source: Mastering Ethereum, Chapter 1 by Andreas Antonopoulos

fundamentally, Ethereum is a state machine

  • deterministic but practically unbounded
  • globally accessible singleton state

at a higher level, Ethereum is an open source, decentralized computing infrastructure.

  • executes smart contracts
  • uses a blockchain to synchronize state changes
  • cryptocurrency: ether - used to constrain execution resource costs

similarities to Bitcoin

  • peer-to-peer network
  • Byzantine fault-tolerant consensus algorithm
  • use of cryptographic primitives

differences from Bitcoin

  • Ethereum isn’t primarily for digital payment
  • general-purpose programmable blockchain
  • programming language is Turing complete
  • tracks more than currency ownership

Ethereum as a blockchain

  • a peer-to-peer network uses gossip protocol
    • the Ethereum main network
  • transactions cause state transitions
    • network messages, include values, data payload
  • consensus rules
    • defined in the Yellow Paper
  • a state machine
    • the Ethereum Virtual Machine (EVM) executes bytecode
    • smart contracts: EVM programs
  • a chain of blocks (cryptographically secure), acts as a journal
  • a consensus algorithm forcing participants to cooperate
    • uses sequential blocks
    • currently uses proof of work, but moving to proof of stake
  • data structures
    • Ethereum’s state is on each node as a database
    • Merkle Patricia Tree serialized hashed datastructure, contains transactions and system state

Ethereum is a general purpose blockchain

tracks state transitions of a general purpose data store (key-value tuples)

  • stores code and data

Turing completeness

a system is Turing complete if it can be used to simulate any Turing machine

  • Universal Turing machine (UTM) a Turing complete system
  • Ethereum is a UTM. It can execute any stored program in the EVM

Turing completeness is easy to achieve, and it’s dangerous. It means infinite loops are possible

  • it’s impossible to predict when or if a program will finish

Solution? Gas

Each instruction has a predetermined cost in units of gas. This limits computation for individual programs

  • Ether needs to be included in transactions

DApps

web applications, built on top of open, decentralized, p2p infrastructure services. Includes:

  • smart contracts on a blockchain
  • a web frontend

web3

The third “version” of the web, centered around DApps

the web3.js JavaScript library - meant to work with the Ethereum blockchain