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Bitcoin's Potential for Going Mainstream

Contents

Abstract.

Introduction.

Bitcoin vs. Ethereum: an overview..

Bitcoin Basics.

Ethereum Basics.

Key Differences.

Strengths of cryptocurrencies.

Opportunities of cryptocurrencies.

Two similar technologies.

Electronic payment technologies.

Comparison and contrast of two technologies.

Comparison chart

Recommendation and conclusion.

References.

Abstract on Block Chain Based Cryptocurrencies

The blockchain technology is the new method in the field of information technology. The first implementation of blockchain technology is bitcoin and it gained a lot of popularity and a lot of attention. Along with Ethereum, the implementation of the blockchain also concentrates on smart contracts, these presents the core of the modern development of cryptocurrency. 

Cryptocurrency is a technology that developed eight years before and it is an encrypted, network of peer to peer, it is used to facilitate digital barter. Bitcoin is a very popular cryptocurrency and it was the first cryptocurrency that became so famous and popular. The currency paves the way as an unruly technology to long-standing and it also unchanged the system of payments that have been going on for a long time. Conversely, the cryptocurrency can not replace the conventional fiat currency but it changed the manner of internet-connected markets interact with one another at a global level. It clears all the barriers that come in the way of exchange rates and national currencies. Technology is changing and becoming advance at a very rapid pace and the success of this particular technology is solely dedicated by the market on which it wants to enhance. The technology of cryptocurrencies helps in revolutionizing the markets of digital trade by making a free-flowing system of trading without any charges. This paper review how bitcoin is different from any other cryptocurrencies such as Ethereum, Zcash, and many more.

Introduction to Block Chain Based Cryptocurrencies

it is bitcoin and the blockchain technology that started to give the shape and describe the new aspects of the information technology and the field of computer science. The requirement for decentralized money has been utilized more as a theoretical concept instead of a practical concept, but in the last decade, it becomes very feasible or practical and all thanks go to the very popular study of Satoshi Nakamoto in 2008, that gives the overview about the blockchain technology and bitcoin. There were some disputes and controversies about the study of Nakamoto’s identity but one thing is true that he got something very revolutionary to the globe and it is the users who have to decide if they want to revolutionize the world or not and if they want to be the part of it or not. Some people talk about its opportunity and strength and some people wanted to develop their applications for resolving the issues that developed in the society, others will invest the money in those ideas or they simply trade with the ups and downs of the values of cryptocurrencies in the market. This paper will talk about the blockchain and cryptocurrencies. First, it described the bitcoin and its core function then the paper describes the Ethereum. These two cryptocurrencies are very popular that hold the majority of the market capitalization (Bearman, 2015). 

Bitcoin vs. Ethereum: An Overview

The cryptocurrency of the Ethereum network is Ether which is also known as ETH. This is the second most famous digital currency after BTC which is commonly known as Bitcoin. ETH is the second-largest cryptocurrency according to the market cap and comparisons among BTC and ETH are obvious. 

ETH and BTC are common and the same in various ways. But the currency can trade through online exchanged and these two can store in many kinds of wallets that are cryptocurrency wallets. BTC and ETH, both digital currencies are decentralized, it means both the tokens can not be regulated by or issued by the central bank or some other higher authority. ETC and BTC both use the technology which is distributed ledger and called at blockchain. Nevertheless, there are various other important differences between the two most famous digital currencies according to the market cap. The next section describes the differences and similarities between BTC and ETH (Reuters, 2016). 

Bitcoin Basics

BTC was introduced in the year 2009 in January. It was launched by a mysterious man named Santoshi Nakamoto, he set this novel idea on the white paper. Bitcoin provides the promise to be an online or digital currency that can be secured without any higher authority, which means no bank or government authority regulates bitcoin. Bitcoins do not present physically, they are only secured and only associated with the cryptographically and very secure public ledger. Even though bitcoin was not the first digital currency but this was the first famous and popular digital currency. It was the most successful cryptocurrency to date (Saito, 2016). 

