Evolution of Blockchain technology
Blockchain technology is an upgradation in internet technology that birthed to the digital assets, opened a new form of financial revenues with an odd form of fundraising. It spawned young entrepreneurship of Millennial. It has revolutionized the economy giving a concept of sharing economy in a decentralized way. It invents the future. As, Alan Kay rightly said, “The best way to predict the future is to invent it”. Blockchain technology invent the future.
In 1990s internet revolution brought technological changes in a society & evolved social communication tools Facebook, Google, WhatsApp, twitter or Skype which introduced a new way of living & doing businesses.
The Internet connects the world by exchanging of information while Blockchain connecting the people or nodes by exchanging of value.
After such influence of the internet world, the new era of blockchain technology introduced with the financial crises of 2008.In those days, big financial institutions became bankrupt, Lehman brothers’ bankruptcy created a shockwave around the world. Governments gave bailouts to many banks to come out from dangers of bankruptcy but all efforts went in vain.
During days of financial crunch, a person named Satoshi Nakamoto introduced a white paper, “Bitcoin - Peer to peer Electrical cash system”. This system facilitated peer to peer electronic cash transfer from one destination to another place or one party to another one without the need of any third party, or financial institutions.
The idea was so originated at the time when trust on centralized system had been lost. It was the basis of the introduction of the blockchain technology & invention of digital currency called “Cryptocurrency” (Digital Asset used to exchange value between two parties).
This was the biggest innovation of the internet world which introduced a system which removed the existence of the intermediaries or middleman concept. The blockchain concept transferring virtual digital currency over the network around the world in seconds is same like the concept of sending email in a second in any corner of the world with one click.
What is Blockchain
Blockchain is a decentralized, distributed database constantly growing ledger that keeps permanent record of transactions which are cryptographically secured & immutable. The ledger is not owned by banks or any intermediary body. It is publicly distributed on millions of computers or nodes over the network.
Blockchain Description
Blockchain is a decentralized distributed database ledger spread across the network & connected to the nodes. Cryptographically secured blockchain introduced a reliable tamper proof system which evident no single point of failure has been observed since the birth of its technology.
Blockchain runs smart contracts which are computer protocol that permits trusted transactions & enforce negotiation mechanism between two parties. The contacts are written in lines of code & are contained across a distributed decentralized blockchain network. To validate contract, blockchain does rely on digital code to confirm transaction & ensure protection of both parties without the involvement of third party even both parties are unknown to each other.
Blockchain technology also led to the creation of a new form of fundraising i.e. ICOs through which ICO startup companies are able to raise millions of funds in minutes & days.
Why do we use a Blockchain technology?
According to the research findings of Mckinsey & Company, An American world-wide managing consultant company reported, “10% Gross Domestic Product (GDP) will be stored on Blockchain by 2027.
Besides this, the technology is useful for domestic & cross border transactions which reduces cost & expedite process without the involvement of banks or middleman.
Fintech company, Satander Inno Venture, stated in its Research paper, “Rebooting Financial Service”, the Distributed Ledger Technology (DLT) has potential to reduce cross payment cost around 15 billion dollars to 20 billion dollars per year by 2020.
Blockchain properties
Blockchain is a constantly growing ledger which keeps permanent record of all transactions cryptographically in a chronological order. The ledger is immutable & tamper proof.
Use of blockchains are gradually growing around the globe
The blockchain technology, an odd technology is still at its early stage. Giant corporations have started to build their own blockchain to run business including IBM, JP Morgan, Amazon, Microsoft & Oracle corporation. Business & service industry has been using blockchain technology to expedite their services. In future, a decentralized ecosystem is going to establish to flourish supply chain management services, health services, Insurance industry, hospitality sector, e-voting etc. Switzerland has already established a crypto valley to promote blockchain industry & many companies are striving to adopt blockchain technology that should be incorporated along with their existed business structure.
Most of the people do not have an idea what is blockchain? Are all blockchains same? If not then how to differentiate between them? These are the core questions which everybody wants to know its answers.
Bitcoin Blockchain
Blockchain is one of the technologies that helps in creating Bitcoin. Bitcoin is a digital asset. It is an electronic currency which has no physical appearance. Bitcoin also considered as a store of value just like gold & fiat currency. In 2008, Satoshi Nakamoto, launched a White Paper named “Peer to Peer electronic Cash”, & introduced, a first digital currency of the world that can be sold or bought over the network.
According to the statistics of Coinmarket cap, Bitcoin holds a dominant position with over $194 market capitalization, constituting about 55.9% among total market capitalization.
Bitcoin uses blockchain, a decentralized database which keeps records of all Bitcoin transactions & distributed across the network which is connected to the thousands of nodes or computers. This is called Bitcoin Network.
There are four components of Bitcoin. These are Bitcoin Software, Cryptography, Hardware & Gaming theory.
