How is Ethereum similar to Bitcoin?
I think it’s easiest to understand Ethereum by exploring the similarities and differences between Ethereum and a simpler system, Bitcoin. So what are the similarities?
Ethereum has a blockchain
Like Bitcoin, Ethereum has a blockchain, which contains blocks of data (transactions and smart contracts). The blocks are created or mined by some participants and distributed to other participants who validate them.
You can explore this blockchain here: https://etherscan.io
Blocks form a chain by referring to the hash or fingerprint of the previous block. See a gentle introduction to blockchain technology for a primer.
Ethereum is public and permissionless
Like Bitcoin, the main Ethereum network is a public, permissionless network – ie anyone can download or write some software to connect to the network and start creating transactions and smart contracts, validating them, and mining blocks without needing to log in or sign up with any other organisation.
In general, when people talk about Ethereum they mean the main public permissionless instance (version) of the network. However, like Bitcoin, you can take Ethereum software, modify it slightly and create private networks that aren’t connected to the main public network. The private tokens and smart contracts won’t be compatible with the public tokens though, for now. For more on the difference between public permissionless and private permissioned networks, see confused by blockchains? Revolution vs Evolution
Ethereum has Proof-of-Work (PoW) mining
Like Bitcoin, mining participants create valid blocks by spending electricity to find solutions to a mathematical puzzle. Ethereum’s PoW maths challenge called Ethash works slightly differently to Bitcoin’s, and this allows common hardware to be used for mining. This reduces the efficiency edge of task-specific hardware known as ASICs, which are common in Bitcoin mining.
For more on mining see a gentle introduction to bitcoin mining.
On Ethereum’s roadmap there is a plan to move from electricity-expensive Proof-of-Work mining to a more energy-efficient Proof-of-Stake protocol called Casper, in a future release of the Ethereum software called Serenity.
Ethereum has an inbuilt cryptocurrency
Ethereum’s token is called Ether, shortened to ETH. This is a cryptocurrency that can be traded for other cryptocurrencies or other sovereign currencies, just like BTC. Its current value is around US$13 per ETH token (Oct 2016). Token ownership is tracked on the Ethereum blockchain, just like BTC ownership is tracked on Bitcoin’s blockchain, though at a technical level they track them in slightly different ways.
For more on cryptocurrencies and tokens see a gentle introduction to digital tokens.
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blocks bitcoin bitcoin xpub prune bitcoin moon bitcoin In a PoW blockchain network, if the block time is too low, it would increase the likelihood of nodes producing orphan blocks, for which they would receive no reward. Orphan blocks are produced by nodes who solved the task but did not broadcast their results to the whole network the quickest due to network latency.It takes time for a message to travel through a network, and it is entirely possible for 2 nodes to complete the task and start to broadcast their results to the network at roughly the same time, while one’s messages are received by all other nodes earlier as the node has low latency.Imagine there is a network latency of 1 minute and a target block time of 2 minutes. A node could solve the task in around 1 minute but his message would take 1 minute to reach the rest of the nodes that are still working on the solution. While his message travels through the network, all the work done by all other nodes during that 1 minute, even if these nodes also complete the task, would go to waste. In this case, 50% of the computational power contributed to the network is wasted.The percentage of wasted computational power would proportionally decrease if the mining difficulty were higher, as it would statistically take longer for miners to complete the task. In other words, if the mining difficulty, and therefore targeted block time is low, miners with powerful and often centralized mining facilities would get a higher chance of becoming the block producer, while the participation of weaker miners would become in vain. This introduces possible centralization and weakens the overall security of the network.However, given a limited amount of transactions that can be stored in a block, making the block time too long would decrease the number of transactions the network can process per second, negatively affecting network scalability.удвоить bitcoin 50 bitcoin
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