Ethereum is an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications.
Like Bitcoin, Ethereum is a distributed public blockchain network. Although there are some significant technical differences between the two, the most important distinction to note is that Bitcoin and Ethereum differ substantially in purpose and capability. Bitcoin offers one particular application of blockchain technology, a peer to peer electronic cash system that enables online Bitcoin payments. While the Bitcoin blockchain is used to track ownership of digital currency (bitcoins), the Ethereum blockchain focuses on running the programming code of any decentralized application.
In the Ethereum blockchain, instead of mining for bitcoin, miners work to earn Ether, a type of crypto token that fuels the network. Beyond a tradeable cryptocurrency, Ether is also used by application developers to pay for transaction fees and services on the Ethereum network.
The thing that makes Ethereum special, as opposed to other cryptocurrency that uses blockchain technology, is that you can actually execute code on the blockchain in this same distributed way. So now, instead of just using the blockchain as a glorified ledger, you can do something like specify conditions under which a person will be paid, and once those conditions are met the money will automatically go to the person without any outside interference. People call these chunks of code ‘smart contracts’.
Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network.Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman.
Because the rules are so secure and easy to follow, even simple devices like phones or locks can be programmed to obey what everyone has agreed to. And the way of doing this is strong enough that attackers or malfunctioning computers can’t break the rules that have been set up. So people can feel secure using Ethereum for billions of dollars, controlling ownership of their cars and houses, or other valuable things. But if there’s a situation where you want to keep track of something, and it would be a problem if someone could hack or manipulate the results, it’s a good bet that Ethereum can help! The results will look like regular websites or mobile apps, but will be completely uncheatable. As long as it’s built right, not even the person who makes the app will have the power to break the rules they agreed to.
Proof of work :
Proof of work is a core component in the verification and generation process (mining) of Bitcoin and other alternative cryptocurrencies. It functions as a process to show that work or effort has been expended to achieve a desired set of data.Bitcoin and other cryptocurrency uses the Hash Cash function as its proof of work. Producing this proof of work involves finding valid solutions to complex mathematical problems through a series of random trial and error (brute-force) attempts using computational power.Proof-of-Work happens through miners trying to solve exceptionally difficult math problems. Finding a solution is basically a guessing game, but checking if a solution is correct is easy.
The fact that you need a serious amount of computing power, more than the average person could afford, or would even be able to work with, means the mining community is getting smaller and more exclusive. This goes against the idea of decentralization, and could potentially lead to a 51% attack. A 51% attack is when a miner, or more likely a mining pool, controls 51% of the network’s computational power. With that ability, they could invalidate valid transactions and double spend funds.That’s where PoS could really help.
Proof of Stake:
PoS happens by a miner putting up a stake, or locking up an amount of their coins, to verify a block of transactions. The cryptographic calculations in PoS are much simpler for computers to solve: you only need to prove you own a certain percentage of all coins available in a given currency. For example, if you somehow owned 2% of all Ether (ETH), you’d be able to mine 2% of all transactions across Ethereum.
Even if someone owned 51% of a digital currency, it would not be in their interest to attack something in which they have a majority share. According to game theory, those with a larger stake in a cryptocurrency should want to maintain a secure network. Any attack would only serve to destabilize the digital currency, diminishing the value of their stake.PoS would be a more fair system than PoW, as technically anyone could become a miner.
PoS offers a linear scale regarding the percentage of blocks a miner could confirm, since it’s based on that person’s stake in the cryptocurrency.
Tutorial on Ether Mining:
You can refer the below videos to gain a knowledge on ethermining.
- How to Mine Ether on Your PC
- How To Mine Ethereum with (Nvidia or AMD) in Windows 10