Bitcoin vs Ethereum:

Introduction:
Both follows the rules of cryptography and distributed ledgers but have slightly difference in their
technical approach. Programming language used by the Ethereum is turning complete while bitcoin uses
a stack-based language. Ethereum transaction is confirmed in a second while bitcoin takes minute to
confirm the transaction process. Algorithm used by Ethereum is ethash and bitcoin uses secure hash
algorithm. Purpose of both Ethereum and bitcoin is different. Bitcoin is created as an alternative to regular
money and is thus a medium of payment transaction while Ethereum is used to develop platform to create
peer to peer contracts and application on its own currency. Ether as a digital currency used to monetized
the work of Ethereum to able developer to build and run distributed application. On popularity-based
ether is more popular than all other cryptocurrencies and mostly used in the rising market. Surpassing
Litecoin and ripples ether is near to reach the level of bitcoin. Bitcoin and ether both use the same
blockchain technology with different intention.

Ethereum architecture:
Ethereum use blockchain technology for building decentralized application. Security and efficiency of
small application can be achieved through Ethereum. Ethereum use a blockchain technology having
Turing-complete programming language which enables each application to write their own smart
contracts and decentralized application. Sole purpose of the Ethereum is based on simplicity, universality,
modularity, agility and Non-discrimination. Ethereum account is made up of object called account.
Account have 20-bytes address and state transitions direct transfer of the value and information. Accounts
consists of four fields.

Nonce

Used for counting purpose and used to count the transaction process. Each transaction can be processed
only once.

ether balance
it is the current balance of the account using Ethereum

contract code

it is the code of the account using ether

externally owned accounts

external owned accounts are controlled by the private keys.

contract accounts

contracts accounts are controlled by the contract code.

Externally owned account does not need any code for transaction anyone can send message directly.
While in contracts account every time, message receives needs a code to activate and allow to read the
internal storage. (1)

Message and transaction:

Message should include the sender signature and recipient address. Amount of ether should also be
identified and option data field.

STARTGAS

it shows the maximum number of computational steps for transaction execution.

GASPRICE

Shows the price of each computational step from sender. (1)

Code Execution:
Code of the Ethereum is written in bytecode language also called EVM code. Code execution have infinite
loop that carrying instruction and operation at the current counter and then incrementing the counter by
one each time the process is completed until it reaches to stop instruction. Mainly consists of three main
parts.(1)

Stack:

Values can be pushed and popped to the last in first out counter.
Memory:

Infinite expandable byte array

Storage:

It persists for a longer term even after completion of computational process.

Architecture of Ethereum pic from.

Architecture of Ethereum.
Features of Ethereum:
First Ethereum was launched in 2015 and it is one of the biggest open-source decentralized that support
smart contracts and decentralized application.

Mining Ethereum:
Ethereum miners earns ether. It provides medium and cryptocurrency services for developer to pay for
transaction fee on Ethereum network. Ethereum network miners’ stores on nodes the state of the most
recent smart contracts on blockchain for a validation transaction. Node has to agree on every action with
user. (2)

Smart contracts:
It is secure method free of conflicts and leaves out intermediate phase. It can be applied to any scenario
where there is a transaction of any value. When the built-in conditions are met the code execute and carry
out the delivery. Ethereum allow users to build their own smart contract using Turing-complete language.
With the help of smart contracts one can enjoy safety, accuracy, trust, backup, autonomy.

Decentralized apps:
Users often don’t have control over data they release onto the web. Dapps works as to remove the
middleman. Its connects the source and the user directly. In one kind of Dapp the client and a source have
to settle a smart contract with each other by exchanging ether. In second type of Dapp the exchange of
information outside the blockchain networks. Last type of DAPP shows the voting administration. (2)

Challenges:
Cumbersomeness occur in blockchain technology when all nodes maintain full copy of the database.
Thousands of nodes have maintained the same make the network unable to run properly.

On the other hand, the cloud computing allows the multiple user to interact with the single database
without allowing other nodes to retain the same copy with them.

Constant updating and upgrading processes are necessary for nodes regarding current states of the
network.

Time consuming when the network is big enough or globally spread due to acknowledgement of data.

Thus, it makes Ethereum less efficient and slow.

Bitcoin supported token system:
Bitcoin is a digital currency used for trading often. Bitcoin token system has many applications and one of
the major applications is software license on the basis of token system supported by bitcoin.

Software license:
Bitcoin offers token system to get licensed for software. IBM first used this technology in 2012. Traditional
token system is used once in a life time while in case of token license system it is reused the same license
for different product when needed. Many users can use the same token for the same software in a limited
time frame.

require a predefined amount of tokens

consume a predefined number of tokens.

