In context of blockchain we encounter many terms like bitcoin, ethernum, ethers, dapps, etc. I will try to explain these terms and their key differences in this article.
Contents
What is Ethereum ?
First of all, Ehtereum is a software development platform. These softwares are based on blockchain technology. We can imagine it with the analogy of internet. Just like internet is the universal platform and developers build theirs apps(websites) on it, Ethereum is a general platform for blockchain developers to develope their apps. These apps are commanly known as decentrailzed apps or dapps.
Why Ethereum ?
Bitcoin was introduced by Satoshi Nakamoto for peer to peer electronic cash transfer. But many developers wanted to implement blockchain, the technology behind bitcoin, for wide range of purposes like smart contracts. Observing this need, Vitalik Buterin created the Ehtereum.
Features and components of Ethereum
Accounts :- To use Ethereum service, we need to create account. Although general perception of account also holds here, but there is certain difference . There are many ethereum networks like Main Ethereum Network, Rinkeby, Ropsten, etc. A single account has access to all of them. An account is characterized by 160 bit address and is used for transactions in Ethers.
Smart Contract :- They are computer codes which facilitate exchange of valuables like currency or properties. Smart contracts are run by 'Ethereum Virtual Machines (EVM)'. This is a core feature of Ethereum which makes it possible to create customized dapps.
Ethereum Virtual Machine (EVM) :- It is a Turing complete machine , which runs on the Ethereum network. This forms essence of decentralization in ethereum. It allows to run smart contracts (codes written in different languages) without need of any third party service.
Ethers (ETH) :- Ethers are medium of exchange of services on ethereum platform. For transactions to be processed and storage space allocated users have to pay price in Ethers. It fuels the dapps on the network.
Smallest unit of currency in Ethereum is wei and 1 ETH = 1e+18 weis. One gwei(giga wei) is 1e+9 wei.Gas and Gas Prices :- Gas is a cost required for completing a particular computation.
Gas Price is amount of ETH sender is willing to pay per unit gas for completion of a transaction.
The product of Gas Limit and Gas Price gives the amount needed for completing the transaction.ERC-20 :- It is a token, which is acting as standard for token implementations of all smart contracts on Ethereum blockchain .
That was an overview of some important features of Ethereum blockchain.
Ethereum Vs Bitcoin
Bitcoin is just a digital cryptocurrency while Ethereum is wider platform with Ether as a digital currency component of Smart Contracts. Ethereum and Bitcoin had different purposes. Also their capacity is different. Blocks are smaller in Ethereum and consucme significantly less time for adding it to the blockchain as compared to Bitcoin. Bitcoin prevents inflation by putting cap on total possible bitcoins, while there is no fixed number of Ethers.
I hope I cleared basic terminologies and key differences mentioned in intro of this article :)
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