Introduction To Ethereum Blockchain
What Is Ethereum
For beginners trying to come into the blockchain ecosystem can be challenging because the blocking technology itself is a combination of multiple disciplines into one such as cryptography, economics, distributed systems, peer to peer networks making the learning curve very steep. Ethereum makes learning blockchain technology easier abstracting away the complexity of blockchain technology.
If you ask an average person out there what Ethereum is you are most likely to hear “It’s a cryptocurrency worth thousands of dollars and I wish I bought it earlier”. Although this is partly correct it would be very wrong to describe the whole of Ethereum by just a small portion of it. In the simplest form, Ethereum is essentially a decentralized computer you can program to perform various tasks, and all its activities are recorded on a public ledger for anyone to see. The system employs a blockchain to harmonize and record alterations to its state, in addition to utilizing a digital currency known as ether to monitor and limit the expenses associated with the execution of resources.
In comparison to other blockchains such as bitcoin Ethereum also shares peer to peer network to connect participants, it uses a proof of work consensus algorithm (a means by which decisions are being made on the blockchain) and also fundamental building blocks such as hashes, digital signature and digital currency ether. With all these similarities, it is strikingly different from Bitcoin.
Unlike bitcoin which is primarily a digital currency that is decentralized and secure, ether the digital currency of Ethereum is intended as a utility currency to pay for the use of the Ethereum platform as the world computer that is capable of carrying out complete programs.
The bitcoin blockchain keeps track of the ownership of its cryptocurrency and reaches an agreement on who owns what and as transactions occur on the bitcoin blockchain it changes ownership of these cryptocurrencies and everyone reaches these agreements together. Ethereum on the other hand doesn’t just keep track of the ownership of its cryptocurrency, It’s like a global data store that can hold any kind of information in a structured way. This data store works like your computer’s RAM, storing values (data) with specific labels (keys). Ethereum keeps a record of how this data changes over time using its blockchain. It can also run programs and store the results. Unlike regular computers, Ethereum’s state changes are controlled by a consensus process, and the data is shared globally.
Components of Ethereum
- P2P network: Ethereum’s main network is the primary and most widely used Ethereum network, where real transactions and smart contracts are executed. It is also known as the Ethereum Mainnet. The Ethereum Main Network consists of a vast number of nodes, each of which participates in processing and validating transactions. Ethereum nodes communicate with each other over the Internet using TCP Port 30303. TCP (Transmission Control Protocol) is one of the core protocols used on the Internet. Port 30303 is designated for Ethereum’s P2P network communication. Nodes on the Ethereum network use this port to connect and exchange data, including transaction information, blocks, and other network-related data. The Ethereum P2P network operates using a specific communication protocol called ÐΞVp2p. This protocol defines the rules and conventions for how Ethereum nodes interact with each other. It ensures that nodes can discover and connect to other nodes on the network, exchange Ethereum-related data, and synchronize the blockchain.
- Consensus Rules and Economic Security: These rules are fundamental to the functioning of any blockchain network. They ensure that all nodes on the network agree on the order and validity of transactions, which is crucial for maintaining integrity. Ethereum uses a proof-of-stake-based consensus mechanism where selected validators create new blocks and validate transactions based on the amount of cryptocurrency they “stake” or lock up as collateral. In PoS, validators are chosen to create blocks and confirm transactions based on factors like the number of coins they hold and are willing to “stake,” their reputation, and other criteria. PoS is considered more energy-efficient and has been introduced in Ethereum 2.0, the upgrade aiming to replace PoW.
- Transactions: In the context of Ethereum, transactions are network messages that users or applications send to interact with the blockchain. These transactions serve multiple purposes: (i)Sender: The sender, also known as the “from” address, is the Ethereum account that initiates the transaction. It is the address that holds the Ether or initiates the smart contract execution. (ii) Recipient: The recipient, often referred to as the “to” address, is the Ethereum account or smart contract that will receive the Ether or process the transaction. It can be another user’s account or a smart contract address. (iii)Value: The value represents the amount of Ether being transferred from the sender to the recipient. It can be denominated in wei (the smallest unit of Ether), gwei, or Ether itself. (iv) Data Payload: The data payload is additional information or code associated with the transaction. For simple Ether transfers, this field might be empty. However, in the case of interactions with smart contracts, this field typically contains the input data required to execute specific functions within the contract.
- State machine: The term “State machine” in Ethereum refers to the system’s ability to transition between different states or conditions. In the context of Ethereum, state transitions refer to the changes in the state of the blockchain, which occur as a result of executing transactions and interacting with smart contracts. These state transitions are the heart of Ethereum’s operation, as they determine how the blockchain’s data and accounts change over time. The Ethereum Virtual Machine is the runtime environment in which all smart contracts and transactions are executed. The EVM is responsible for executing bytecode, which is a low-level, machine-readable code that represents the operations to be performed. These operations can include transferring Ether, changing the state of accounts, and executing smart contract codes. Smart contracts in Ethereum are essentially self-executing programs with predefined rules and logic. These programs are written in high-level programming languages like Solidity, Vyper, or Serpent. Once written, smart contracts are compiled into bytecode, which is the language that the EVM understands. When a transaction invokes a smart contract, the EVM executes the bytecode of the contract, and this execution results in state changes, such as altering account balances or updating data on the blockchain.
- Data structure: Ethereum nodes typically use a database to store the blockchain data. LevelDB is a popular choice for this purpose. It is a high-performance, embedded key-value database developed by Google that provides efficient storage and retrieval of data. Ethereum’s use of LevelDB ensures that the data is organized and accessible in an efficient manner. The data in Ethereum’s state is organized and stored using a data structure called a Merkle Patricia Tree. This structure is a trie-based data structure that allows efficient and secure storage of data. It is “hashed” to ensure the integrity of the data, meaning that any change in the data would result in a different hash, making it easy to detect tampering or errors.
- Client: An Ethereum client is a software application that, when installed and run on a computer, allows that computer to participate in the Ethereum network by acting as an Ethereum node. An Ethereum client consists of the necessary software components to verify and process blocks and transaction data on the Ethereum blockchain. To operate as a complete Ethereum node, you typically need to run two separate pieces of software, often referred to as ‘clients’ . These clients work in tandem to enable your computer to interact with the Ethereum network, validate transactions, and contribute to the overall functionality and security of the blockchain.
