Some transactions can be a bit more complex. The types of events that the Bitcoin protocol allows to be recorded into that logfile are limited and simple-they are the transactions that we discussed earlier, transactions made either as payments between users, fees for use, or as rewards for people that help to make the network and protocol infrastructure work. So the Bitcoin protocol generates this logfile, called the Bitcoin blockchain, and it reflects all the events that happen on the Bitcoin network.
Ethereum tokens software#
In computer science, a logfile is just a record of events that occur as a piece of software ( i.e. We call it a ledger because that word is familiar to non-technical people, but really it is better described as a log or (even better) a logfile.
Ethereum tokens full#
It’s like a book full of entries that either create new units of bitcoin or describe a transfer of existing units from one public address (the closest thing Bitcoin has to a user account) to another. This is why the Bitcoin blockchain is commonly referred to as a ledger. For Bitcoin, that shared data is a list of bitcoin transactions. Recall that any blockchain technology does the following: it will allow connected computers to reach agreement over shared data. Unlike the Bitcoin protocol, the Ethereum protocol was explicitly designed to do more than just create and record transfers of the network’s native tokens. Ether is the name for the scarce token that emerges as a result of networked computers running the Ethereum protocol and it is also, like bitcoin: (1) a reward for participation, (2) a currency, and (3) a medium for paying fees. Ethereum is the name of a peer-to-peer computer network similar to but distinct from Bitcoin it’s also the name of a protocol or set of rules and procedures for computers that borrows some technologies and ideas from the Bitcoin protocol but also has a fair amount of novel, additional functionality. So, when it comes to a new network like Ethereum, things can become confusing. Many people interested in open blockchain networks started with Bitcoin and never had this distinction entirely spelled-out for them. miners) are rewarded with bitcoins, (2) users of the network can send bitcoins to other users as a payment medium, and (3) users can (and often must) pay fees in bitcoin in order to use the network. Those valuable tokens, bitcoins, in turn perform at least three functions: (1) people who dedicate computing resources to making the network work ( i.e. All of these are true statements, which means that Bitcoin, the word, is used to describe three different things: (1) a group of networked computers on the Internet, (2) a set of rules and procedures for passing data between computers, and (3) valuable tokens that exist as a consequence of these networked computers running that Bitcoin protocol software. Bitcoin is a provably scarce token that will have a positive value if there is demand for it. Bitcoin is a computer protocol for electronic cash. Protocols, Networks, Tokensīitcoin is a peer-to-peer network. Much of the confusion stems from the cryptocurrency community’s unfortunate habit of using the same name to describe multiple different things so, to start, we’ll try to disambiguate a few terms. How can one valuable digital item “run” or “be launched” on top of another valuable digital item? This backgrounder will answer that question, but first we need to cover a fair amount of background material. What does it mean to issue a token “on top of” Ethereum?Įven for those with an understanding of cryptocurrencies, Ethereum and other advanced open blockchain networks can be confusing, especially when people start talking about launching their new cryptocurrency or token on top of Ethereum.
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