Bitcoin Blockchain follows Proof of work mechanism
Bitcoin are mined through proof of work mechanism on Bitcoin Blockchain using software. Bitcoin Software is basically a software which identifies a rule for a valid Bitcoin. The Bitcoin software uses cryptography. Cryptography refers to the study & application of techniques used to transfer, store, protect & communicate information in a secure way which cannot be intervened by any third party.
Bitcoin transaction is cryptographically secured, it means, a hashing function, SHA 256, Security Hashing Algorithm is applied on transactional data which converts or digest the data into alpha-numeric hash value. This hash value acts as a digital finger print of the message.
No one can reverse to the original data from hash value. Bitcoin miners with computational powers using by hardware try to mine Bitcoin Block. After each 10-minute, Bitcoin software issues a cryptographic challenge to Bitcoin community which try to mine block by figure out nonce. The Nonce is a random number, once used number which helps to find correct hash value of a specified block. When someone successful to find the exact nonce that matches with hash for a specific number & the rest of the community verifies it. This is proof of work mechanism where verifying transactions & also verifying the authenticity of record by the Bitcoin community connected to the blockchain. Then a new block is added to the Blockchain in a chronological order. On mining of the block, a miner gets rewarded by 12.5 Bitcoin.
Bitcoin community executes two functions; Competing each other for mining a block & one who mines showing proof of work, the Bitcoin community spread over the network verifies its validity.
Bitcoin has four characteristics; decentralization, record keeping, immutability & trustless.
Bitcoin is not centrally controlled. The process of selling & buying Bitcoin happens without any bank or third party. All Bitcoin transactions are spread over the network that is connected with thousands of computers or nodes. Bitcoin community consensus mechanism approves real transaction. Transactions are recorded like bank record transactions. Transactions are recorded in a distributed database ledger which are immutable. Once any transaction records on Blockchain ledger, it cannot be changed amended or deleted. Bitcoin transactions are supposed trustless, there is no need to verify transactions by any third party. This all done with nodes agreed that transaction took place. Due to this factor, it also resolves double spending problem because global network comprising thousands of computers verifies transaction. The Blockchain has observed no single point of failure since the inception of the Bitcoin Genesis block which came into existence on January 03, 2009.
Litecoin Blockchain
Litecoin blockchain is a counterpart of the Bitcoin blockchain. It is especially designed to observe some drawbacks of Bitcoin blockchain like slow block generation time & incapable handling of low transaction volume. Litecoin blockchain rightly addressed these issues & is capable of efficient handling of higher transaction volume, faster transaction confirmations without modifying its software.
Comparisons - Litecoin Blockchain with Bitcoin Blockchain
Litecoin launched after two years from the arrival of Bitcoin in 2011. It accelerated the process of a global payment system. Blockchain on which Litecoin built, is an improved version of Bitcoin. It has earned the support of household consumers & the business industry in a very short span of time.
Litecoin is considered the most trusted cryptocurrency. It maintained its dominance at seventh (7) position with more than $3 billion market capitalization on the website of the coin market cap as on September 17, 2018. It is a global, decentralized currency based on blockchain technology. Its structure is similar to that of Bitcoin. Charles Lee is the creator of Litecoin, a former Google engineer. He wanted the best innovations of Bitcoin & wanted to create a currency that contains all benefits of Bitcoin. Underlying this concept, he launched Litecoin.
It is a decentralized cryptocurrency which has potential to execute a fast transaction with low fees. It is convenient to make purchases & send payments instantly across the globe via blockchain of Litecoin. Due to its remarkable features, it is also identified as Silver to Bitcoin’s gold.
The blockchain of litecoin is so powerful and are used for online payment system with a purpose of transfer of currency from one destination to another one. The total circulation of litecoin will be 84 million. The Source code for litecoin is available at Github.
Coins Limit
Bitcoin maximum coins will be capped at 21 million, however Litecoin will be produced around 84 million which are approximately four times more than that of Bitcoin units.
The current Litecoin’s block reward is 25 coins which will be halved after every 840,000 blocks. However, the present block reward of Bitcoin is 12.5 bitcoins.
Block generation Time
Litecoin block generation time is about 4 times faster than Bitcoin. Litecoin’s block time is 2.5 minutes while Bitcoin completes its block in 10 minutes. It shows that Litecoin executes at a faster transaction rate than Bitcoin.
Hashing Algorithm
The hashing algorithm which is used to mine on Bitcoin network is a SHA 256 algorithm. Therefore, Bitcoin network is more complex & takes much time to execute transactions. On the other hand, Litecoin uses a hashing algorithm, called Scrypt which is less complex & transactions take place quickly.
The fastest blockchain generating capability of Litecoin made it an exceptional & source of attraction for merchants.
Atomic Swaps
This is a new concept of cross blockchain trading where one party can exchange one cryptocurrency with another cryptocurrency without the need of centralized exchanges in order to execute a transaction instantly. Atomic Swaps experience has successfully happened between the blockchains of Bitcoin & Litecoin.
