A Comparative Study Of Ethereum And Bitcoin Features And Applications Essay.

Part 1: Ethereum & Bitcoin

The students explore Ethereum & Bitcoin by reviewing the literature on the internet as papers, book chapters, and independent scholarly reports by experts, and research based videos. Students participating in the PBL are taught how to do the critical thinking for review of literature. At least three articles related to technology supporting Ethereum need to be analysed in depth by discussing the overall contribution, scope and limitations of each research work. Following aspects related to Ethereum must be discussed: 

a.Architecture
b.Features
c.Challenges

Part 2: Applications of Bitcoin

Students need to discuss at least one application in EACH of the following domains supported by Bitcoin:

a.Token Systems

b.Decentralised file storage

Part 3: Compare Ethereum and Bitcoin

Bitcoin and Ethereum are the two biggest giants of the cryptocurrency world. Bitcoin (BTC) was the first coin and Ethereum (ETH) followed a few years later. Discuss in detail similarities and differences between the two.

Crypto currency is a digital asset that is designed for transferring the assets. It is a form of digital currency that works on decentralized control system. In this report the focus is on bit coin and ethereum. If considering the popularity bit coin is more popular as it came before in the market. It became popular due to open source, decentralised and resistant network. Bit coin and ethereum differs from each other in terms of their use as in bit coin it is just use as a currency and ethereum is used to create and store all the records. Bit coin has gained popularity and offers an easy way to buy, store and sell products. In this report, the first part deals with ethereum a detail study of its architecture, challenges and its features. The second part deals with decentralised file storage and it’s important in bit coin. The last part covers a detail comparison between bit coin and ethereum.  The overall amount of bit coin produced s limited while in case of ethereum the supply is not limited. It can be found that bit coin is used for value transfer whereas etherum is used for tracking the information between applications.

Ethereum

It is a latest technology that is supports all the modified version of transactions. It is a distributed platform that features all the smart functionality. Etherum platform generates crypto currency that is ether [13]. It works on a block chain technology and allows user to develop and deploy decentralised applications. It is a core innovation as it allow user to run any application to nay platform regardless of eh programming language. It is much easy and efficient to use [1]. They are not controlled by any single entity. It is a quiet adaptable platform. The ethereum system is highly reliable as no third party can make any change. The application supported by etherum never goes down as there is no limit in megabytes. The transaction is not interrupted in case of etherum [2]. Apart from that, all the apps are programmed by using decentralised platform.

 Architecture

The ethereum is a transaction state machine, the architecture works on reading a series of input and then use these input it transmit to a new state. It state functioning from a genesis state that can be seen as a blank state [3]. It represents the current state of etherum initially.

Ethereum

Then after a certain input it produces new state. For considering a transaction it makes sure that inputs is valid and goes through a proper validation process.

 It monitors all the events and states by updating the user interface.

 Features

Some of the benefits that are offered by ethereum are:

• It works on a decentralised platform so that no third party is allowed to change the data.
• In case of, ethereum apps are tampered and are corruption free.
• It operates in state transition by using accounts and balances.
• It allows execution of smart contracts that to do not require presence of any third party [4].
• It has smaller fees, as third party is not required and all the operations are carried automatically.
• It is based on block chain technology and the network is open and decentralised.
• It allows users to create remote connection and also works on offering a clear transparency [5].

 Challenges  

Some of the challenges faced in ethereum are:

• The network is quiet new in the market, thus these technologies are not easily understood [5]. There capabilities and functionalities remain unused.
• Average users face legal inexperience’s.
• The speed of transaction is not that good because of this many trades have suffered.
• The upgrades are needed at regular interval of time.
• There is an improper documentation. The online content is hardly updated which degrades the users experience.

Token system 

It is used in every crypto currency can is used to describe any digital asset. Bit coin and ether is a form of token [12]. The fact of creating, transferring and storing of crypto currency is done using data tokens. In case of bit coins, tokens are used to send and receive data over the internet. Tokens are provided by the system so that they can use specific function. It is a secure way of transferring the data [6]. They are used in bit coin to find out the digital identity and by automating the regulatory compliance. Token system makes it possible for sending and receiving the digital currency.

If considering the case of bit coin, a token are generally used to describe actions and also describes the alternative for using a different platform instead of working on the same platform [7]. It encrypts the data so that information can be transmitted over the network in a secure manner.

Application of token system in bit coin

It is used for carrying out transaction in the bit coin between all the computers that are connected via internet. They are used as miners to run the system. It also allows user to confirm their ownership and liability on bit coins and permit them to transmit their sensitive information without sharing it [8]. They are used to find the digital identity and for automating regulatory compliance. In bit coin there exist a way for sending and receiving the currency which is made possible by using token system.