Since 2009, the concept of digital and virtual currency gained a lot of acceptance and gained a lot of popularity among government bodies and other higher regulators. Cryptocurrencies are continuously scrutinized and it is debated till the time it developed but it has managed to carve out a niche for all the digital currencies. It is not a formally recognized way of payment but somehow its manages to pull itself in a much better way. 

Ethereum Basics

The technology of the blockchain is being used to generate an application that can go beyond just making the digital currency. Ethereum was introduced in the year 2015 and it is the largest and well-known established currency, it is the open landed and decentralized platform. 

It is the ETH that introduces the smart contractor’s deployment and various other applications that are decentralized that have to be created and execute without any fraud, interference, downtime, or control from the third party. ETH comes with its programming language that can run on the blockchain, it also enables the developers to create and run the applications on a distributed environment (Team, 2016).

The possible applications of ETH are of wide range and they can be powered by the native tokens of cryptography which is commonly known as ether and generally abbreviated as ETH. In the year 2014, Ethereum introduced and it is the presale of ether, it gets an overwhelming welcome and response from the people. Ether works as a fuel for all the running commands on the platform of Ethereum and it is used by the creators to prepare and run different applications on different platforms. 

The two main purposes of Ethereum are, it can be traded as the digital currency in different exchanges in the same way as other cryptocurrencies. As per Ethereum, people across the globe can use ETH to generate payments and they can store the value. 

Key Differences

The bitcoin and the Ethereum are the networks that are powered on the principle of cryptography and distributed ledger, these two are lots of differences in various ways. For instance, the transaction in the Ethereum network can include the code which is executable while data which is affixed to bitcoin are commonly only for the notes. The other difference is block time; the Ethereum transaction time is very much fast as compared to the bitcoin. Bitcoin takes time in minutes while Ethereum confirms the transaction in seconds. The algorithm on which Ethereum runs is Ethash and the algorithm in which Bitcoin runs is SHA-256. 

The most important thing that the networks of both, the Ethereum and the bitcoin, work on different networks if check their overall objectives. Bitcoin was introduced as a substitute to the national currency and it became a medium of exchange and also the value can be stored, while the Ethereum was introduced as a platform to provide immutable, applications, and programmatic contracts with the help of its currency.

Bitcoin and ETH are digital currencies but the primary purpose of both is different. The main purpose of ether is not to work as a substitute for the monetary system but instead of help in monetizing the functions of the Ethereum with the help of smart contracts and daap which is known as a decentralized application platform. Nevertheless, ether’s popularity has pushed it into the field of competition and all the cryptocurrencies want to compete with Ether especially from the trader’s perspective. Since 2015, Ether is working behind the Bitcoin even though the ranking of it is in top according to market cap. However, it is important to keep in head that the ecosystem of ether is much smaller than the ecosystem of Bitcoin. As of January 2020, the market cap of ether was under $16 billion and the market cap of Bitcoin was nearly 10 times higher than ether which is nearly $147 billion (Price, 2016). 

Strengths of Cryptocurrencies

The strength of the bitcoin lies in its design as it is a very viable currency and this is reasoning its status has elevated over the years. The returns of the bitcoin are very diminishing as they have to mine and it returns after every four years till the time it reached the maximum bitcoin. This is the main aspect of bitcoin and it is very important for the value of Bitcoin. The amounts of Bitcoin are very limited, so the price of the bitcoin can never be inflated like the conventional fiat money. The bitcoin and all the other cryptocurrencies are protected from getting inflated as they don come under the regulatory authorities and the number of cryptocurrencies is limited. The price of all the commodities fluctuates across the globe but the value of cryptocurrencies remains the same and it does not get inflated. As of last year, bitcoin is the most valued currency in the world. If the flow of the cryptocurrencies will increase then it will help the vendors to accept more to meet the demands of consumers. So this will be a cyclical flow. If more vendors will start accepting the technology of cryptocurrency then more users will start capitalizing its benefits (Patterson, 2015). 

