Aniketh Vijesh

Introduction to the Ethereum Blockchain

The Vision

The vision of the Ethereum blockchain is an unstoppable censorship resistant self-sustaining decentralised worl computer.

What is Ethereum?

Ethereum is software running on a netword of compyter that ensures that data and small computer programs called smart contracts are replicated and processed on all the computers on the network without a centrailised overseer.

It is an extension of the Bitcoin concept. While Bitcoin only aimed to distribute storage and mainly deals with the concept of money and finance, Ethereum takes this a step further by incorporating computation of small computer programs called smart contracts on the network.

It is also private and permissionless, which means that anone can download or write sime software, connet it to the network and satrt creating transactions, smart contracts, validating them and all other functions without being granted permission from some higher authority.

Ethereum also has it's in-built cryptocurrency or token called Ether or ETH.

Main concepts of Ethereum

Smart Contracts

Smart contracts as discussed before are small computer programs running on the network. They are essentially like jukeboxes, you give them some amout of ETH, which activates them, then it performs some sort of function.

Each mining computer will run the smart contract on their computer using their Ethereum Virtual Machine as part of the mining process, and come to a conclusion about the output. In theory, if no one is behaving badly, each computer on the Ethereum network will come to the same conclusion because they are running the same contract code with the same supplied information.

When a block is mined, the winning miner will publish their results which can then be reviewed by the rest of the network to validate the action.

Accounts

These are essentially accounts on the newtwork which store the tokens of the users. In Ethereum there are two types of accounts:

Uncles and Orphans

When I discussed about Mining in the last post, I had doubt about what happens to other hundred of threads which were not chosen when the winning computation was chosen? The answer is that they are indeed used, this is where the concepts of Uncles come in. n Ethereum they are called uncles. Uncles can be referenced by a few of the subsequent blocks. Even though they are not added to the main ledger, they are given a small fee for their work. This achieves two things:

Gas and Gas Prices

When you activate a smart contract, you ask all the miners in the whole network to each individually perform the calculations within it. This costs them time and energy, and Gas is the mechanism by which you pay them for that service.

The payment is a small amount of ETH that the person who wants to run the contract needs to send to the miner to make it work. This is similar to putting a coin in a jukebox.

Whereas the amount of Gas to run a contract is fixed for any specific contract, as determined by the complexity of the contract, the 

Gas Price

is specified by the person who wants the contract to run, at the time they request it (a bit like Bitcoin transaction fees). Each miner will look at how generous the gas price is, and will determine whether they want to run the contract as part of the block. If you want miners to run your contract, you offer a high Gas Price. In this way it’s a competitive auction driven by how much someone is willing to pay to have a contract run.

ETH Units

Just like 1 dollar can be split into 100 cents, and 1 BTC can be split into 100,000,000 satoshi, Ethereum too has its own unit naming convention.

The smallest unit is a wei and there are 1,000,000,000,000,000,000 of them per ETH. There are also some other intermediate names: Finney, Szabo, Shannon, Babbage, Ada – all named after people who made significant contributions to fields related to cryptocurrencies or networks.

Closing

That brings a close to my breif overview of everthing I've learnt until now.