Thus, the shortcomings of Bitcoin are properly addressed in Litecoin. The Litecoin blockchain is capable of executing faster transaction, low transaction fee, short block generation time & mining at low computing power. With Litecoin, you can buy food, drink, clothes & necessary commodities because it is widely accepted by a large number of merchants worldwide due to its valuable characteristics.
Ethereum Blockchain App Plate form
Ethereum blockchain is the next second most popular blockchain after Bitcoin. It ranked in the second position with a total market capitalization around $21 billion on Coin market Cap as on September 18, 2018.
Ethereum blockchain is a decentralized plate form that has potential to execute smart contracts. Its distributed applications built & run without the involvement of the middleman. Besides this, Ethereum is also a programming language which used blockchain (decentralized public ledger for transactions of cryptocurrency) to run, assisting developers to build distributed applications. The applications of Ethereum are well designed & widely accepted by reputed organizations globally.
Ethereum applications run on its designed plate form called Ether. Ether is used for dual purposes. Firstly, it is used as a digital currency which is traded on cryptocurrency exchanges. Secondly, Ether is also used inside Ethereum to execute applications & monetize the work.
Legitimacy of the Ethereum blockchain applications plate form can be determined that the Ethereum Enterprise Alliance (EEA), a global alliance of companies belong to Fortune 500 enterprises, industries of banking, pharma, automotive, technology, consulting, startups, research labs, academics globally. The core purpose of this alliance is to build the next generation of economy on pillars of Ethereum blockchain technology that develop unique industry standards. The credibility of EFA can be judged by its member companies like J.P Morgan, Microsoft, Accenture, Satander, brainbot, Deloitte, etc.
Ethereum Blockchain Features
The founder of an Ethereum plate form is Vitalik Buterin who enables code for smart contracts technology, along with other developers. The Ethereum blockchain technology offering wide solutions for developers to run smart contracts.
Ethereum Smart contracts
Smart contract is a protocol that is used to regulate contract terms. It is especially designed to contribute to the performance of the contract. It allows to perform irreversible but traceable transactions without any intermediary body. It is a distinctive quality of a smart contract that contains all information & data of contract terms & conditions in coded form put on the block of a blockchain. Ethereum has potential to attract a cluster of developers worldwide to build & publish applications.
Ethereum blockchain app Decentralized Plate form
Decentralized plate form which eliminates the need of middle man either it is the financial sector, industrial or transportation. Uber or Airbnb connects the individuals by centralized system that can be replaced by decentralized applications reducing time with cost effectiveness for the users.
Rex is a peer to peer decentralized real estate multiple listing services plate form, built on Ethereum blockchain network offering selling, buying & leasing solutions with fastest transactions lowering cost.
Ethereum Decentralized Digital Identity
Digital Identity is an online identity of individuals or companies that has concern with security & privacy.
Ethereum applications allowing you to control your private data, information & identity without the centralized server access that can be hacked. Popular social media sites like Facebook, LinkedIn also maintain digital identity but the users do not have privileges to keep secure their personal information as the plate form managed by the centralized server. However, Ethereum maintains decentralized identity like uPort allowing more control over privacy.
Celsius network, a decentralized peer to peer credit lending plate form built on Ethereum blockchain technology establishing a digital identity of members to extend credit facility.
Ethereum blockchain network allowing sharing Computing Power
Ethereum decentralized applications explore a new world of better utilizing the idle resource of economy i.e. computing power. It introduced an odd concept, when your computer is in idle form, its computing power & free storage can be rented out & get paid them. The concept is similar to the renting out bedroom space on Airbnb.
Golem, an Ethereum blockchain network allowing sharing computing power to individuals or companies & transactions are used to make payments between service provider & requestors.
Comparisons - Ethereum Blockchain & Bitcoin Blockchain
Ethereum blockchain app plate form is a decentralized plate form which runs smart contracts. Users can build unstoppable apps on the blockchain & can create their own digital token which can be used to generate funds. Ethereum blockchain developed by Ethereum Foundation, a Swiss based nonprofit organization.
Contrary to this, the Bitcoin blockchain is a digital asset. It is neither controlled or owned by anybody. A Consensus based Bitcoin community network working behind the Bitcoin blockchain.
Ethereum is a close competitor of Bitcoin. Bitcoin support basic smart contracts & restrictive language, however Ethereum supports programming language that allow programmers / developers to write their own programs, own smart contracts.
Bitcoin is a digital asset & Ethereum is a decentralized plate form
Bitcoin is a digital currency which introduced cryptocurrency & revolutionize the world economy with the introduction of blockchain technology (Blockchain is a database where transactions, data, are stored & publicly access to individuals). Ethereum is a decentralized plate form that runs smart contract. The contracts are underlying specific codes for the completion of any transaction. For instance, transfer of remittance from abroad by the sender to the receiver in a recipient country using code numbers without involving a third party.
Block generation times
Ethereum is a close competitor of Bitcoin. Bitcoin takes 10 minutes to complete its block while Ethereum block time is 13 to 14 seconds.