FIN80016 Report: Crypto-Currencies, Ethereum, and Blockchain Analysis

This report provides a comprehensive overview of crypto-currencies, with a specific focus on Ethereum and its underlying blockchain technology. It defines crypto-currencies as digital forms of money built on blockchain, emphasizing their use of cryptography for secure transactions. The report details the role of crypto-currencies, particularly Ethereum, in a world where fiat money is influenced by governments, and highlights the advantages in countries with weak currencies. It explains blockchain technology, its properties (immutability, transparency, and decentralized control), and its application in Ethereum. The report further explores Ethereum's features, including smart contracts, decentralized autonomous organizations (DAOs), and its potential as a platform for other currencies. It also analyzes the advantages of the Ethereum network, such as numerous applications, data security, and corruption-free applications. The report also mentions drawbacks such as loopholes in smart contracts and security threats. Finally, it provides a competitor analysis, discusses future possibilities, and concludes that crypto-currencies are becoming an important means of business.

Crypto-Currencies
Ethereum

Title and Content Layout with List
• Define Crypto currencies and there associated Roles.
• Concept of Block-Chain.
• Ethereum as a Crypto-Currency.
• Lightning Network.

Crypto-Currencies
• A Crypto-Currency is a type of tradable or a digital form of money that is
built on the block-chain technology and is traded on an online basis.
Crypto-currencies generally use cryptography to verify and secure
transactions that are done by users.
• Crypto-currency as an digital currency is also referred as an key
internet-based medium of exchange that applies the principle of
cryptographically functions for the purpose of conducting and carrying
out various financial transactions.
• Crypto-currencies can be sent directly between two parties via the use
of private and public keys.

Price Trend of Bitcoin as a Crypto-Currency
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Bitcoin Price Trend

Role of Crypto-Currency
• The advancement in technology and innovation lead to a new type of currency
which was invented in the form of Crypto-Currency. This was developed
with the start of the Bit-coin in the year 2009, which was developed by a still
unknown creator known as Satashi Nakamoto (Narayanan, Felten, Miller and
Goldfeder 2016).
• Crypto-Currencies can serve as a key stable store of value in a world where the
value of fiat money is directly dependent actions of national governments,
both in the domestic economy as well as in the international currency
markets.
• Crypto-Currencies can be particularly beneficial to those countries that are
having a weak national currency associated and is undergoing through excess
inflation stage.

Block-Chain Technology
The block chain technology which was first used in the mining of bit-coin is the same
principle which is used in the Ethereum network. The block-chain is a set of ledger
consisting of all the entries of transaction in a set of block. Key properties of the
mentioned technology are as follows:
• They cannot be tampered with easily.
• They record the transaction between the two parties without the involvement of
any intermediary.
• The block is available with every user of the block chain technology.
• Since the block chain cannot be tampered, data or entries can only be included
thus making the block chain relatively permanent.
• Since there is no central authority controlling the block chain any data update is
made by a consensus vote of the block chain users.

Ethereum as a Crypto-Currency
• The Ethereum is an application on the internet where various coders can
write application and programmes which are safe and can run easily.
• The benefit of this platform is that it is safe from the loss of theft of data by
various other users. The currency which is used in the internet application is
called Ether. Thus the users of Ethereum can use this currency to transfer
payments and receive payments in the form of Ether all around the globe.
• The Currency is an alternative option for Bit-coin and has to be mined as
similar to Bit-coin by programmers around the globe.
• The Ethereum is a platform which is decentralized and the users of the
platform can be a part of an open financial system, as well as develop various
application which are of some digital value in the practical world (Fry and
Cheah 2016).

Background of Ethereum as a Crypto-Currency
• The Ethereum network was created by Vitalik Buterin and laid the foundation
for this network in the year 2013. There were total four co-founders for the
Ethereum network which got active in the year 2015.
• The Ethereum network also uses the block-chain technology which is used by
Bit-coin miners to mine bit-coin. However the miners use the block-chain
technology to mine Ether which is a crypto-currency used in the Ethereum
Network.
• Also another coin known as the gas is generated by using the Ethereum
Network which is used to pay transaction and other fees (Makarov and
Schoar 2019).

