Blockchain Technology

ethereum and blockchain

Ethereum and Blockchain

What is Ethereum?
Ethereum is a blockchain-based decentralized software platform that includes smart-contract. Like other cryptocurrencies, Ethereum can be used to send and receive value around the world without the need for third-party involvement.
Exchange of value is the main application of the Ethereum blockchain today and is usually done through the blockchain’s natural marker, ether. Due to the long-term potential and ambitious vision of its developers, many developers are looking for cryptocurrencies, even if Ethereum gives users more control over their financial and online data. This ambitious idea, which has sometimes led to Ethereum being referred to as the “global computer,” has been rejected by some critics who say it may not work. However, if this experiment goes according to plan, it will result in very different apps from Facebook and Google, where users knowingly or unknowingly trust their data.

The goal of Ethereum enthusiasts is to use blockchain, a data distribution technology, to regain control of users so that thousands of people around the world can get their hands on a copy. Developers can use Ethereum to build lead-free apps, which means that service creators can’t tamper with user data.

Although Bitcoin was created to disrupt online banking and everyday transactions, the creators of Ethereum wanted to use the same technology to replace third parties on the internet and track complex financial instruments. These apps help people in many ways, including paving the way for sharing vacation photos with friends on social media. However, they are accused of abusing these controls by censoring data or inadvertently revealing sensitive user data in the hack, to name a few.

The platform was officially launched in 2015 and turned the idea of ​​Ethereum into a real and powerful network.

Proponents of decentralization say that this structure can create problems. This means less direct consumer control and also offers opportunities for censorship. Intermediaries can step in and prevent consumers from taking action, whether that’s buying shares, posting messages on social media, or blocking them outright.

Many people, including the founders of the Internet, believe that the Internet has always been decentralized and separatist movements have sprung up around the use of new tools to achieve this goal. Ethereum is one of the technologies joining this movement.

How is Ethereum different from Bitcoin?
Ethereum is inspired by Bitcoin. These are all cryptocurrencies. Ethereum uses the same technology as Bitcoin, a blockchain that uses a decentralized public ledger to decentralize the network so that it is not controlled by a single entity.

But while Bitcoin is primarily used as a store of value, the idea behind Ethereum is to decentralize other types of applications and services, from social media to more complex financial protocols.

What is the next step for Ethereum?
It should be noted that Ethereum has been met with strong suspicion. First, Ethereum is far from scalable, meaning it can no longer support multiple users, causing problems with the idea of ​​destroying the “global computer” of Google, Facebook, and other centralized platforms.

Ethereum 2.0 was introduced on December 1, 2020, to address some of these issues. Other scaling technologies such as Raiden, which has been in use for many years, can also solve scalability problems.

Like Bitcoin, Ethereum works through a public blockchain network; Bitcoin is used to track currency ownership, while the Ethereum blockchain focuses on the decentralized execution of program code for each application.

These applications may include security programs, voting systems, and payment methods. Like Bitcoin, Ethereum operates outside the license of central institutions such as banks and governments.

Is Ethereum a Cryptocurrency?

Ethereum itself is not essentially a cryptocurrency – the term Ethereum refers to a digital platform. The actual symbol (which is used for online payments) is called Ether. In other words, Ethereum is the “crypto-fuel” (or cryptocurrency) of the Ethereum network. In terms of transactions, the price you see is for Ether. However, you will usually see a cryptocurrency called Ethereum.

What is the difference between Ethereum and Bitcoin?
The Ethereum blockchain technology is similar to Bitcoin, but Bitcoin only uses one specific application of blockchain technology. After all, it is an electronic money system that supports online Bitcoin payments.

How can I trade Ethereum CFDs?
When you buy ether on an exchange, prices are usually quoted in traditional currencies (such as US dollars, euros, and British pounds). In other words, you sell some currency to buy Ether. If the price of ether goes up you can sell for a profit, if the price goes down and you decide to sell you will lose.

At CMC Markets you can trade Ether via a CFD account. This way, you can speculate on the actual price movements of cryptocurrencies without having to own them. They don’t get ownership of ether. On the other hand, the value of the position you open increases or decreases depending on the change in the price of ether against legal tenders.

