What is Ethereum and how is it different from Bitcoin?

Ethereum is a public blockchain platform with programmable transaction functionality. It provides a decentralized virtual machine that can execute peer-to-peer contracts using a crypto asset called Ether (unofficial code ETH).

Ethereum was initially proposed by Vitalik Buterin in late 2013, and the genesis block, marking the live release of the Ethereum project, occurred on 30 July 2015. The Ethereum software project is advanced by a Swiss company, Ethereum Switzerland GmbH (EthSuisse)and a non-profit foundation, the Ethereum Foundation.

Ethereum differs from Bitcoin in 7 main ways:

1. In Ethereum the block time is set to twelve seconds compared to Bitcoins 10 minutes. This allows for faster transaction times. Ethereum does this by using the Ghost protocol.

2. Ethereum has a slightly different economic model than Bitcoin – Bitcoin block rewards halve every 4 years whilst Ethereum releases the same amount of Ether each year ad infinitum.

3. Ethereum has a different method for costing transactions depending on their computational complexity, bandwidth use and storage needs. Bitcoin transactions compete equally with each other. This is called Gas in Ethereum and is limited per block whilst in Bitcoin it is limited by the block size.

4. Ethereum has its own Turing complete internal code... a Turing complete code means that given enough computing power and enough time... anything can be calculated. With Bitcoin there is not this form of flexibility.

5. Ethereum was crowd funded whilst Bitcoin was released and early miners own most of the coins that will ever be mined. With Ethereum 50% of the coins will be owned by miners in year five.

6. Ethereum discourages centralised pool mining through its Ghost protocol rewarding stale blocks. There is no advantage to being in a pool in terms of block propagation.

7. Ethereum uses a memory hard hashing algorithm called Ethash that mitigates against the use of ASICS, and encourages decentralised mining by individuals using their GPU’s.

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