Ethereum Technology?
ow that you understand the basics of Ethereum, it's important to learn about the underlying technology behind Ethereum.
Smart contracts
A smart contract is a contract that is implemented with software. Unlike a traditional contract, where parties have to refer to the legal system, a smart contract is self-enforced (and possibly self-executing), depending on whether or not specific conditions, as monitored by software, are met. A “layer” that supports smart contracts can be built on top of the existing Ethereum infrastructure. All smart contracts are created through a programming language called Solidity.
Smart contracts may provide several advantages, such as:
- They may automatically ensure that all parties involved have equal power.
- They protect a person’s rights by imposing reasonable expectations on the signee.
- They remove the possibility of any signatory failing to meet their obligations.
Example of using a smart contract:
Assume Laura and Michael want to play rock, paper, scissors, and the winner of three games wins a bet of 1 ETH. In this case, a smart contract can:
- Escrow both of their funds until a winner is determined.
- Make certain that neither player knows what choice the other player has made before making their own.
- Have a set of rules that say rock beats scissors, paper beats rock, and scissors beats paper.
- Keep track of who wins each game until someone wins three times.
- Pay out the entire amount to the final winner of the three games.
All of this can be accomplished objectively, transparently, and without relying on Laura and Michael.
Solidity
Solidity is a statically typed programming language with syntax heavily influenced by JavaScript that allows programmers to create smart contracts. Smart contracts running on the Ethereum blockchain are written in bytecode language, running on the EVM.
Ethereum Blockchain
Ethereum, similarly to Bitcoin, is a blockchain that allows the transfer of cryptocurrencies between individuals without the need for a third party – such as a bank or international remittance company – to guarantee the transaction. Around the world, developers are working to build applications and platforms that will bring the potential of the Ethereum decentralized network to the public. While the blockchain ecosystem will take time to develop and fully integrate with wider economies, we are already seeing many organizations deliver applications that interact with the Ethereum blockchain to create new ways of generating and exchanging value.
This wave of decentralized applications – or dApps – is evolving models in industries as broad as finance, music, gaming, and social media, with notable results, and is pushing the blockchain industry into an era that is less about speculation and more about results, adoption and substantial improvement in users’ lives. Some relevant projects are:
- Metamask: a web browser plugin that connects your device to the Ethereum network.
- Brave: An integrated web and mobile browser for BAT and ERC-20 tokens.
- Ethereum Name Service: a platform to create custom and simple ETH wallet addresses.
- Decentraland: A virtual reality platform where users create, experience, and monetize content and apps.
- Gnosis: A prediction market and a DutchX protocol for valuing digital assets.
- CryptoKitties: The infamous game that brought down the Ethereum network allows players to produce and trade unique digital kittens.
Consensus mechanism
Blockchains require network members to reach an agreement before adding new blocks. A consensus mechanism is required to determine whether a particular transaction is legitimate or not, using a network-specific cryptographic validation method. The consensus mechanism is also useful for resolving conflicts between multiple concurrent competing entries, such as when different participants propose different transactions on the same asset. This mechanism ensures proper transaction sequencing and prevents low-performing participants from exploiting the system. There are several types of consensus mechanisms, but Ethereum applies:
Proof of Stake (PoS) - A proof of stake scheme implies that the owner of coins can earn coins simply by proving that she owns a certain amount of coins, rather than solving difficult mathematical algorithmic problems (i.e. mining for coins).
Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) is an environmentally safe and secure runtime where programmers can work remotely, which allows them to upload progressive updates to the Ethereum blockchain, and that has led to the emergence of numerous decentralized applications (dApps). In other words, the EVM is a large computer distributed throughout the network, where codes and data of each individual contract, indicated respectively as codes and state variables, are shared by all nodes. The validation of a new Ethereum block determines the updating of all the state variables, and among these, the balance of all accounts.
Conclusion
Understanding the technology behind Ethereum is primordial. The majority of the main projects today are somehow inspired by the main technologies developed in Ethereum or were created with the main purpose of solving Ethereum’s limitations. The knowledge you acquired in this module will be of great relevance for when you’re studying other projects.
Highlights
Solidity is a statically typed programming language with syntax heavily influenced by JavaScript that allows programmers to create smart contracts.
Ethereum is a blockchain that allows the transfer of cryptocurrencies between individuals without the need for intermediaries.
Ethereum's consensus mechanism was mainly through Proof-of-Work (PoW), and that's why Ethereum mining was a common activity in the crypto sector. After an update called "The Merge", which will be further discussed later, its consensus mechanism turned into Proof-of-Stake (PoS).
The Ethereum Virtual Machine (EVM) is an environment that allows programmers to upload progressive updates to the Ethereum blockchain, leading to the emergence of numerous decentralized applications (dApps).
