Have you heard about Namecoin? Released in 2011, Namecoin is a fork of the Bitcoin project, which used the same P2P network but applied itself to build a decentralized domain name system. The first Historical Snapshot currently available at Coinmarketcap (April 28, 2013) shows Namecoin in Rank 4. Namecoin still exists, ranked 257 as on 24th February 2019, fading away somewhere in the abyss.
There were 6 other coins in that snapshot. Only 2 survived! Bitcoin and Litecoin!
Then again, this is not a story about the survivors! This story is about what brought the change and how! Let us time travel and go back to the origin!
When on 3rd January 2019, Satoshi Nakamoto mined the Genesis Block, he embedded the following text in the coinbase of the block “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” Satoshi had created a Proof of Concept of a revolutionary Virtual Currency which directly challenged the existing Financial Ecosystem. Suddenly, there was a virtual currency, have limited supply, managed by a peer to peer network, present in an open distributed ledger and cannot be tampered with at all, and, above all, it stored value!
Wait! That sounds like Blockchain!
Somewhat. Bitcoin was the first Use Case built on a Blockchain. The potential was infinite! Namecoin was an example that used Blockchain Technology and presented a different Use Case. And there were more!
Then, what happened to them?
Imagine carrying a calculator, a music system, books, a suitcase of cash, your land phone, and so on, wherever you go. All of them have specific uses, however, think about the inflexibilities and the sheer weight you need to carry!
In 2013, then 19-year-old Vitalik Buterin argued that Bitcoin needed a scripting language for application development. In late 2013 Vitalik proposed, in a white paper, the development of a new platform with a more general scripting language. Ethereum was created.
Suddenly the world had the capability of writing self-executing smart contracts in a Blockchain. The Blockchain world was evolving!
To understand how Ethereum fast-tracked the Blockchain evolution, let us review, and in some cases, compare the fundamental properties of Bitcoin and Ethereum.
Imagine a new operating system that has the capability of performing the tasks of a calculator, a music player, store digital books, perform transactions of money, make phone calls and so on.
Ethereum promised to do so through an ecosystem of applications known as Dapps.
While Bitcoin is a single purpose system, Ethereum positioned itself as a protocol that can host multiple single-purpose systems/ applications.
• If we send it to an account having a private key, Ethereum acts as a currency.
• If we send to an account having code, the smart contract can
o Send Ethereum (act as a currency)
o Read/ Write Storage.
o Call other contracts.
Bitcoin and Ethereum have the same basic principle. Every (full) node on the Blockchain processes every transaction and stores the entire state.
• Ethereum uses a Turing complete programming language (Solidity), which means that anything can be calculated with enough computing power and enough time. Bitcoin is developed in a stack-based language.
• Block time in Bitcoin is 10 minutes compared to 10-19 seconds of Ethereum.
• Similar to Bitcoin Orphan Blocks, Ethereum has Uncle Blocks (Rejected Blocks). However, unlike the Bitcoin network, the Ethereum network incentivizes Uncle Block miners. This neutralizes the effect of network lag while distributing mining rewards.
• Ethereum Blockchain stores the most recent state of the network (unlike Bitcoin) along with the transaction list of the Blockchain. Ethereum achieves this through the use of Patricia Trees as a part of Blockchain state regulation.
Ethereum uses a Proof of Work (PoW) consensus model almost similar to Bitcoin.
Bitcoin’s hashing algorithm is SHA-256, which can be performed efficiently using ASIC Miners. Problem with Bitcoin specialized miner, with extremely large mining organizations, with greater hash power, takes up a huge percentage profit from the network.
The Ethereum hashing algorithm is Ethash, designed to require more memory to make it harder to mine using ASICs. This allows for Ethereum to have greater mining decentralization. Ethereum has somewhat succeeded as there are no dedicated ASIC’s available to mine Ethereum.
Some important examples:
51% attack: Bitcoin Blockchain runs at a higher hash rate than its Ethereum counterpart. As a result, the monetary cost of a hacker to perform a 51% attack on Bitcoin is proportionately greater.
Some example of security features in Ethereum:
Halting Problem: Ethereum prevents attackers from creating programs that keep on running on everyone’s computers forever.
Execution expiry: If execution could stop at halfway through, it might be possible to perform weird attacks on contracts, eg: execution to expire when one-half of changes are made and another half not made. Gas prevents that by reverting an execution.
Replay Attack: Every transaction has to have a unique incrementing nonce. If Paul sends 20 ETH to Robert, Robert should not take out that transaction and reinsert into the Blockchain to gain 20 more ETH. Nonce prevents that.
Bitcoin eliminated the prevalent Transaction Model of granting trust to a central authority (in case, the central authority is compromised there is a Risk of Failure of the prevalent Transaction Model). Bitcoin uses the Unspent Transaction Output (UTXO) scheme while Ethereum uses the Account-Based model. Every block in the Ethereum Blockchain has a Gas Limit. If a miner, wants to fill a block, he will fill it with transactions that give most profit, so every transaction specifies a Gas Price (amount of ether willing to pay per unit Gas) and also specifies the maximum amount of gas that it is willing to take.
If in a transaction:
• Execution takes up less gas. The transaction pays only for the computational steps that it uses.
• Execution goes Over the limit. All the execution gets reverted.
Ethereum has succeeded in getting the attention of multiple industries which has opened the window to a wide horizon of industry Dapps. Ethereum enabled the industries to create Sandboxes and run Proof of Concepts. Ethereum can be considered as the Foundation towards the mass adoption of Blockchain.
Bitcoin and Ethereum solve different real-life problems and can co-exist.
What does the future hold?
Bitcoin has rolled out Segwit, and now, Lightning Network, to increase scalability. Rootstock Project (RSK) is adding value and functionality to the Bitcoin ecosystem by enabling smart-contracts, near-instant payments, and higher-scalability.
Ethereum, for now, faces huge scalability issues, as seen during running Cryptokitties! It thrives towards a Proof of Stake Consensus mechanism through Casper.
Big Projects like EOS have moved to their Mainnet and using their Consensus Algorithm (DPoS).ICOs are dying out, STOs will be the next big thing.
Zilliqa is the first project to implement Sharding.
Cardano promises to be the first Peer-reviewed protocol, which will kick start the Staking Era!
That’s a future to live and die for! There will be causalities. There will be winners. Buckle up and enjoy the thrill!
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