CFDs are leveraged products. This means that you only need to deposit a certain percentage of the total transaction value to open a position. You don’t have to buy Ethereum outright to get all the funds at once, but you can use an initial deposit to get bigger funds. While leveraged trading can increase your returns, losses also increase because they are based on the total value of the position. Your losses can exceed your deposit.

Security of Blockchain

Is the blockchain secure?

Blockchain technology solves security and trust issues in several ways. New blocks are always stored linearly. They are always added to the “end” of the blockchain. If you look at the Bitcoin blockchain, you will see that each block has a position in the chain called “High”. As of November 2020, the block height has reached 656,197 blocks.

After adding a block to the end of the blockchain, it is difficult to go back and change the contents of the block unless most people reach a consensus. This is because each block contains its own hash value, the hash value of the previous block and the timestamp mentioned above. A hash code is created by a mathematical function that converts digital information into a sequence of numbers and letters. If the information is manipulated in any way, the hash code also changes.

Because it is important for safety. Suppose a hacker wants to modify the blockchain and steal bitcoins from other people. If they choose to change their unique copy, it will no longer match anyone else’s copy. When other people cross your copy with each other, they will find that the copy is noticed and the pirated version of the chain is considered illegal and discarded.

A successful hack of this type requires the hacker to simultaneously control and modify 51% of the blockchain copies so that the new copy becomes the majority copy or agreed chain. Such attacks also require a large amount of resources and resources because they have to process all the blocks because they now have different timestamps and hash codes.

Due to the size and growth rate of the Bitcoin network, the costs of performing this feat are insurmountable. Not only can it be very expensive, it can also be useless. This is not ignored as network members will see such drastic changes in the blockchain. The network member then forks to the new unaffected version of the chain.

This will cause the attacked version of Bitcoin to lose its value, ultimately rendering the attack futile as bad people control useless assets. The same thing would happen if bad guys wanted to attack the new Bitcoin fork. It is designed so that participating in the network is more of a financial challenge than an attack.

Bitcoin and Blockchain

The purpose of the blockchain is to allow the recording and dissemination of digital, but not editable, information. Blockchain technology was first proposed in 1991 by Stuart Haber and W. Scott Storneta. These two researchers want to implement a system that cannot change the labeling of temporary documents. But it wasn’t until 20 years later, with the introduction of Bitcoin in January 2009, that blockchain got its first practical application.

The Bitcoin protocol is based on the blockchain. In a research paper on digital currencies, the creator of the pseudonym Bitcoin, Satoshi Nakamoto, described it as “a new system for equivalent electronic money without a reliable third party”.

The key to understand here is that Bitcoin only uses the blockchain to transparently record the ledger, but in theory blockchain can be used to record any number of data points without exception. As noted above, this could be a transaction, a vote, a product inventory, a government identification, a residency deed, etc.

Today there are many blockchain-based projects that hope to implement blockchain in such a way that, apart from capturing transactions, it will help society. The invariability of the blockchain means fraudulent voting becomes more difficult.

For example, blockchain based decentralization system can be used for a voting system. Each candidate then receives a specific address in the wallet, and voters send their token or cryptocurrency to the address of each candidate they wish to vote for. The transparency and traceability of the blockchain will eliminate the need for manual counting of votes and the ability for poor participants to manipulate physical votes.

Decentralization

Blockchain will not be a panacea for solving social problems. No tool or technology can, but its adoption across societies may offset some of Ito’s concerns about the modest direction of Silicon Valley technology evangelism and its over-reliance on artificial intelligence. First, Silicon Valley’s financial monopoly on all data and assets contained in a Web 2.0 environment can be redistributed to individual Web 3.0 users. Second, the social decentralization promoted by blockchain can redistribute and democratize the way people participate and work together. Third, the blockchain is not controlled by a central authority, but by the entire network of participants. The decision-making mechanism of a large number of people is more flexible.