This is no small feat in a global economy with powerhouses like China and the United States running the landscape. An increase in Bitcoin flow will motivate vendor acceptance to accommodate customer needs. Theoretically, this

Opportunities of Cryptocurrencies

The nature of cryptocurrency is very natural and it helps in filling the gaps in the existing financial technologies and it also helps in solving the conventional problems of banking by offering a peer to peer system. Another peer to peer system is Napster that helps in transforming the music industry by not involving the middle man. The transformative technologies start its transformation to solve the specific problem within the industry. For example, cryptocurrencies are very helpful in solving the problems of unbanked customers. A large number of people in developing countries are unbanked. In Latin America, 360 million out of 600 million people don’t have any access to the bank. Cryptocurrencies are very useful and it allows individuals to share the currency without any involvement of a third party even though the party is very trusted such as a bank. 

The ad-hoc capability is there in the cryptocurrencies networking and two users can trade with one another only by scanning the given QR codes and it helps in displaying the prints on the user’s phone by the application. This is a unique way to address the problem that has been presented for a very long time. This is the reason the user base of these digital currencies increases and the demand for a better network of cryptocurrency is also increasing and various applications come forward. There is a large market for possible developers to create these kinds of applications as this can influence industries that depend on third party systems (King, 2013). 

Two Similar Technologies

The electronic trade increases the utilization of new technologies and this is the reason the demand for new electronic payment approaches increased. This was started in the mid-year of the 1990s as the information revolutionize, the prices of computers decline, and the price of networking also decline. Cohen defined a term that is “change in the geography of money”. This term means the outcome of electronic payment in business and the use of connectivity as a new monetary market. As this information emerges, various methods of payment also some forward which is all ecteronic such as electronic cash, e-currency, e-bag, digital money, digital currency, or digital cash. The purpose of these electronic instruments is to improve the efficiency of the conventional payment method. 

All the business needs to do a transaction, it does not matter the size of the organization, businesses have to do transactions on regular basis, on monthly basis. An organization needs to provide the cash all the time, the company needs a technique through which the money can deduct automatically, for example, if a company wants to pay the salary to the employees then payment deduct automatically from the company’s account and it is credited to the accounts of employees. Various technologies work on a similar line. This helps in saving time and also helps in avoiding any kind of dispute related to money. The payment can be made electronically, there are various methods available for making the payment electronically that almost all the originations use such as RTGS, NEFT, and various others (Kasiyanto, 2016). 

Electronic Payment Technologies

The e-payment approach exists since the 1960s when Electronic fund transfer developed. It became more applicable and more sophisticated as the number of countries grows. Electronic fund transfer is also known as EFT. EFT is the application of telecommunication and computer technology in the field of making payments that too electronically. This method of transfer the funds used by banks and all the other financial agencies to share and transfer the amount of money on an international level and national level. The main base of this technology is that money moves from one network to another network and it is a substitute for cash. In this manner, the time takes in transferring the money reduced and the cost of the transaction is also got reduced. The use of EFT has increased significantly as the ATMs develop and people start accepting the ATM use that helps in transferring the money at the point of sale (ETPOS). EFT is the first stage of making the transactions electronically.

As the network technology developed in the year 1980, the cost of information technology and data processing was reduced and the transfer of money that happened electronically become more useful as users start accepting credit card debit cards. After their appearance, the method of transferring money electronically became more popular. The technology which is encryption technology also played an important and primary role in making the card payment successful. This innovation was considered the second level of transaction in the form of electronics. 

The acceptance and emergence of car payments have various negative effects and consequences for the conventional manner of payment. Many countries start using the electronic method instead of using paper instruments like cash, demand draft, and checks, and the use of paper instruments is reduced (Desjardins, 2016). 

Comparison and Contrast of Two Technologies

As the technology becomes very advance and modern, the transfer system of digital money also start gaining a lot of popularity as the speed of the ecteronic payment is very good, these payments are user friendly, if the person is not very tech-savvy then also can handle the online payment method, money is very safe and this method is also very convenient. The funds can be shared from one bank to another bank, one organization to another organization with the help of a computer system. In addition to this, the system also provides instant account details and information and also provides quick data about all kinds of rates like foreign exchange rates. Two technologies are NEFT and RTGS that help in almost all the industries and all the sectors. These are two electronic media that helps in transferring the money from one entity to another. NEFT is used to deal with the smaller size of the transaction while RTGS help in handling a large number of transactions (Price, 2016). 