Decentralised File storage 

The decentralised file storage is the best solution in implementing bit coin. As it allow to store the information without compromising with the privacy of information. Every file is stored over the network by uniquely identifying the file [9]. It also removes the issue of duplication by tracking the history of each file. Distributed file system stores the information over the cloud by making eth data available all the time without the need of any owner. The reliability of storing and retrieving the files are ensured. It can be an expensive process as storing the file is not free. It offers high speed and linear capacity of speed and storage is offered.

Architecture

Application of distributed file storage in bit coin

It permits user to access the file from anywhere with regards to the time. One of the applications that make use distributed file storage is File storage; it offers a cloud platform for hosting the files. It allow user to put some unused information of the computer over the network [10]. The crypto currency use distrusted file storage so that they allow clients to access the data that is stored over the servers from their own location.  

Differences and Similarities between Ethereum & Bitcoin 

The major difference between these two is that, etherum is not just digital currency it is more than that. It is a platform based on block chain technology whereas bit coin is just a digital currency that is used to secure the payment system. In case of bit coin, the reward method also differs as they create rewards by miners and in case of ethereum they validate the transaction using smart contracts [11]. The focus area of bit coin is quiet less; it is just focusing on fast and secure transaction. On the other hand, ethereum is focusing on smart and decentralised application.

If both these crypto currency are compared, bit coin creates approx. 12.5 new bit coins every 10 mins. On the other hand, ethereum creates approx.  3 new ether in every 15 seconds. Bit coin is limited to currency cap but ethereum has no hard cap. Bit coin has limited functionality as it uses a scripting language whereas etherum as smart contracts [11]. The transaction details in case of bit coin are visible to the end user and in case of etherum it remains private.

Similarities

The use of Bit coin and Ethereum are continuously rising and they are one of the well-known crypto currencies. The core similarity is both are powered and distributed block chain that rely completely on cryptography function [11]. The interest is dependent on currencies potential as well as their massive price gain.

• They both work on block chain system.
• They are built using open source software.
• They allow user to contribute in code of underlying technology.

Conclusion

It can be concluded that use of crypto currencies have increased in the global market as these are form of digital currencies that is used to secure the connection. They become popular due to low cost money transfer benefits as they offer ability to send and receive payment at low cost.  It also allows users to rent out the space over the cloud and also saves the overall time. This report helped in understanding the difference between bit coin and ethereum. The importance of decentralised file storage is discussed. There are various challenges that are faced by using ethereum, thus its features and challenges are discussed.  This report helped me in finding out the best crypto currency among bit coin and ethereum.

References

[1]S. Stavroyiannis, "Expected Shortfall via Filtered Historical Simulation for Bitcoin and Ethereum", SSRN Electronic Journal, 2018, pp. 78-90.

[2]D. Kondyrev, V. Bobrov, I. Efremov and V. Vlasov, "Ethereum-Based Tender System", Vestnik NSU. Series: Information Technologies, vol. 15, no. 3, pp. 31-39, 2017.

[3] T. Minks, "Ethereum and the SEC: Why Most Distributed Autonomous Organizations are Subject to the Registration Requirements of the Securities Act of 1933 and a Proposal for New Regulation", SSRN Electronic Journal, 2018, pp.56-90

[4]N. Fischer, "Bitcoin", Digitale Welt, vol. 2, no. 2, pp. 64-65, 2018.

[5]S. Corbet, B. Lucey and L. Yarovaya, "Datestamping the Bitcoin and Ethereum bubbles", Finance Research Letters, 2017.

[6]V. Mukhi, The undocumented internals of the bitcoin, ethereum and blockchains, pp. 41-70, 2015. .

[7]N. Fischer, "Bitcoin", Digitale Welt, vol. 2, no. 2, pp. 64-65, 2018.

[8]"Big File Cloud Storage (BFCS): Distributed Storage Service with De-Duplication and Secure Storage", International Journal of Science and Research (IJSR), vol. 5, no. 1, pp. 573-576, 2016.

[9]T. Doeppner, "Distributed file systems and distributed memory", ACM Computing Surveys, vol. 28, no. 1, pp. 229-231, 2015.

[10]J. Kubasik, "Bitcoin and other cryptocurrencies where are theygoing?", Ekonomiczne Problemy Us?ug, vol. 126, pp. 105-113, 2017.

[11]J. Szczerbowski, "Legalization of Bitcoin cryptocurrency.Private law aspects", Journal of Modern Science, vol. 35, no. 4, pp. 91-104, 2018.

[12]J. Hendrickson, T. Hogan and W. Luther, "THE POLITICAL ECONOMY OF BITCOIN", Economic Inquiry, vol. 54, no. 2, pp. 925-939, 2015.

[13] R. Kaushal, "Bitcoin: First Decentralized Payment System", International Journal Of Engineering And Computer Science, vol. no. 2, 2016.