Jhaymes blog

Ethereum

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Jhaym3s
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5 min read

Hi there, My name is Jhaymes and in the next couple of articles, we will gradually learn about Ethereum and why it has an essential role to play in building the new internet, web3.

We will start with the story behind Ethereum. Learning the history of other technology is not that important but I think knowing why Ethereum was created in the first place can help you understand what the project is and why you should spend your time learning about it.

A Short history lesson

It all started in October 2008 when a mysterious Satoshi Nakamoto released the official bitcoin white paper describing a system to allow peer-to-peer transactions without the middle man (like the bank), and the bitcoin network went live by January 2009. However, the only use of bitcoin was to enable financial transactions. People realized they could use this innovation to not just transfer currencies.

By December 2013, Vitalik authored his white paper. Vitalik envisioned using blockchain to create more advanced applications and sub-crypto currencies. Then came the birth of Ethereum. Vitalik also mentioned something known as a smart contract in his white paper. A smart contract is a piece of code that lives in the Ethereum network and runs to automate the execution of an agreement so that all participants can be certain of the outcome when predetermined conditions are met. As a matter of fact, the popular Binance Smart Chain started as a smart contract built on top of the Ethereum network. The Ethereum main network went public in July 2015.

What is Blockchain

It would be really difficult to talk about Ethereum without understanding what blockchain is, so I will explain briefly what blockchain is. Blockchain is a shared digital, decentralized, and immutable ledger of linked transactions. This means the blockchain is a database that stores transaction histories that can not be edited and are not controlled by anyone or the government. To simplify more Blocks are batches of transactions with two hashes, one inherited from the previous and one to be inherited from the next transaction. This links blocks together (in a chain) because hashes are cryptographically derived from the block data. Hence the name blockchain right?

What is Ethereum?

Ethereum is an open-source public service that uses blockchain technology to facilitate smart contracts and cryptocurrency trading securely without a third party. Ethereum currently uses a proof-of-work consensus mechanism. This means that anyone who wants to add new blocks to the chain must solve a difficult puzzle that requires a lot of computing power. Solving the puzzle "proves" that you have spent the computational resources. When working with Ethereum, we are working with a network of computers. These networks are used to transfer money between parties and store data, which are what allow us to create Decentralized Applications(DApps) with Ethereum. It is important to point out that Ethereum is not the same as ether. Ethereum is a technology that uses blockchain development while Ether is the native cryptocurrency of the technology, Ethereum. Ether (ETH) is the cryptocurrency used to pay for computing services on the Ethereum blockchain. Ether has a price, Ethereum does.

Ethereum Networks

It is essential to know that there are many Ethereum networks. There is the main network where everyone uses for the deployment of production applications, these are where coins are worth real money. There are test networks used solely for testing smart contracts created. Some known test networks are the Rinkeby Test Network and Kovan Test Network. You can also create a network on your computer and either make it private for personal use or public for other developers to use. These networks are formed by one or more nodes. A node is a machine that is running an Ethereum client. Basically, any computer that installs and runs Ethereum software on it is a node.

What is a smart contract?

Smart contracts are codes that lives on the blockchain written to self-execute once the terms of two parties involved in a transaction are met. When working with the Ethereum blockchain there are mainly two smart chain languages namely: Solidity and Vyper. Other programming languages like JavaScript and Python can also help a lot in blockchain. In future articles, we will focus on solidity and how to write smart contracts with it.

Ethereum Virtual Machine

The Ethereum Virtual Machine (EVM) is the runtime environment for transaction execution in Ethereum. It allows developers to create decentralized applications (DApps).

DApps

Decentralized Applications(DApps) are just like regular applications we use daily but DApps use smart contracts for their app logic(backend) and the Ethereum blockchain for data storage instead of a centralized server.

Accounts

An Ethereum account is an entity with an ether (ETH) balance that can send transactions on Ethereum. There are two kinds of accounts in Ethereum which share the same address space - External accounts controlled by anyone with the private keys and Contract accounts controlled by the smart contract deployed to the network. Regardless of whether or not the account stores code, the two types are treated equally by the EVM. Every account has a persistent key-value store mapping 256-bit words to 256-bit words called storage. Nonce: The number of transactions performed by this account or the number of contracts deployed by this account if it is a contract account, and Balance: The number of Wei owned by this account. Wei is a denomination of ETH and there are 1e+18 Wei per ETH.

Summary

  • Blockchain is a decentralized ledger that stores transactions.
  • Ethereum is a blockchain technology with smart contract functionality.
  • Ether(ETH) is the native cryptocurrency of the Ethereum blockchain
  • A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code.
  • Smart contracts are popularly known to be written in Solidity or Vyper.
  • DApps are applications that are not controlled by anyone and use smart contracts as it’s logic.
  • The External account is controlled by individuals and Contract accounts are controlled by smart contracts.
  • Wei is a denomination of ETH
  • 1e+18 Wei equals 1ETH

There is more to learn on Ethereum. I recommend you visit Ethereum's official developers' docs to learn more. In our next article, we would be jumping right into Solidity and how to create a smart contract with it. Stay tuned.