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Chapter 4: Public Blockchain

1) Explain Ethereum and components of Ethereum.

Ethereum is a decentralized platform that operates on a blockchain network. It's designed to execute
smart contracts, which are self-executing contracts with the terms of the agreement directly written into
code. This allows for the creation of decentralized applications (dApps) that1 operate autonomously.
❖ Key Components of Ethereum:
1. Peer-to-Peer Network:
o A network of computers that communicate directly with each other without relying on a central
server.
o Each node in the network maintains a copy of the blockchain, ensuring redundancy and security.
o Nodes share information and validate transactions, contributing to the network's overall
consensus.
2. Consensus Rules:
o A set of rules that govern how the network agrees on the order of transactions and the state of
the blockchain.
o These rules ensure that all nodes in the network have a consistent view of the blockchain.
3. Transactions:
o Units of data that represent the transfer of value (e.g., Ether) or the execution of smart contracts.
o Transactions are broadcasted to the network and are included in blocks.
o Miners validate and add blocks to the blockchain, earning rewards for their work.
4. State Machine:
o A system that tracks the state of the Ethereum network at any given point in time.
o It records the balances of accounts, the ownership of smart contracts, and other relevant data.
o The state machine is updated with each new block added to the blockchain.
5. Consensus Algorithm:
o The method used to achieve consensus among the nodes in the network.
o Ethereum currently uses a proof-of-stake (PoS) consensus mechanism, where validators stake
Ether to secure the network and validate transactions.
o Previously, Ethereum used a proof-of-work (PoW) mechanism, which involved miners solving
complex cryptographic puzzles.
6. Data Structure:
o The underlying data structure used to store information on the blockchain.
o Ethereum uses a Merkle tree, a data structure that allows efficient verification of data.
o The Merkle tree stores the state of the blockchain, including account balances, smart contract
code, and transaction history.

2) What is mining in Ethereum? Explain mining process in detail.

While Ethereum's transition to a Proof-of-Stake (PoS) consensus mechanism in 2022 has rendered
traditional mining obsolete, it's still important to understand the concept for historical and educational
purposes.
Here's a breakdown of the Ethereum mining process under the previous Proof-of-Work (PoW) system:
1. Transaction Initiation:
• A user initiates a transaction, such as sending Ether to another address or interacting with a smart
contract.
• This transaction is broadcasted to the Ethereum network.

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2. Transaction Broadcasted to Miners:

• The transaction is received by multiple miners across the network.
• Miners are individuals or organizations that use specialized hardware (mining rigs) to solve
complex mathematical problems.
3. Mining Process:
• Miners compete to solve a cryptographic puzzle associated with the new block of transactions.
• This involves hashing the block header, which includes information like the previous block's hash,
a nonce (a random number), and a timestamp.
• The goal is to find a hash that meets a specific difficulty target.
4. Successful Mining and Reward:
• The first miner to solve the puzzle and find a valid hash is rewarded with a block reward.
• This reward consists of newly minted Ether and transaction fees associated with the transactions
included in the block.
5. Transaction Added to the Blockchain:
• The miner broadcasts the newly created block to the network.
• Other nodes in the network verify the block's validity.
• If the block is valid, it is added to the blockchain, and the transaction becomes confirmed.
6. Transaction Complete:
• Once the transaction is included in a block and the block is added to the blockchain, the
transaction is considered complete.
• The funds are transferred to the recipient's address, and the smart contract, if any, is executed.

3) Short note on Ethereum Virtual Machine (EVM).

The Ethereum Virtual Machine (EVM) is a virtual machine that executes code within the Ethereum
blockchain. It serves as the computational engine of the Ethereum network, processing transactions and
running smart contracts.
❖ Key functions of EVM:
• Transaction processing: The EVM verifies and executes transactions submitted to the Ethereum
network.
• Smart contract execution: It runs the code of smart contracts, which are self-executing contracts
with the terms of the agreement directly written into code.
• State transitions: The EVM updates the state of the Ethereum blockchain by modifying the
balances of accounts and the storage of smart contracts.
• Consensus mechanism: The EVM interacts with the consensus mechanism (Proof-of-Work or
Proof-of-Stake) to ensure the security and integrity of the network.

