WHAT IS ETHEREUM AND IS IT BETTER THAN BITCOIN?
As the young Canadian programmer, Vitalik Buterin passionately blogged about the newly emerging world of cryptocurrency for Bitcoin Magazine, he uncovered a hidden treasure. At that time, Bitcoin was the only major digital coin, and the primary goal was to decentralize the financial markets of the world by using a distributed ledger technology, known as blockchain. By providing a copy of a ledger including everyone’s transactions to all participants of the network, while simultaneously hiding personal information using encryption techniques, the exchange of Bitcoin from one person to another could be validated through consensus. Such transactions were both secure and transparent. This is where Buterin saw an enormous amount of untapped potential.
If blockchain could truly process the transfer of information in a more transparent, secure, cheaper and faster way, then it could improve not just financial transactions, but all kinds of exchanges. Essentially what Buterin wanted to do was create a decentralized internet that ran on a distributed network.
He realized that the nature of Bitcoin made it inaccessible from a development standpoint. Therefore, Buterin planned to launch a blockchain network called Ethereum, where developers would flock to deploy Decentralized Applications (Or DApps, pronounce “Dee-Apps”). Such applications would no longer need a data collector in the middle, like Google or Facebook, to process information and grant special access. With DApps, two users could simply transact with each other while preserving their personal data.
There are a number of reasons why Ethereum was able to unlock this potential over Bitcoin, which had already been in circulation for several years.
- In contrast to the specialized use of Bitcoin, the creators of Ethereum recognized that it is incredibly difficult for the average developer to launch their own blockchain network because it requires extensive knowledge of mathematics, computer science, and cryptography. Therefore, the Ethereum network is marketed to be a blockchain platform with open access, where anyone can launch their own applications. Similar to how the internet functions, where both giants like Netflix and smaller apps like Flappy Bird can run freely.
- The script used to run Ethereum was also designed to be a lot more versatile. For example, Bitcoin only allows public, permissionless transactions to occur, whereas Ethereum offers a lot more flexibility. Transactions may be permitted or permissionless. These slight differences can be important for specialized uses when an application needs to behave in a complex way.