Background of Ethereum as a Crypto-Currency
• The Ethereum network was created by Vitalik Buterin and laid the foundation
for this network in the year 2013. There were total four co-founders for the
Ethereum network which got active in the year 2015.
• The Ethereum network also uses the block-chain technology which is used by
Bit-coin miners to mine bit-coin. However the miners use the block-chain
technology to mine Ether which is a crypto-currency used in the Ethereum
Network.
• Also another coin known as the gas is generated by using the Ethereum
Network which is used to pay transaction and other fees (Makarov and
Schoar 2019).

Ethereum as a Smart Contract
• This feature makes the use of Ethereum a relatively unique and
different from Bit-coin. The smart contract is a programme which is
written by coders which include various digital assets which have
some value.
• Thus the purchase and sale of anything which has a value can be
written as a programme and this programme will be running in the
background. This programme is not reversible and hence the concept
of block chain is preserved.
• These contracts are executed when certain conditions of the contract
are met and thus they are relatively free from any interference which
might affect it. All the block chain which are present are capable of
processing such programs or codes.

Reason for Creation of Ethereum
• Since the block chain are created to serve a specific purpose and for a
new application an entirely new block chain has to be created. Thus as
the Bit-coin is used as a payment platform between peers and any new
application has to be created using a different block chain.
• To overcome this problem the founder of Ethereum created the
network known as the Ethereum Virtual Machine.
• Since the creation of a different task would require the user to expand
the function of the existing block chain which would involve a lot of
money and time, thus Ethereum involves creation of potentially
thousands of application from the same block chain.

Decentralized Autonomous Organization
• The removal of centralized control on the operations of the
network is an important feature of the Ethereum Network. Thus
organization which are decentralized and operate without the
presence of a leader is created by using a code of program on
smart contracts.
• Thus the presence of intermediary is removed and the people can
own a Decentralized Autonomous Organization by providing
donations.
• These donations are known as tokens which give the donation
givers rights to vote. Thus the organization keeps on running until
it generates its survival cost as revenue and provides services
which are useful to its consumers.

Decentralized Autonomous Organization
• The removal of centralized control on the operations of the
network is an important feature of the Ethereum Network. Thus
organization which are decentralized and operate without the
presence of a leader is created by using a code of program on
smart contracts.
• Thus the presence of intermediary is removed and the people can
own a Decentralized Autonomous Organization by providing
donations.
• These donations are known as tokens which give the donation
givers rights to vote. Thus the organization keeps on running until
it generates its survival cost as revenue and provides services
which are useful to its consumers.

Platform For Other Currency
• The users of the platform can use the Ethereum Network to issue their
own currency in exchange for Ether, a native currency of the Ethereum
Network.
• The Standard ERC20 of the network allows the user to issue their own
currency or token in a fundraising strategy called the Initial Coin
Offering.
• The platform can be used to track and register the ownership of
digital assets which are scarce in nature. As many games are written
on the Ethereum Network and some become very popular, thus the
owner of the intellectual property can be tracked using this network
(Atzei, Bartoletti and Cimoli 2017).

Properties of Ethereum Network
The Ethereum network with its platform and the block chain principle
different from other crypto currency has the following benefits like:
• The network provides numerous number of operations to be written
on the same block chain.
• The data to the application cannot be changed or altered by any
unauthorized user, thus it protects the application and the data related
to the users of the application.
• The application are attached to the block chain if they get approved by
a vote by majority of the users, thus making the application corruption
free and free from alteration.
• The application and the network is coded with enhanced
cryptography principle, thus they are protected from cyber-attacks or
hacking attempts.