To understand blockchain, it helps to look at the context of Bitcoin’s application. Like a database, Bitcoin requires a number of computers to store its blockchain. In Bitcoin usage, the blockchain is just a specific type of database that is used to store every Bitcoin transaction. In bitcoin usage, it is not like most database, these computers are not all under one roof. Each computer or group of computers is managed by a unique person or group of individuals.

Imagine a company has a server with 10,000 computers and a database server containing the account information of all its customers. The company has a warehouse that holds all these computers in a room and has complete control over each computer and all the information. Like above example, Bitcoin is made up of thousands of computers, but each computer with its own blockchain is in a different geographic location, and all of them are managed by different people. The computers that make up this Bitcoin network are called nodes.

In this model, the Bitcoin blockchain is used in a decentralized manner. However, there are centralized blockchains where the computers that make up your network are owned and managed by a single entity.

With Bitcoin, data is a complete history of all Bitcoin transactions. If the data error on one node, you can use thousands of other nodes as a benchmark to fix it. In this way, no node on the network can change the information stored on it. Therefore, the transaction history in any block that is the Bitcoin blockchain cannot be changed.

When a user interferes with Bitcoin transaction logs, all other nodes are redirected to each other and easily identify nodes with false information. With Bitcoin, this information is a list of transactions, but blockchain can also store various types of information, such as legal contracts, status displays, or company product inventory.

To make it work, most of the computing power of a decentralized network must agree to these changes. This will ensure that any changes made are in the best interests of the majority of people.

transparency

Due to the decentralized nature of the Bitcoin blockchain, all transactions can be viewed transparently, with private nodes or with a blockchain browser, so everyone can view transactions in real time. Each node has its own copy of the circuit which is updated as new blocks are confirmed and added. This means you can track Bitcoin anytime, anywhere if you want.

For example, exchanges have been hacked in the past and those who have bitcoins on the exchange have lost everything. Although hackers can be completely anonymous, the bitcoins they withdraw are easy to track. If the bitcoins stolen in some of these hacking attacks are transferred or spent somewhere, this is known.

Basic Blockchain Knowledge for beginners

What is blockchain?

Blockchain is chain of block that store information to make it impossible to modify or cheat the system.

It also can be called a digital transaction book that is distributed across a network of blockchain computer systems.

A decentralized database that is managed by multiple participants is called Distributed Ledger Technology (DLT).

Blockchain is a distributed ledger technology in which transactions are recorded with a fixed cryptographic signature, called a hash.

This means that when a block in a circuit is replaced, it is damaged immediately. If hackers want to disrupt the blockchain system, they must modify every block in the chain of all distributed versions of the chain.

By adding blocks to the chain, blockchains like Bitcoin and Ethereum are constantly evolving, which greatly increases the security of the ledger.

Blockchain looks complicated, it sure can be, but the basic concept is actually very simple. Blockchain is a type of database. To understand blockchain, we first need to understand what a database actually is.

Information in the database is usually arranged in the form of tables to facilitate the search and filtering of certain information. What is the difference between people using spreadsheets instead of databases to store information?

Spreadsheets are designed for one person or a small group of people and are used to store and access a limited amount of information. In contrast, databases are designed to store large amounts of information, and any number of users can quickly and easily access, filter, and manipulate this information.

Large databases do this by storing data on servers consisting of powerful computers. These servers can be built with thousands of computers to have the processing power and storage capacity. While a spreadsheet or database can be accessed by any number of people, it is usually owned by a company and maintained by a dedicated person who has complete control over how it works.

So, what is the difference between blockchain and database?

Storage structure

The main difference between a regular database and a blockchain is the way the data is structured. Blockchain collects information in the form of groups (also called blocks) and these groups contain a collection of information. Blocks have a specific storage capacity and are connected to pre-filled blocks when filled, creating a data chain, called a “block chain”.

A database builds its data in tables, and a blockchain builds its data in blocks that are linked together. This is what makes all blockchain databases, but not all databases blockchain. Even with decentralized use, the system inherently creates an immutable chronology of data. When a block is filled, it attaches to the rock and becomes part of that timeline. Each block in the circuit is given an accurate timestamp when added to the circuit.