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❖ EVM architecture:
The EVM has a stack-based architecture, meaning it uses a stack to store data and execute
instructions. It also has a memory area for temporary storage and a storage area for persistent data.
❖ EVM bytecode:
Smart contracts are written in high-level languages like Solidity. These contracts are then compiled
into EVM bytecode, which is the machine code that the EVM can understand and execute.
❖ EVM blocks:
The EVM operates on a block-based system. Each block contains a set of transactions and smart
contract executions. Once a block is added to the blockchain, its transactions and smart contract
executions are considered final.
❖ EVM execution model:
The EVM executes instructions sequentially, one at a time. Each instruction can modify the stack,
memory, storage, or other parts of the EVM state. The execution of a transaction or smart contract
continues until it reaches the end of the code or encounters an error.
❖ Importance of EVM:
The EVM is a crucial component of the Ethereum network, enabling the creation and execution of
decentralized applications (dApps). It provides a secure and transparent environment for executing
smart contracts, facilitating trustless interactions between parties.

4) Short note on Ethereum transactions.

An Ethereum transaction is a digital record of a transfer of value (ether) or the execution of code (smart
contract) on the Ethereum blockchain. It is a fundamental unit of activity on the Ethereum network.
❖ Key fields of an Ethereum transaction:
• Recipient: The address of the account receiving the ether or executing the smart contract.
• Value: The amount of ether being transferred in the transaction.
• Nonce: A unique number assigned to each transaction by the sender. It prevents replay attacks.
• Signature: A cryptographic signature generated by the sender to authenticate the transaction.
• Data: Optional data field used to carry additional information, such as function calls for smart
contracts.
• GasPrice: The amount of ether paid per unit of gas used to execute the transaction.
• GasLimit: The maximum amount of gas allowed for the transaction.
• maxPriorityFeePerGas: The maximum amount of ether paid per unit of gas to incentivize miners
to prioritize the transaction.
• maxFeePerGas: The maximum total fee per unit of gas, including base fee and priority fee.

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❖ Transaction process:
1. Transaction creation: A user (sender) creates a transaction by specifying the recipient, value,
nonce, data, and gas parameters.
2. Transaction signing: The sender signs the transaction with their private key to authenticate it.
3. Transaction broadcasting: The signed transaction is broadcast to the Ethereum network.
4. Transaction validation: Nodes on the network verify the transaction's validity, including the
sender's signature and gas price.
5. Transaction inclusion: If the transaction is valid, it is included in a block by a miner.
6. Transaction execution: The EVM executes the transaction, either transferring ether or executing
smart contract code.
7. State update: The Ethereum state is updated to reflect the changes made by the transaction.
❖ Transaction fees:
Ethereum transactions incur fees, paid in ether, to incentivize miners to include transactions in blocks.
These fees are calculated based on the gas price and gas limit set by the sender.

5) Explain Ethereum architecture.

Certainly, let's break down the Ethereum architecture layer by layer:

1. Decentralized Application (DApp) Layer:
• This is the top layer where the end-user interacts with the Ethereum network.
• It comprises the front-end components of the DApp, including the user interface (UI) and the
JavaScript code that communicates with the Ethereum network.
• Web3.js: This JavaScript library provides a bridge between the DApp and the Ethereum
blockchain, allowing developers to interact with smart contracts and the network in general.
2. Smart Contract Layer:
• This layer houses the "brains" of Ethereum, the smart contracts.
• Smart contracts are self-executing contracts with the terms of the agreement directly written into
code.
• They are deployed to the Ethereum blockchain and can be triggered to execute specific actions
based on predefined conditions.
• EVM (Ethereum Virtual Machine): This is the virtual machine that executes the code of smart
contracts. It provides a sandboxed environment where the code can run without affecting the
underlying system.
• RPC (Remote Procedure Call): This is the interface that allows communication between the DApp
and the smart contracts. It enables the DApp to call functions on the smart contracts and receive
the results.