Drawbacks of the Network
• Although the Ethereum network has several properties which is
different from other currency networks. The Smart contract feature of
the network is subject to various loop holes, like if there is some fault
in the code or there is some inefficiency in the code it will be exploited
until and unless the consensus is reached to change the code.
• Also the code which are written by coders are humans any bugs or
malware in the code can pose a threat to the entire network and its
users. Thus it can lead to a severe security threat to the privacy and
benefits of multiple users around the globe.
• Also if the code are allowed to be altered by achieving a consensus
goes against the absence of a centralized authority principle of the
platform (Corbet, Lucey and Yarovaya 2018).

Price Trend of the Ethereum Stock
The Ethereum Stock trades at the exchange and has the following price
trend over the years of trading which is highlighted in the graph below:
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Price Trend

Price Trend of Bit-Coin
The competitor currency to the Ethereum Stock is the Bit-coin which is
the first crypto currency in the crypto currency universe. The monthly
price of the currency has been taken for the same period of the Ether
Currency and is presented in the table below:
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Price Trend

Competitor Analysis with Other currency
The Ethereum Network has the currency Ether which is used in the network by its users for
completing their transaction. Thus the competing currency to Ether is the QTUM which is a
platform network which has the best properties of both the bit-coin and the ethereum network. It
includes the desirable property of both the networks in its platform thus is desirable by many
developers to use it for their application. The return of both the Ethereum Network and the
QTUM is highlighted in the table below:
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ETH VS QTUM
ETH QTUM

Future Possibilities
• The network holds tremendous opportunities in the future as the decentralized
autonomous organization can have major impact on all the industry sectors around
the globe. This will lead to the creation of private, combined and public block chains
by majority of the company.
• Thus the future of using this technology in the business projects are immense with
the reduction of human interference and less manipulation of data in the block chain.
Thus this will lead to transparency and complete availability of information to the
general public.
• As the business can use private block chain for confidential information and
transaction. While the public block chain can be used for pooled data resources
which can be disclosed publicly and the combined block chain by the company to
share the necessary resources and infrastructure among the company (Vujičić,
Jagodić and Ranđić 2018).

Conclusion
It can be well concluded that crypto currency are the new means of doing business in
the near future. As in the past the currency has evolved from the past from the barter
system to the use of precious metals and copper. Also the use of paper currency for
doing business is slowly decreasing with the innovation in digital money. Thus, with the
creation of Bit coin and its use as payment between two peers started the age of crypto
currency used for transaction in the absence of intermediaries. Since Bit coin platform
can only be used for making payment and receiving payment innovation made the
possibility the creation of Ethereum.

References
Amani, S., Bégel, M., Bortin, M. and Staples, M., 2018, January. Towards verifying ethereum smart
contract bytecode in Isabelle/HOL. In Proceedings of the 7th ACM SIGPLAN International Conference
on Certified Programs and Proofs (pp. 66-77). ACM.
Atzei, N., Bartoletti, M. and Cimoli, T., 2016. A survey of attacks on Ethereum smart contracts. IACR
Cryptology ePrint Archive, 2016, p.1007.
Atzei, N., Bartoletti, M. and Cimoli, T., 2017, April. A survey of attacks on ethereum smart contracts
(sok). In International Conference on Principles of Security and Trust (pp. 164-186). Springer, Berlin,
Heidelberg.
Atzei, N., Bartoletti, M. and Cimoli, T., 2017, April. A survey of attacks on ethereum smart contracts
(sok). In International Conference on Principles of Security and Trust (pp. 164-186). Springer, Berlin,
Heidelberg.
Bogner, A., Chanson, M. and Meeuw, A., 2016, November. A decentralised sharing app running a smart
contract on the ethereum blockchain. In Proceedings of the 6th International Conference on the
Internet of Things (pp. 177-178). ACM.
Corbet, S., Lucey, B. and Yarovaya, L., 2018. Datestamping the Bitcoin and Ethereum bubbles. Finance
Research Letters, 26, pp.81-88.

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