Crypto Unlocked: In the bleak midwinter - Page 12

Chapter 2 : Ethereum in focus

Ethereum : The basics

Ethereum is a decentralised blockchain with smart contract functionality
Author : Christian Hazim
Bitcoin ’ s creation in 2009 marked the first successful application of blockchain technology as a finitesupply decentralised currency . Significantly , it was open to anyone . Bitcoin inspired developers to discover broader tools and applications powered by the security , transparency and scalability of blockchain technology . While the bitcoin network provided a base for a medium of exchange , a young programmer saw it as a method capable of challenging centralised entities across the economy .
In 2013 , at just 19 , Vitalik Buterin published the Ethereum whitepaper , in which he introduced a novel , general-purpose blockchain network that allows developers to build programable conditions and applications . In essence , Buterin created a system of programmable money that revolutionised how people think about , create , and deploy blockchain technology . previous , block . The Ethereum Virtual Machine ( EVM ), Ethereum ’ s distributed state machine , is responsible for maintaining the network ’ s data structure and standards . In essence , the EVM defines the rules for calculating a transition in state between blocks . A transition in state could be a simple change in an account balance , or it could be the result of a more complex smart contract interaction .
Ethereum introduced a novel blockchain with a built-in Turingcomplete language , which is a programming language that can be used to embed logic and complete more advanced transactions than simple payments . The introduction of this language has allowed developers to create and integrate applications into Ethereum , serving as the base layer of an open ecosystem capable of hosting smart contracts and decentralised applications ( DApps ).
Smart contracts : The programmable infrastructure for DApps
Smart contracts comprise much of Ethereum ’ s value proposition . A smart contract has predefined criteria that self-execute a response based on programmed conditions , and the agreement is recorded in the blockchain . Smart contracts eliminate the need for a third-party intermediary . Data feeds , conditions , rules and agreements embedded in the contract automatically trigger a pre-defined outcome without the need for a trusted intermediary to execute the contract . Any application can deploy a smart contract and compose functionality .
Ethereum smart contracts are activated and deployed by submitting the contract as a transaction . They also have ETH balances that can trigger transactions through the network once the conditions of the contract are met . Because the network is open source , a library of implemented smart contracts is available for developers to
Ethereum : A blockchain with smart contract functionality
The Ethereum network uses fully transparent blockchain technology to record transactions and track states on the ledger . Network participants can find a consensus state , which is where they agree on the blockchain ’ s distributed ledger , by independently validating transactions and blocks against the protocol rules . Blocks are individual data structures built from an aggregate transaction list and include a reference to its parent , or