Related Articles
Ethereum Technology?
ow that you understand the basics of Ethereum, it's important to learn about the underlying technology behind Ethereum.
Smart contracts
A smart contract is a contract that is implemented with software. Unlike a traditional contract, where parties have to refer to the legal system, a smart contract is self-enforced (and possibly self-executing), depending on whether or not specific conditions, as monitored by software, are met. A “layer” that supports smart contracts can be built on top of the existing Ethereum infrastructure. All smart contracts are created through a programming language called Solidity.
Smart contracts may provide several advantages, such as:
- They may automatically ensure that all parties involved have equal power.
- They protect a person’s rights by imposing reasonable expectations on the signee.
- They remove the possibility of any signatory failing to meet their obligations.
Example of using a smart contract:
Assume Laura and Michael want to play rock, paper, scissors, and the winner of three games wins a bet of 1 ETH. In this case, a smart contract can:
- Escrow both of their funds until a winner is determined.
- Make certain that neither player knows what choice the other player has made before making their own.
- Have a set of rules that say rock beats scissors, paper beats rock, and scissors beats paper.
- Keep track of who wins each game until someone wins three times.
- Pay out the entire amount to the final winner of the three games.
All of this can be accomplished objectively, transparently, and without relying on Laura and Michael.
Solidity
Solidity is a statically typed programming language with syntax heavily influenced by JavaScript that allows programmers to create smart contracts. Smart contracts running on the Ethereum blockchain are written in bytecode language, running on the EVM.
Ethereum Blockchain
Ethereum, similarly to Bitcoin, is a blockchain that allows the transfer of cryptocurrencies between individuals without the need for a third party – such as a bank or international remittance company – to guarantee the transaction. Around the world, developers are working to build applications and platforms that will bring the potential of the Ethereum decentralized network to the public. While the blockchain ecosystem will take time to develop and fully integrate with wider economies, we are already seeing many organizations deliver applications that interact with the Ethereum blockchain to create new ways of generating and exchanging value.
This wave of decentralized applications – or dApps – is evolving models in industries as broad as finance, music, gaming, and social media, with notable results, and is pushing the blockchain industry into an era that is less about speculation and more about results, adoption and substantial improvement in users’ lives. Some relevant projects are:
- Metamask: a web browser plugin that connects your device to the Ethereum network.
- Brave: An integrated web and mobile browser for BAT and ERC-20 tokens.
- Ethereum Name Service: a platform to create custom and simple ETH wallet addresses.
- Decentraland: A virtual reality platform where users create, experience, and monetize content and apps.
- Gnosis: A prediction market and a DutchX protocol for valuing digital assets.
- CryptoKitties: The infamous game that brought down the Ethereum network allows players to produce and trade unique digital kittens.
Consensus mechanism
Blockchains require network members to reach an agreement before adding new blocks. A consensus mechanism is required to determine whether a particular transaction is legitimate or not, using a network-specific cryptographic validation method. The consensus mechanism is also useful for resolving conflicts between multiple concurrent competing entries, such as when different participants propose different transactions on the same asset. This mechanism ensures proper transaction sequencing and prevents low-performing participants from exploiting the system. There are several types of consensus mechanisms, but Ethereum applies:
Proof of Stake (PoS) - A proof of stake scheme implies that the owner of coins can earn coins simply by proving that she owns a certain amount of coins, rather than solving difficult mathematical algorithmic problems (i.e. mining for coins).
Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) is an environmentally safe and secure runtime where programmers can work remotely, which allows them to upload progressive updates to the Ethereum blockchain, and that has led to the emergence of numerous decentralized applications (dApps). In other words, the EVM is a large computer distributed throughout the network, where codes and data of each individual contract, indicated respectively as codes and state variables, are shared by all nodes. The validation of a new Ethereum block determines the updating of all the state variables, and among these, the balance of all accounts.
Conclusion
Understanding the technology behind Ethereum is primordial. The majority of the main projects today are somehow inspired by the main technologies developed in Ethereum or were created with the main purpose of solving Ethereum’s limitations. The knowledge you acquired in this module will be of great relevance for when you’re studying other projects.
Highlights
Solidity is a statically typed programming language with syntax heavily influenced by JavaScript that allows programmers to create smart contracts.
Ethereum is a blockchain that allows the transfer of cryptocurrencies between individuals without the need for intermediaries.
Ethereum's consensus mechanism was mainly through Proof-of-Work (PoW), and that's why Ethereum mining was a common activity in the crypto sector. After an update called "The Merge", which will be further discussed later, its consensus mechanism turned into Proof-of-Stake (PoS).
The Ethereum Virtual Machine (EVM) is an environment that allows programmers to upload progressive updates to the Ethereum blockchain, leading to the emergence of numerous decentralized applications (dApps).
Related Articles