This type of license system is very useful for software vendors with wide portfolio where individual
applications are difficult to predict. Token license is very economical and user friendly. (3)

Concurrent Token Licensing:

Software vendors instead of creating a license key with the product they check the number of tokens with
user and then estimate the price of the product. Particular number of tokens are required to run
application or software. (4)

Consumptive Token Licensing:

Product runs and consumes certain number of tokens and when all tokens are once consumed there are
no more tokens available for user. tokens are then destroyed or go back to the service providers. This type
of token is used for transactions-based software. (4)

Block square is a commercial real estate property buy and sale these tokens. Network of block square
provide platform for token property management and communication. Block square further consists of 5
major groups.

(1) certified partners, (2) property management companies, (3) property holding companies, (4) Prop
Token Validators and (5) end users. (5)
 Software token license diagram.

Decentralized file storage:

Decentralization is used for file storage used for better web. It makes the web robust and resilient.
Information on internet is often kept on the basis of location. Traced by URL which further contains IP
address of the source. This way is no less efficient because the location once contain correct address at
the past are no longer available at that location. This is not efficient but to try another method which
actually shows what is to be searched instead of where it is e.g. fingerprint. So that data can be stored
and served from anywhere. To create such kind of content-based addresses cryptography developed a
particular content called hash as the unique identifier. Through IFPS exchange of data takes place between
content-based addresses. In IFPS fingerprint of file is its address. This will help in identifying the direct
content of the file instead of its address. In such process the actual file can be retrieved from anywhere it
is located. File can be retrieved from anywhere on the network available.it is peer to peer exchanging data
system but with high quality of improvement. IFPS helps the web to work in a local network disconnects
from the main source. Examples are working of Wikipedia in village with poor connectivity of network.
This process strengthens our digital information and making the data resilient to failures in the underlying
internet and securing important data by using cryptography. Data can be saved for years with yourselves
and other people to whom it was shared. (6)
File coin is used for storage of data. File coin provide us a way of to pay each for storing data. It is
decentralized file storage network and protocol token. It acts like Airbnb of storage data.

Differences and similarities between Ethereum and Bitcoin:

Differences:
 currency issuances. Bitcoin produce 12.5 new bitcoins every 10 minutes while Ethereum 3 in an
hour
 bitcoin has a scripting language while Ethereum has general purpose language called Turing-
complete.
 Ethereum assign a cost called gas while bitcoin transaction cost based on file size
 Bitcoin block size is 1MB while Ethereum don’t have such a restriction bitcoin has 4 transaction
per second while Ethereum roughly do 15.
 Ethereum smart contract has its own code and thus it has 2 account types. One to hold user funds
and other is to hold computer code.

Similarities:

 Both blockchain system

 have their own peer to peer network
 token required for access
 both are open source software
 Ethereum is a descendent of bitcoin

Conclusion:
The topic mainly discussed the blockchain technology and having two of the different approaches one is
bitcoin and other one is Ethereum. Programming language used by the Ethereum is turning complete
while bitcoin uses a stack-based language. Architecture and function of the Ethereum are discussed in the
above section and its basic functionality. Its features like mining, decentralization of application and smart
contracts have been discussed earlier. Issues and challenges faced by the Ethereum was shown earlier.
Bitcoin application like token and decentralization application are discussed in detail and its working
procedures are there in detail. There are some similarities and differences which was also discussed.

Refernces:

[1]"Ethereum/wiki", GitHub. [Online]. Available: https://github.com/ethereum/wiki/wiki/White-Paper.

[2]"Looking Beyond Bitcoin: The Key Features of Ethereum That Will Make it the Big Stack Bully of the…",
Medium, 2018. [Online]. Available: https://medium.com/@johannpals/looking-beyond-bitcoin-the-key-
features-of-ethereum-that-will-make-it-the-big-stack-bully-of-the-4b52f39394d3. [Accessed: 12- Jan-
2018].

[3]"Blockchain: Token as a License (TaaL) – Hacker Noon", Hacker Noon, 2017. [Online]. Available:
https://hackernoon.com/blockchain-token-as-a-license-taal-ba5d173e4ad6. [Accessed: 25- Nov- 2017].

[4]C. Wendt, "What the Heck is a Token Software License Model? | Software Monetization", Software
Monetization, 2011. [Online]. Available: https://blogs.flexera.com/ecm/2011/06/what-the-heck-is-a-
token-software-license-model/. [Accessed: 21- Jun- 2011].

[5]B. licensing?, "Blockchain as a solution for software licensing?", Bitcoin Stack Exchange. [Online].
Available: https://bitcoin.stackexchange.com/questions/60480/blockchain-as-a-solution-for-software-
licensing.

[6]"Why is decentralized and distributed file storage critical for a better web? | Coin Center", Coin Center.
[Online]. Available: https://coincenter.org/entry/why-is-decentralized-and-distributed-file-storage-
critical-for-a-better-web.

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