Ethereum Yellow Paper

A guide to understanding the Ethereum Yellow Paper

Ethereum is a global, decentralized platform for money and new kinds of applications in a public, open source blockchain-based distributed computing platform. Ethereum is known as a peer-to-peer network of virtual machines that any developer can use to run distributed applications (Dapps). For example, a developer writes code that can control money, and build applications accessible anywhere in the world.

A careful consideration needs to be paid to the way the Bitcoin versus Ethereum mining works.

At the core, Bitcoin and Ethereum are part of the blockchain technology family, which are made of distributed ledgers and cryptography. However, the key differences are observed best for their purposes when it comes to their consensus algorithm in the technical sense as they really have their own distinct consensus algorithm. Therefore, verifying the validity of the information being added to the ledger are different.

For example, Ethereum is Turning complete and Bitcoin is a stack based language. Other differences include the block time for Bitcoin and Ethereum differs and their basic builds.

In a nutshell, Bitcoin mining is based on the so-called Proof of Work (PoW) algorithm whereas Ethereum mining is based on another algorithm called Proof of Stake (PoS).

Though, both Bitcoin and Ethereum, have all the transactions lined up in a mempool.

Miners have the opportunity to do the transactions and put them inside the blocks that they have mined. The moment the transaction is put inside the block, it gets fulfilled. Since miners are performing such a critical task, it is important to incentivize them correctly. However, the way Ethereum and Bitcoin differ in terms of transactions. Bitcoin miners charge some transaction fees for each and all transactions. If you want your transactions to process faster, then you can attach larger fees to your transaction to incentivize miners. Ethereum, on the other hand, doesn’t use transaction fees, but a gas system. Gas is a unit that measures the amount of computational effort that it will take to execute certain operations.

Overall, Bitcoin and Ethereum are both extremely important and valuable projects in the blockchain community. Even if you are not a serious crypto investor/trader, buying BTC or ETH tokens will bring immense value to the cryptocurrency community.

Disclaimer: The views expressed by the author above do not necessarily represent the views of the Ethereum Foundation.