Ethereum which aims to develop an application-based system which is to be used over this de-centralized system and provide the end-developer with the language to build software over the Blockchain [3]. The purpose of this application is that it facilitates trust between two parties, that would otherwise not be present due to various reasons such as geographical separation, unwillingness or incompetence. Ether, the cryptocurrency of Ethereum, is also traded as other crypto-currencies used to monetize work and run applications. According to [4], it has the capacity to be used to secure, codify and decentralize almost any asset online. Microsoft’s partnership with ConsenSys is already offering an Ethereum based Blockchain service (EBaaS) on the Microsoft Azure system for developers and enterprises to have access to a cloud-based application development environment [5].

              The same scalability issues faced by bitcoin is also faced by Ethereum i.e., every transaction on the Blockchain needs to be verified by each node but in Ethereum’s case, the nodes on the network only store states rather than the entire block chain history as in the case of bitcoin. Previously, we discussed that the size of the Blockchain, which is constantly increasing, decreases the ability of a regular user to become a node. This played out to be a massive problem for bitcoin and can become an even severer problem for Ethereum since its growth is faster than bitcoin. The two coins hold purposeful social progressions. This smart contract allows mutual trust between two parties despite of other social factors i.e., location, country, different monetary body or other differences thus regardless of these weaknesses, is a huge advancement in the world of technology and sociology.

              As a concluding note, we realize the importance of Blockchain and cryptocurrencies as a game changer in the internet domain. Its de-centralized usage, security and open-source-ness gave rise to a new frontier which demands fairness over use of data online. The two exampled currencies hold the potential to revolutionize how we carry out our online transactions and use networked applications. This solution, with its scalability issues, still offers a major leap in peer to peer, open online ledgers.

References

[1]	M. Swan, Blockchain: Blueprint for new economy, Sebastopol: O'reilly, 2015.
[2]	S. Nakamoto, “Bitcoin: A Peer-to-Peer electronic cash system,” 31 10 2008. [Online]. Available: http://nakamotoinstitute.org/bitcoin/.
[3]	G. Wood, “Etherium: A secure decentralised generalised transaction ledger,” 12 04 2017. [Online]. Available: http://www.cryptopapers.net/papers/ethereum-yellowpaper.pdf.
[4]	V. Buterin, “Etherium whitepaper, A next generation smart contract & decentralized application platform,” 2014. [Online]. Available: https://www.weusecoins.com/assets/pdf/library/Ethereum_white_paper-a_next_generation_smart_contract_and_decentralized_application_platform-vitalik-buterin.pdf.
[5]	P. Bajpai, “Bitcoin Vs Ethereum: Driven by different purposes,” 02 2018. [Online]. Available: https://www.investopedia.com/articles/investing/031416/bitcoin-vs-ethereum-driven-different-purposes.asp.