Understanding Bitcoin and Ethereum

#Day4 – #30daysofWeb3 Learning Challenge

Understanding Bitcoin and Ethereum

#1Bitcoin 101 : Created in 2009 by Satoshi Nakamoto to be a “peer-to-peer electronic cash system, it is built on blockchain and thus shares the characteristics of being decentralised, immutable and open.

It is also hard-capped (there will be only 21M bitcoin ever) and single-purpose ( a store of value).

#2 What was the value prop? It was proposed as a solution to the double spending problem using a peer to peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. T

#3 What is Ethereum

The second most popular crypto currency, it was created in 2013 by Vitalik Buterin to let anyone write “write smart contracts and decentralised applications (dapps)”

#4 How does it work? Much like BTC, Ethereum is built on blockchain and is decentralised, immutable and open. Unlike BTC though, the goal of Ethereum is to becomes the worlds’ decentralised computer

#5Understanding Ethereum 101

Ether – Ethereum;s digital token (store of value such as bitcoin) but its purpose is to reward nodes on the Ethereum blockchain for processing transactions.

Gas – Amount of Ether that’s paid to a node to process a transaction

Smart Contracts – Code that runs on Ethereum blockchain that is decentralised (stored on all nodes in the network), immutable (can’t be changes once committed on blockchain) and open (anyone can view and use it)

Decentralised apps (dapps) combine backend smart contract with front end UI

Ethereum has the largest web3 developer ecosystem thanks to its ‘composability’ – ie, much like legos, anyone can build on an existing smart contract to create something new.

This has results in dapps that power Web 3 that allow for buying and selling NFTs, swapping tokens, lending and borrowing tokens to earning income from playing games

So if you hear gas, remember that it costs a lot in gas to process Ethereum transactions. Tomorrow lets look into learning more around why folks invest in crypto

For Sources/if you missed earlier days in the series, check out the series in the link below. Follow along if you are keen to join me on this journey.

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Ranjani Mani

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