The real revolution behind Bitcoin: Blockchain

22

October

2016

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What is blockchain

Some see it as one of the biggest technological innovations since the internet: Blockchain. It is the technology behind the virtual currency Bitcoin. Blockchain allows people to transfer Bitcoins (and other virtual currency like Litecoin(LTC) & Ethereum(ETH)) via a peer-to-peer network using a public ledger. Every transaction has to be confirmed by a number of peers and after that the transaction is confirmed and the money transferred. And it is just the public ledger and the multiple peer confirmation that is so interesting for a lot of companies and governments as well.

What are the technological possibilities?

“The possibilities are endless” is maybe a over-used business term, but for Blockchain it is (to a certain consent) applicable. Instead of facilitating money transactions -of virtual or maybe even normal currency- a wide array of possibilities arise. It can be used to prevent fraud in –for example- university degrees, or give insight in the food chain of the hamburger you eat in order to prove that it is made of biological meat as the package says it is. So for a lot of possible purposes this technology of multiple confirmation and public ledger can be used.

Are there companies considering this?

Although it is a very exciting part of technology, and fantasizing about it can create a whole different layout of industry and financial markets, it has to create value and must be feasible to implement. So that’s why a number of companies and even governmental institutions have started to test the functionalities and feasibility of blockchain technology. In the Netherlands the ‘Betaalvereniging Nederland’, some mayor banks (ING, ABN AMRO) and the Dutch central bank have started experimenting with blockchain technology.

So only good news?

So far yes, but of course with every new technology come problems and even possible risks that have to be dealt with or minimalized. In Blockchain technology the public ledger is it strength but also ist weakness. For anonymous transactions it is not very important who actually confirms and saves the data, but with information that is not anonymous and maybe could even be vulnerable (ID theft for public stated university degrees) it is important. So in any way this data has to be controlled by a central authority or at least there should be some kind of organization of it. And that does directly interfere with one of the major advantages of Blockhain namely the obsolence of big data storage facilities and the unnecessary stream of these data.

But nevertheless there is a big potential of this Blockchain technology, even with some uncertainties and risks. The internet wasn’t built in a year and so will Blockchain also not be available for end-users within a short time, but it’s certainly a technology to watch!

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Is Ethereum the new Bitcoin?

22

October

2016

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What is Bitcoin

Bitcoin(BTC) is the first virtual currency in the world and traces back to the year 2009, and is believed to be created by the (still unknown) pseudonym of Satoshi Nakamoto. It was designed to reduce transaction fees for online payments, increase security by using encryption and to create a decentralized inflation free currency. Bitcoin is fueled by the blockchain technology, that is built on a peer-to-peer network. Transactions that are made have to be approved by the public ledger before they can be made (this on order to prevent re-using bitcoins)and will take approximately a couple of minutes to complete. Bitcoin has grown to the most popular virtual currency in the world and is accepted at numerous online webshops (like Ebay.com and Justeat.nl) and its marketcap is still rising, today (22-10-2016) a Bitcoin is sold for approximately 590 Euros per coin.

What is Ethereum

Ethereum(ETH) is launched in 2015 and is the largest open-ended decentralized software. It provides application building (+ all kinds of extra possibilities), is a programming language and is also a virtual currency. And where the virtual currency started as an internal currency within the Ethereum platform it has grown exponentially for the last year and has surpassed Litecoin and Ripple (known for the Bitcoin-bridge) in market capitalization. The technology behind the currency is based on blockchain technology but is supporting more than only the currency itself, and is referred to as blockchain 2.0. the difference in speed compared to bitcoin transactions is high; a Ether transaction can be completed in seconds. One ETH is sold today for approximately 11 Euros.

Is Ethereum surpassing Bitcoin?

Both currencies are powered by blockchain technology and both have a high market capitalization (although the market share of Bitcoin is still a lot larger than that of Ethereum). There are lot of  differences in technology like programming language (BTC= stack based, ETH= own language), basic builds and implementation of blockchain technology. But the real difference is in the purpose it is designed, Bitcoin is clearly designed to be a currency that tries to become a established virtual currency in the world. While Ethereum is designed to also be a platform that facilitates peer-to-peer contracts and applications, and the primary goal is not to become a payment alternative.

So?   

In sum you can say that BTC and ETH can be even complements in some ways, and do not directly compete with each other over the virtual currency market. Although ETH is a rising star with an corresponding growing market share, and in these rapidly changing times it is not certain that ETH doesn’t change its overall prupose and targets the very lucrative market for alternative payments.

Sources

Bitcoin.it

Investopedia.com 

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