The two electronic methods provide transfer of funds that is inter and intra bank, within the country and across the country. NEFT is a national electronic Fund Transfer and RTGS is Real Time Gross Settlement. The transfer of funds in NEFT is based on real near time and the transfer of funds in RTGS is continuous and immediate. 

Comparison Chart

Basis of comparison

NEFT

RTGS

Meaning

It is an online transfer of money system that helps in making the payment in real near time basis.

In this particular method, the transfer take place at the same time when the transaction held.

Established

In 2005

In 2004

Basis

DNS which stands for deferred Net settlement

One to one

The cycle of settlement

There are 12 settlement in a working day

Constant settlement

Processing

Slow as comparison to RTGS

Fast

Appropriate for

It is appropriate for smaller transaction value

It is appropriate to high transaction value

Operates on

Only hourly batch

Real time

Recommendation and Conclusion on Block Chain Based Cryptocurrencies

The two most known and important cryptocurrencies are bitcoin and Ethereum. These two are based on the technology of blockchain and these two are intended to encourage as a mechanism of trust in peer to peer networks. This is based on majority consensus and that of the nodes. In this paper, the difference between the two, Bitcoin and Ethereum was presented. Also, the paper represented the basics of Bitcoin and Ethereum. The paper also reviewed the initial phases of digital technologies and how to implement these technologies are initial phases. The paper also showed the foundation of digital and blockchain technology and how the implementation of digital technology is the most promising. In the past couple of years, there has been a rapid development in various cryptocurrencies, consensus agreement, and hashing algorithms in the networks. Out of all, these are some cryptocurrencies that generate in past few years such as Ripple, Cardano, NEO, Stellar, Litecoin, EOS, IOTA, Dash, Monero, TRON, Qtum, Lisk, Tether, Stratis, Zcash, Steem, Siacoin, Verge, Electroneum, Nxt, Dogecoin, and many more. As of now, there are 1498 types of cryptocurrency is present and out of all 8,250 is in the market.

References for Block Chain Based Cryptocurrencies

Bearman, J. (2015, May). The Untold Story of Silk Road, Pt. 1. Retrieved from Wired.com Website: https://www.wired.com/2015/04/silk-road-1/

Desjardins, J. (2016, January 5). It‟s Official: Bitcoin was the Top Performing Currency of 2015. Retrieved from The Money Project Website: http://money.visualcapitalist.com/its-official-bitcoin-was-the-topperforming-currency-of-2015/

Kasiyanto, S. (2016). Bitcoin's potential for going mainstream. Journal Of Payments Strategy & Systems, 10(1), 28-39.

King, R. S. (2013, December 17). By reading this article, you‟re mining bitcoins. Retrieved from Quartz.com Website: http://qz.com/154877/by-reading-this-page-you-are-mining-bitcoins/

Patterson, J. (2015, August 04). Bitcoin: A New Global Economy. Retrieved from Bitpay Website: https://blog.bitpay.com/bitcoin-a-new-global-economy/

Price, R. (2016, June 17). Digital currency Ethereum is cratering because of a $50 million hack. Retrieved from Business Insider Website: http://www.businessinsider.com/dao-hacked-ethereum-crashing-in-value-tensof-millions-allegedly-stolen-2016-6

Reuters. (2016, July 6). Two-Year High on Gold Prices Fueled by Brexit-Spooked Investors. Retrieved from Fortune.com Website: http://fortune.com/2016/07/06/brexit-gold-prices/

Saito, M. (2016, February 18). Exclusive: Amazon expanding deliveries by its 'on-demand' drivers. Retrieved from Reuters Website: http://www.reuters.com/article/us-amazon-com-logistics-flex-idUSKCN0VR00O

Team, B. (2016, January 20). Understanding Bitcoin's Growth in 2015. Retrieved from Bitpay Website: https://blog.bitpay.com/understanding-bitcoins-growth-in-2015/

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