Ethereum

Ethereum is like a decentralized computing network. It allows developers to create and

run applications on its blockchain using smart contracts.
The Ethereum network is currently famous for allowing the implementation of smart
contracts. Smart contracts can be thought of as ‘cryptographic bank lockers’ which
contain certain values.
These cryptographic lockers can only be unlocked when certain conditions are met.
Unlike bitcoin, Ethereum is a network that can be applied to various other sectors.
Ethereum is often called Blockchain 2.0 since it proved the potential of blockchain
technology beyond the financial sector.
The consensus mechanism used in Ethereum is Proof of Stakes(PoS), which is more
energy efficient when compared to that used in the Bitcoin network, that is, Proof of
Work(PoW). PoS depends on the amount of stake a node holds.
The Merkle Patricia Trie (MPT)

• The Merkle Patricia Trie (MPT) is a fundamental data structure utilized within the
Ethereum blockchain, integrating the characteristics of both Merkle trees and
Patricia tries. Its primary role is to function as a robust data storage system for
managing the vast array of transactions and receipts on the network.
Features (Nodes)
• #1 – Null nodes
• These nodes represent empty strings and serve as stand-ins for missing or deleted
values when necessary. They not only replace such values but also act as proof of
the MPT for a specific piece of data.
• #2 – Branch nodes
• As the name suggests, branch nodes are analogous to the branches of a tree. Each
branch node consists of 17 items, with one item representing the value and the
remaining 16 representing hexadecimal characters. The last item serves as the key-
value pair.
• #3 – Leaf nodes
• A node without child nodes is classified as a leaf node (or end node). It originates
from a branch node and includes two components: path and value. For instance, if
AxBE is a branch node in the MPT, the subsequent leaf nodes would be AxBEF and
AxBEC. Each leaf node, like AxBEF, features AxF as the path and 1000 as the value.
• #4 – Extension nodes
• Another node type, the extension node, serves as a shortcut to stored data. It’s an
optimized version of a branch node. In some instances, branch nodes have only one
child node with no subsequent siblings. To streamline the Trie, these branch nodes are
compressed into extension nodes, which include a prefix, path, and value related to
the child node. The hash value is derived from another node in this context.
History of Ethereum
• 2013: Ethereum was first described in Vitalik Buterin’s white paper in 2013 with
the goal of developing decentralized applications.
• 2014: In 2014, EVM was specified in a paper by Gavin Wood, and the formal
development of the software also began.
• 2015: In 2015, Ethereum created its genesis block marking the official launch of
the platform.
• 2018: In 2018, Ethereum took second place in Bitcoin in terms of market
capitalization.
• 2021: In 2021, a major network upgrade named London included Ethereum
improvement proposal 1559 and introduced a mechanism for reducing transaction
fee volatility.
• 2022: In 2022, Ethereum has shifted from PoW( Proof-of-Work ) to PoS( Proof-
of-State ) consensus mechanism, which is also known as Ethereum Merge. It has
reduced Ethereum’s energy consumption by ~ 99.95%.
Features
•
of Ethereum
Smart contracts: Ethereum allows the creation and deployment of smart contracts.
Smart contracts are created mainly using a programming language called solidity.
Solidity is an Object Oriented Programming language that is comparatively easy to
learn.
• Ethereum Virtual Machine (EVM): It is designed to operate as a runtime environment
for compiling and deploying Ethereum-based smart contracts.
• Ether: Ether is the cryptocurrency of the Ethereum network. It is the only acceptable
form of payment for transaction fees on the Ethereum network.
• Decentralized applications (Daaps): Dapp has its backend code running on a
decentralized peer-to-peer network. It can have a frontend and user interface written
in any language to make calls and query data from its backend. They operate on
Ethereum and perform the same function irrespective of the environment in which
they get executed.
• Decentralized autonomous organizations (DAOs): It is a decentralized organization
that works in a democratic and decentralized fashion. DAO relies on smart contracts
for decision-making or decentralized voting systems within the organization.
Type of Ethereum Accounts
• Ethereum has two types of accounts: An externally owned account (EOA), and a
Contract account. These are explained as following below:
• Externally owned account (EOA): Externally owned accounts are controlled by
private keys. Each EOA has a public-private key pair. The users can send
messages by creating and signing transactions.
• Contract Account: Contract accounts are controlled by contract codes. These
codes are stored with the account. Each contract account has an ether balance
associated with it. The contract code of these accounts gets activated every time a
transaction from an EOA or a message from another contract is received by it.
When the contract code activates, it allows to read/write the message to the local
storage, send messages and create contracts.
How Does Ethereum Work?
• Ethereum implements an execution environment called Ethereum Virtual Machine
(EVM).
• When a transaction triggers a smart contract all the nodes of the network will execute
every instruction.
• All the nodes will run The EVM as part of the block verification, where the nodes will
go through the transactions listed in the block and runs the code as triggered by the
transaction in the EVM.
• All the nodes on the network must perform the same calculations for keeping their
ledgers in sync.
• Every transaction must include:
• Gas limit.
• Transaction Fee that the sender is willing to pay for the transaction.
• If the total amount of gas needed to process the transaction is less than or equal to the
gas limit then the transaction will be processed and if the total amount of the gas
needed is more than the gas limit then the transaction will not be processed the fees
Real-World Applications of Ethereum

