Overview of Ethereum

Soureesh Patil — Sat, 06 Jun 2020 17:45:57 +0000

In context of blockchain we encounter many terms like bitcoin, ethernum, ethers, dapps, etc. I will try to explain these terms and their key differences in this article.

What is Ethereum
Why Ethereum ?
Features and components of Ethereum
Ethereum Vs Bitcoin

What is Ethereum ?

First of all, Ehtereum is a software development platform. These softwares are based on blockchain technology. We can imagine it with the analogy of internet. Just like internet is the universal platform and developers build theirs apps(websites) on it, Ethereum is a general platform for blockchain developers to develope their apps. These apps are commanly known as decentrailzed apps or dapps.

Why Ethereum ?

Bitcoin was introduced by Satoshi Nakamoto for peer to peer electronic cash transfer. But many developers wanted to implement blockchain, the technology behind bitcoin, for wide range of purposes like smart contracts. Observing this need, Vitalik Buterin created the Ehtereum.

Features and components of Ethereum

Accounts :- To use Ethereum service, we need to create account. Although general perception of account also holds here, but there is certain difference . There are many ethereum networks like Main Ethereum Network, Rinkeby, Ropsten, etc. A single account has access to all of them. An account is characterized by 160 bit address and is used for transactions in Ethers.
Smart Contract :- They are computer codes which facilitate exchange of valuables like currency or properties. Smart contracts are run by 'Ethereum Virtual Machines (EVM)'. This is a core feature of Ethereum which makes it possible to create customized dapps.
Ethereum Virtual Machine (EVM) :- It is a Turing complete machine , which runs on the Ethereum network. This forms essence of decentralization in ethereum. It allows to run smart contracts (codes written in different languages) without need of any third party service.
Ethers (ETH) :- Ethers are medium of exchange of services on ethereum platform. For transactions to be processed and storage space allocated users have to pay price in Ethers. It fuels the dapps on the network.
Smallest unit of currency in Ethereum is wei and 1 ETH = 1e+18 weis. One gwei(giga wei) is 1e+9 wei.
Gas and Gas Prices :- Gas is a cost required for completing a particular computation.
Gas Price is amount of ETH sender is willing to pay per unit gas for completion of a transaction.
The product of Gas Limit and Gas Price gives the amount needed for completing the transaction.
ERC-20 :- It is a token, which is acting as standard for token implementations of all smart contracts on Ethereum blockchain .

That was an overview of some important features of Ethereum blockchain.

Ethereum Vs Bitcoin

Bitcoin is just a digital cryptocurrency while Ethereum is wider platform with Ether as a digital currency component of Smart Contracts. Ethereum and Bitcoin had different purposes. Also their capacity is different. Blocks are smaller in Ethereum and consucme significantly less time for adding it to the blockchain as compared to Bitcoin. Bitcoin prevents inflation by putting cap on total possible bitcoins, while there is no fixed number of Ethers.

I hope I cleared basic terminologies and key differences mentioned in intro of this article :)

Simplest Blockchain Explanation

Soureesh Patil — Thu, 04 Jun 2020 08:10:33 +0000

Source : Singularity University

      * What is blockchain?

      * Simple day to day life example

      * Blockchain Details

      * Impact on the world

What is blockchain?

Simply speaking blockchain is a chain of blocks which contain useful information. New information or block is added only after validation by authenticated users (miners). The most important feature of this technology is, once information is added, it is almost impossible to tamper it. Also anyone in the network of the blockchain can see the newly added information but the details of the sender and the receiver are in encrypted form, (created using hashing technique). Hence this technology provides transparency and security.

Simple day to day life example

Suppose there are four friends. They often do transactions together and also spend money on behalf of each other. But at the end of the day, they want to have a clear record of all the transactions. They should know who owes how much money to whom.
One solution is, one of them should monitor and keep record of all the transactions. But if due to some reasons he changed order of some transactions, missed some transactions, or added some invalid transactions, that will be miserable.

Blockchain Details

To avoid this, blockchian can be used. Implementing decentralization feature, every one of them will have a copy of the ledger. For new transaction to be added, it should be approved by majority of them. The newly added transaction contains information like sender, receiver, amount, time stamp, its own hash (encrypted form) and more importantly hash of the previous transaction.
By adopting this technique, all the transactions will be authenticated and added in right order.
The most important part, chaining of the transactions, is possible due to hash of previous transaction. If anyone tampers the data in the block , the unique identity of the block , ie- hash will be changed. But the next block still contains the old hash and hence , after tampering, it will not be consistent with the common ledger. This will result in unacceptable transaction, thus securing the blockchain from such attacks. Furthermore, if the attacker tries to change the previos hash component of all the next blocks, it is almost impossible due to the system called 'Proof of Work' (PoW). The attacker will have to solve a difficult math puzzle which requires great computational power. This process of solving the puzzle and adding new transaction is called mining. Mining is continuous process going on in the blockchain as it decides the next person, who will add the new transaction. Miner who adds the transaction get paid for it. Due such competition and huge computational requirements, it is very difficult to tamper the data.

Impact on the world

Blockchain is influencing major sectors like banks, cryptocurrency, supply chain, finance, healthcare, smart contracts, voting systems and many more.
In my opinion, due to its features like immutability, transparency, security, decentralization, this technology has potential to revolutionize the world. Reliability and resilience will help it to strengthen its roots. History of usage in illicit activities, grater computational power requirements, slow rate of adding new transactions are some negative points about it. But, its pros are seeming more beneficial than the loss made by its cons. Hence, this technology is trending today.

DEV Community: Soureesh Patil