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3. Blockchain Layer:
• This layer is the foundation, where all transactions and smart contract code are recorded.
• Blockchain: This is a distributed ledger that stores all transactions and smart contract code in a
secure and transparent manner.
• Consensus Algorithm (POW): This is the mechanism used to validate transactions and add them
to the blockchain. In Ethereum, the Proof-of-Work (POW) algorithm is currently used, although it
is transitioning to a Proof-of-Stake (POS) algorithm.
• Miner: Miners are nodes on the network that solve complex mathematical problems to validate
transactions and add them to the blockchain. In return, they are rewarded with Ether, the native
cryptocurrency of Ethereum.
• Network: This layer handles the communication between nodes on the Ethereum network. It uses
a peer-to-peer (P2P) network, where each node is connected to multiple other nodes.
4. Base Layer:
• This layer provides the building blocks for the Ethereum network.
• P2P: This protocol allows nodes on the network to communicate with each other directly.
• Crypto: This refers to the cryptographic algorithms used to secure the network, such as
encryption, hashing, and digital signatures.
• HttpClient: This library is used to make HTTP requests to other nodes on the network.
• LevelDB: This is a key-value database used to store data on the blockchain.
• Solidity: This is the programming language used to write smart contracts.
• Math&Number: These libraries provide mathematical functions and number operations used in
smart contracts.
❖ In summary:
The DApp layer interacts with the smart contract layer through Web3.js. The smart contract layer
executes the code of smart contracts on the EVM and communicates with the blockchain layer through
RPC. The blockchain layer records all transactions and smart contract code, and the base layer provides
the underlying infrastructure for the entire network.
6) Explain accounts in Ethereum and its types.

In the Ethereum blockchain, accounts serve as fundamental entities that hold Ether and interact with
smart contracts. There are two primary types of accounts:
1. Externally Owned Accounts (EOAs)
• Control: Controlled by private keys.
• Functionality: Limited to sending transactions and interacting with smart contracts.
• Security: High security due to the need for a private key to authorize transactions.
• Example: Your personal Ethereum wallet is an EOA.
2. Contract Accounts
• Creation: Deployed by transactions initiated by EOAs.
• Functionality: Execute code defined in their bytecode.
• Storage: Can store state data.
• Security: Depends on the code's quality and the security practices of the developer.
• Example: Decentralized applications (dApps) like Uniswap or OpenSea are built on contract
accounts.

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7) Compare Bitcoin and Ethereum.

Feature Bitcoin Ethereum

Primary Purpose Digital Currency Platform for Smart Contracts
Consensus Mechanism Proof-of-Work (PoW) Proof-of-Stake (PoS)
Smart Contract Capability Limited Extensive
Transaction Speed Slower Faster
Transaction Fees Higher Lower
Energy Consumption High Lower
Scalability Less Scalable More Scalable (with Layer-2 solutions)
Security Highly Secure Highly Secure
Market Cap Typically Higher Typically Lower (but still significant)
Use Cases Primarily as a Store of Value Diverse, including DeFi, NFTs, and DApps

8) Short note on test networks in Ethereum.

Ethereum Test Networks
Ethereum test networks are public blockchains that mimic the mainnet, allowing developers to test their
dApps and smart contracts without risking real funds. They provide a safe and controlled environment to
experiment and learn.
Here are some of the most popular Ethereum test networks:
• Ropsten:
o One of the oldest testnets.
o Uses a Proof-of-Work consensus mechanism.
o Often used for long-term testing and experimentation.
• Kovan:
o Uses a Proof-of-Authority consensus mechanism.
o Known for its faster block times and reliable performance.
o Ideal for testing dApps and smart contracts that require frequent interactions.
• Rinkeby:
o Also uses a Proof-of-Authority consensus mechanism.
o Frequently used for testing and debugging.
o Offers a balance of speed and reliability.
By utilizing these test networks, developers can iterate quickly, identify potential issues, and refine their
projects before deploying them to the mainnet.

9) Explain how to transfer Ethers using Metamask.