• Voting: Voting systems are adopting Ethereum. The results of polls are available
publicly, ensuring a transparent fair system thus eliminating voting malpractices.
• Agreements: With Ethereum smart contracts, agreements and contracts can be
maintained and executed without any alteration. Ethereum can be used for
creating smart contracts and for digitally recording transactions based on them.
• Banking systems: Due to the decentralized nature of the Ethereum blockchain it
becomes challenging for hackers to gain unauthorized access to the network. It
also makes payments on the Ethereum network secure, so banks are using
Ethereum as a channel for making payments.
• Shipping: Ethereum provides a tracking framework that helps with the tracking of
cargo and prevents goods from being misplaced.
• Crowdfunding: Applying Ethereum smart contracts to blockchain-based
crowdfunding platforms helps to increase trust and information symmetry. It
creates many possibilities for startups by raising funds to create their own digital
cryptocurrency.
• Domain names: Ethereum name service allows crypto users to buy and manage
their own domain names on Ethereum, thus simplifying decentralized transactions
without putting users to remember long, machine-readable addresses.
Benefits of Ethereum
• Availability: As the Ethereum network is decentralized so there is no downtime. Even
if one node goes down other computing nodes are available.
• Privacy: Users don’t need to enter their personal credentials while using the network
for exchanges, thus allowing them to remain anonymous.
• Security: Ethereum is designed to be unhackable, as the hackers have to get control of
the majority of the network nodes to exploit the network.
• Less ambiguity: The smart contracts that are used as a basis for trade and agreement
on Ethereum ensure stronger contracts that differ from the normal traditional contracts
which require follow-through and interpretation.
• Rapid deployment: On Ethereum decentralized networks, enterprises can easily
deploy and manage private blockchain networks instead of coding blockchain
implementation from scratch.
• Network size: Ethereum network can work with hundreds of nodes and millions of
users.
• Data coordination: Ethereum decentralized architecture better allocates information so
Drawback of Ethereum

