Bitcoin is the first massively adopted cryptocurrency getting most of the attention and dominating other cryptocurrencies.
Bitcoin was born in 2008 when an unknown person or group of people named Satoshi Nakamoto published the Bitcoin whitepaper.
Since then, many other cryptocurrency systems (including many in the rest of this list) have considered Bitcoin as a model and created other kinds of cryptocurrencies based on the same concept and open-source computer code (in fact, if you want to, you can also take Bitcoin’s code and build your own cryptocurrency, you can find all of the code on GitHub).
On January 12, 2009, Satoshi Nakamoto performed the first Bitcoin (BTC) transaction by sending 10 BTC to a coder named Hal Finney.
By 2010, Nakamoto disappeared along with an estimated one million BTC. Bitcoin’s development and maintenance was taken over by the Bitcoin Foundation in 2012. Since then, and over the last ten years, the bitcoin price has continued to rise.
Why are people investing in Bitcoin?
- Bitcoin is a globally accessible digital store of value.
- People also use bitcoin as a currency. Today, more than 100,000 online merchants make transactions using bitcoin (BTC).
- People buy bitcoin for the same reasons that investors buy gold or stocks — as a speculative investment with the expectation that the price will rise in the future.
- Bitcoin is even used to collateralize other kinds of financial transactions. The programmable features of Bitcoin (like its multi-sig contracts) make it a perfect platform to build universal and cost-effective financial products and services.
What is Ethereum?
Ethereum, or the Ethereum Virtual Machine (EVM), is an attempt to build a new version of the internet. Rather than centralized hubs (or private companies) that control massive troves of personal data, Ethereum is designed to create more decentralized information networks enabled by a series of distributed nodes and Ethereum wallets.
The idea for Ethereum was developed in 2013 by Vitalik Buterin, who at the time was a computer programmer and contributor to Bitcoin Magazine. He was advocating for more functionality on the Bitcoin blockchain to make it easier for developers to build applications.
When his plan was met with resistance from the bitcoin community, he developed the framework for Ethereum, created a team, and published the Ethereum whitepaper. After a pre-sale to raise money to fund the development of the Ethereum Virtual Machine, the network went live on July 30, 2015.
If the internet is like a vast highway, then the current system has few on- and off-ramps. These existing ramps are also controlled by a toll of sorts, which either exists as actual fees or costs that require users to pay in the form of surrendering personal or financial data.
The goal of a decentralized internet is to give people control over their information, enable censorship-resistant technologies (these range from financial applications outside of corporations or governments, to better election technologies, to forms of gaming and data storage that aren’t stored on centralized servers), and remove the need/cost of third parties.
A decentralized internet replaces large, centralized gatekeepers that control the flow of information, with internet operating infrastructure that is spread all over the world. In other words, a decentralized internet provides many more on-ramps and off-ramps, which makes the internet more secure and more democratic.
Ethereum helps accomplish the vision of decentralized computing in two ways. The first way is to create a distributed system of nodes, which happens anytime a computer or miner joins the Ethereum blockchain — and anyone, with sufficient computing power, can become a node, which makes Ethereum a permissionless blockchain.
A node is any machine that contains a copy of the blockchain. The more nodes that exist, the more resilient Ethereum becomes to security breaches and outages.
A wide distribution of the network makes it possible for developers to build decentralized applications using open-source smart contracts, which is the second way that Ethereum is enabling digital decentralization. A smart contract is basically a computer program that executes a transaction after a series of requirements are met. Most Ethereum apps are written using the Solidity language (there are also other Ethereum-specific languages).*
*Source Credit – Abra.com
3 Replies to “What is Bitcoin and Ethereum?”
Interesting and concise overview of both Bitcoin and Ethereum. I wonder if you can breakdown, for the average consumer, the importance of allocating some of your portfolio to cryptocurrencies.
Great Question! Crypto is NOT right for everyone! But, Bitcoin has significantly outperformed every other asset class so for those investors willing to ride the ups and downs of this crazy market, I expect Bitcoin to continue to provide historic returns over the next 5, 10 and 15 years!
HOPE TO SEE YOU SOON MIKE L
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