❖ How to Transfer Ether Using MetaMask
Here's a step-by-step guide on how to transfer Ether using MetaMask:
1. Open MetaMask:
o Ensure you're connected to the correct network (e.g., Mainnet, Goerli, etc.).
2. Select the Sender Account:
o Click on your account address in the top right corner to select the account you want to send
Ether from.

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3. Click "Send":
o Locate the "Send" button, usually in the middle of the screen.1
4. Enter Recipient's Address:
o Carefully input the Ethereum address of the recipient. Double-check for accuracy to avoid
sending to the wrong address.
5. Specify Amount:
o Enter the amount of Ether you wish to send in the designated field.
6. Set Gas Fee:
o MetaMask will automatically suggest a gas fee.2 You can adjust it if needed, but be mindful of
network congestion and transaction speed. Higher gas fees typically result in faster
transaction confirmation.3
7. Review and Confirm:
o Double-check all details, including the recipient's address, amount, and gas fee.
o Click "Next" to proceed.
8. Sign the Transaction:
o MetaMask will prompt you to sign the transaction using your private key.4
o Confirm the transaction by clicking "Confirm."
9. Wait for Confirmation:
o Your transaction will be broadcast to the Ethereum network and processed by miners.
o The time it takes for confirmation can vary depending on network congestion.5

❖ Important Considerations:
• Network Fees (Gas Fees): Be aware of the gas fees associated with transactions. Higher fees can
expedite the transaction process.6
• Security: Always double-check the recipient's address before sending Ether. Avoid sharing your
private key with anyone.
• Network Congestion: During periods of high network usage, transaction times and fees may
increase.7
• Test Networks: Practice sending Ether on test networks like Kovan or Rinkeby before using the
mainnet. This allows you to familiarize yourself with the process without risking real funds.

10) Short note on Mist wallet.

❖ Mist Wallet:
• Ethereum's official wallet application.
• Provides a full node experience, allowing users to run a node and interact directly with the
Ethereum network.
• Offers features like sending and receiving Ether, managing tokens, and interacting with dApps.
• Provides a user-friendly interface for both beginners and advanced users.1
• Supports multiple networks, including the Ethereum mainnet and various testnets.
• Has been deprecated and is no longer actively developed.
• Users are recommended to migrate to newer, more actively supported wallets like MetaMask.

11) Explain different Ethereum frameworks.

Ethereum Frameworks: Tools for Building on the Blockchain
Ethereum frameworks are powerful tools that simplify the development of decentralized applications
(dApps) on the Ethereum blockchain. They provide a structured approach, reusable components, and
automated processes, making it easier for developers to build complex dApps.

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Here are three popular Ethereum frameworks:

1. Truffle Suite:
• Comprehensive Framework: Offers a suite of tools for building, testing, and deploying smart
contracts.
• Smart Contract Development: Provides a high-level language (Solidity) for writing smart contracts
and a development environment to compile and test them.
• Testing Framework: Includes a testing framework to write and execute unit and integration tests
for smart contracts.
• Deployment Pipeline: Streamlines the deployment process to different networks (mainnet,
testnets, private networks).
2. Embark:
• Full-Stack Development: A full-stack framework for building dApps, covering both frontend and
backend development.
• Rapid Prototyping: Offers a quick and efficient way to build dApps, with features like hot reloading
and live code editing.
• Built-in Tools: Includes tools for testing, debugging, and deployment.
• Modular Architecture: Allows developers to customize and extend the framework to fit their
specific needs.
3. OpenZeppelin:
• Security-Focused Library: Provides a collection of secure, audited, and reusable smart contract
libraries.
• Common Patterns: Offers implementations of common smart contract patterns, such as ERC20
tokens, ERC721 tokens, and more.
• Security Best Practices: Encourages secure coding practices by providing guidelines and tools to
identify vulnerabilities.
• Upgradable Contracts: Supports the development of upgradable smart contracts, allowing for
seamless updates and bug fixes without deploying new contracts.

12) Explain any one application using Ganache.