• Complicated programming language: Learning solidity from programming smart

contracts on Ethereum can be challenging and one of the main concerns is the
scarcity of beginner-friendly classes.
• Volatile cryptocurrency: Ethereum investing can be risky as the price of Ether is
very volatile, resulting in significant gains as well as a significant loss.
• Low transaction rate: Bitcoin has an average transaction rate of 7TPS and
Ethereum has an average speed of 15 TPS which is almost double that of bitcoin
but it is still not enough.
What is Ethereum Virtual Machine
and How it Works?
• The article focuses to discuss Ethereum Virtual Machine and how it
works. The following topics will be discussed here:
• Introduction To Ethereum Virtual Machine (EVM)?
• Purpose Of EVM
• How Does EVM Works?
• How Does Gas Relate to the Performance of EVM?
• Benefits Of EVM.
• Downsides Of EVM.
Introduction to Ethereum Virtual Machine (EVM)?
• Ethereum Virtual Machine (EVM) is designed as the runtime environment for smart
contracts in Ethereum. It is sandboxed and isolated from the other parts of the system.
This means that any operation on EVM should not affect your data or programs in any
way, no matter how many times you call a particular function on it.
• An EVM is the runtime environment that executes Ethereum smart contracts.
• Ethereum contains its own Turing-complete scripting language, called Solidity, and
with this comes a need to execute this code.
• A program called the Ethereum Virtual Machine (EVM) can do this task.
• It runs on top of the Ethereum network, meaning that all nodes reach a consensus
about what code should be executed at every given time.
• Purpose of EVM
• The Ethereum Virtual Machine (EVM) is a Turing complete programmable machine,
which can execute scripts to produce arbitrary outcomes. It has been built with the
purpose of being a “world computer” and has immense power.
How Does EVM Works?
• Ethereum Virtual Machine (EVM) is a program which executes scripts used to
implement certain operations usually in Ethereum blockchain.
• The Ethereum Virtual Machine makes the process of creating new tokens on
Ethereum Blockchain easy. Here, script means a set of instructions or an algorithm
which tells the computer what it needs to do in order for something to work properly.
The EVM requires that one has access over any network node so as to be able to
execute the desired commands and create new tokens on the blockchain without any
difficulties.
• In Ethereum, there is something called a smart contract. These contracts have some
computer code which facilitates the exchange of money and information.
• These contracts are predefined by the creator of the smart contract, in order to ensure
that a certain outcome will happen based on either what happens or doesn’t happen.
• Ethereum Virtual Machine provides Turing complete environment for execution
of scripts and smart contracts. This means that anything that can be implemented
with a computer can be run on EVM.
• In the Ethereum ecosystem, EVM plays a vital role by providing a platform for
decentralized applications (DApps) to be built on top of it.
• Ethereum Virtual Machine ensures that all transactions and smart contracts made
on the Ethereum blockchain are executed in correct and expected manner as
desired by the smart contract code. It serves as a platform for applications to be
executed on.
• In simple words, it can be said that Ethereum Virtual Machine facilitates DApp
creation and execution on the blockchain.
Ethereum Virtual Machine (EVM) has two parts:
• EVM (the part that runs solidity source code): The EVM is written in C++ and
uses LLVM as its compiler. It is a full-featured virtual machine with all the
features that you would want in a general purpose Smart Contract Virtual
Machine, such as support for multiple programming languages, security features,
runtime environments and more. It also allows you to write custom EVM
bytecode .
• Uncles: These are small pieces of smart contracts or data stored on the blockchain.
This is a useful feature because it allows for you to store metadata about your
program. EVM Assembly: This is the bytecode of EVM, which you can use as
your programming language.
 Feature
• This is a useful feature because it allows one to store metadata about the program.
• Actions: These are basic operations that one can perform on assets stored in memory (and not on the blockchain), such as
multiplication, addition, and so on.
• Balance: This is the amount of Ether that one have at any time. So, if there is a balance of 100 Ether and spend 10 Ether, the
balance would be 90 Ether. Note that this is not actually a variable, it’s just a part of memory where EVM stores the data.
This means that whenone tries to modify or read from it, it will return execution with an error.
• Block: This is an immutable storage for all actions and transactions related to Ethereum in its lifetime up until this block in
particular. These blocks can be only 65,000 so this is not going to change.
• Blockhash: This is a hash of the block in question. So, if you are looking at stored on the blockchain under another name,
this would be a hash of the data stored there.
• Block Number: This is a number indicating which block this particular blockhash belongs to. It always starts from zero and
increases every time there’s a new block added to the chain. Note that blocks have timestamps associated with them so you
can tell how much time passed between two blocks.
• Code: This is code executed in EVM that determines what action is going to be taken when an input happens (such as
transferring money).
• CodeHash: This is a hash of the code itself. If one looks at a contract on Etherscan, the CodeHash is what one will see.
When functions are executed on EVM, this number changes because the code itself changes based on the input.
• CodeSize: This is the actual size of the code in bytes.
• GasLimit: This is a part of EVM that allows for users to specify how much gas they are willing to spend in order to execute
something. If this number is zero, then nothing will happen (this rarely happens).
• How Does Gas RelateTo Performance Of EVM?
• Gas is a measure of computational power. It determines how much time each
transaction and contract takes to execute.
• Because there is so much code already in the system, it uses a limited amount of
Gas to run all of this code. It sets the default gas limit to 250,000 gas units.
• In general, the more complicated your transaction, the more gas it takes to
execute.
storage network

• (Swarm) A decentralized storage network that was designed for the Ethereum
blockchain. Via distributed apps (dApps), Swarm stores data that would otherwise
overload Ethereum, and transactions reference the data using a hashed key created
in Swarm. IPFS is another storage system that complements blockchains, but
Swarm was designed especially for Ethereum (see IPFS).
Whisper protocol

• Whisper is a protocol for secure, peer-to-peer messaging on the Ethereum

network. It is built on top of the Ethereum blockchain and is designed to provide a
secure and private communication channel for decentralized applications (dApps)
and users on the Ethereum network.
• The Whisper protocol uses a combination of public key cryptography and a
distributed hash table (DHT) to ensure that messages are both secure and private.
Each user on the network is assigned a unique public key, which is used to encrypt
messages sent to them. The DHT is used to securely distribute and store these
encrypted messages, allowing for peer-to-peer communication without the need
for a centralized server.
Diffrence between Bitcoin and Etherum