A Pizza Business on the Blockchain: A Ganache Case Study
❖ Understanding the Scenario
Imagine a pizza business that wants to leverage blockchain technology to ensure transparency, trust,
and automation in its operations. By using smart contracts, we can automate the ordering, payment,
and delivery processes.
❖ Setting Up the Development Environment with Ganache
1. Install Ganache: Download and install Ganache, a popular Ethereum development environment.
2. Start a Local Blockchain: Launch Ganache to start a local blockchain network with multiple
accounts and Ether.
3. Set Up a Development Wallet: Create a development wallet in MetaMask or another Ethereum
wallet and connect it to the local blockchain.
❖ Developing the Smart Contract
1. Define the Smart Contract:
o State Variables:
▪ owner: Address of the pizza shop owner.
▪ menu: Mapping of pizza names to prices.
▪ orders: Mapping of order IDs to order details (customer address, pizza, price, status).

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o Functions:
▪ placeOrder: Allows customers to place orders by specifying the pizza and paying the
required amount.
▪ fulfillOrder: Allows the owner to fulfill orders and update the order status.
▪ withdrawFunds: Allows the owner to withdraw funds from the smart contract.
2. Write the Solidity Code:
Solidity
// SPDX-License-Identifier: MIT
pragma solidity ^0.8.17;
contract PizzaShop {
address public owner;
mapping(string => uint) public menu;
mapping(uint => Order) public orders;
uint public orderCount;
struct Order {
address customer;
string pizza;
uint price;
bool fulfilled;
}
constructor() {
owner = msg.sender;
menu["Margherita"] = 10;
menu["Pepperoni"] = 15;
// Add more pizzas to the menu
}
function placeOrder(string memory _pizza) public payable {
require(menu[_pizza] > 0, "Pizza not available");
require(msg.value >= menu[_pizza], "Insufficient funds");
orderCount++;
orders[orderCount] = Order(msg.sender, _pizza, menu[_pizza], false);
}
function fulfillOrder(uint _orderId) public onlyOwner {
require(orders[_orderId].fulfilled == false, "Order already fulfilled");
orders[_orderId].fulfilled = true;
// Trigger delivery or other actions
}
function withdrawFunds() public onlyOwner {
payable(owner).transfer(address(this).balance);
}
modifier onlyOwner() {
require(msg.sender == owner, "Only owner can call this function");
_;
}
}

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❖ Deploying and Testing the Smart Contract

1. Compile and Deploy: Use Truffle or Remix to compile and deploy the smart contract to the local
blockchain.
2. Test the Smart Contract: Write unit tests to verify the correctness of the smart contract's
functions.
3. Interact with the Smart Contract: Use MetaMask to interact with the deployed smart contract,
placing orders, fulfilling orders, and withdrawing funds.
❖ Benefits of Using a Blockchain-Based Pizza Business
• Transparency: All transactions and order statuses are recorded on the blockchain, ensuring
transparency.
• Trust: Smart contracts enforce the rules of the business, eliminating the need for intermediaries.
• Automation: The ordering, payment, and fulfillment processes can be automated, reducing
manual effort.
• Security: Blockchain technology provides a secure and tamper-proof way to store and process
data.

13) Explain Ether Block structure.

An Ethereum block is the fundamental unit of data storage on the Ethereum blockchain. It contains a set
of transactions and smart contract executions, along with metadata about the block itself.
❖ Key fields in an Ethereum block header:
• Timestamp: The time at which the block was created, measured in seconds since the Unix epoch.
• Block Number: A unique identifier for the block, indicating its position in the blockchain.
• Difficulty: A measure of how difficult it was to mine the block. This difficulty level is adjusted to
maintain a target block time.
• mixHash: A hash value used in the proof-of-work mining algorithm.
• parentHash: A hash of the previous block in the chain, ensuring the integrity of the blockchain.
• Beneficiary: The address of the account that receives the block reward for mining the block.
• ExtraData: Additional data that can be included in the block, such as version information or
custom data.
• GasUsed: The total amount of gas used by all transactions included in the block.
• GasLimit: The maximum amount of gas allowed for the block.

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