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Introduction to Ethereum​


Ethereum intends to provide: a blockchain with a built-in Turing-complete programming language, allowing anyone to write smart contracts and decentralized applications where they can create their own arbitrary rules for ownership, transaction formats and state transition functions.

  • The Ethereum platform enables developers to build decentralized applications with built-in economic functions, by programming on top of Ether.

  • Ethereum has a general-purpose programmable blockchain that runs a virtual machine capable of executing code.

  • Smart contracts run inside a powerful virtual machine known as EVM.

  • Smart contracts are compiled to a low-level, stack based bytecode language, referred to as "Ethereum virtual machine code" or "EVM Code".

  • Ethereum has its own cryptocurrency, Ether, which is used to pay for certain activities on the Ethereum network.

  • Ethereum is often referred to as "the world computer"


"Ether" is the main internal crypto-fuel of Ethereum, and is used to pay transaction fees.

Ethereum Architecture​

The main components of the Ethereum blockchain system are:

  • P2P network
  • Consensys rules
  • Transactions
  • State Machine
  • Data structures
  • Economic security
  • Clients

P2P network​

Ethereum runs on the Ethereum main network, which is addressable on TCP port 30303, and runs a protocol called ÐΞVp2p.

Consensus rules​

  • Ethereum 1.0 uses a Proof-of-Work Algorithm called Ethash to achieve consensus.
  • While Ethereum 1.0 uses a proof-of-work, Ethereum 2.0 will use a proof-of-stake (PoS) mechanism to achieve consensus.


Ethereum transactions are network messages that include (among other things) a sender, recipient, value, and data payload.

State machine​

Ethereum state transitions are processed by the Ethereum Virtual Machine (EVM), a stack-based virtual machine that executes bytecode (machine-language instructions). EVM programs, called "smart contracts," are written in high-level languages (e.g., Solidity) and compiled to bytecode for execution on the EVM.

Data structures​

Ethereum’s state is stored locally on each node as a database (usually Google’s LevelDB), which contains the transactions and system state in a serialized hashed data structure called a Merkle Patricia Tree.

Consensus algorithm​

Ethereum uses Bitcoin’s consensus model, Nakamoto Consensus, which uses sequential single-signature blocks, weighted in importance by PoW to determine the longest chain and therefore the current state. However, there are plans to move to a PoS weighted voting system, codenamed Casper, in the near future.

Economic security​

Ethereum currently uses a PoW algorithm called Ethash, but this will eventually be dropped with the move to PoS at some point in the future.


An Ethereum client is a software application that implements the Ethereum specification and communicates over the peer-to-peer network with other Ethereum clients. Ethereum has several interoperable implementations of the client software, the most prominent of which are Go-Ethereum (Geth) and Parity.



Ethereum Accounts​

In Ethereum, the state as part of the state machine is made up of objects called accounts, with each account having a 20-byte address and state transitions being direct transfers of value and information between accounts.

An Ethereum account contains four fields:

  • The nonce, a counter used to make sure each transaction can only be processed once
  • The account's current ether balance
  • The account's contract code, if present
  • The account's storage (empty by default)

There are two types of accounts:

  • Externally owned accounts
  • Contract accounts
Externally owned accounts
  • Externally owned accounts are accounts controlled by private keys.
  • An externally owned account has no code, and one can send messages from an externally owned account by creating and signing a transaction.
Contract Accounts
  • Contract accounts are accounts that are controlled by their contract code.
  • In a Contract account, every time the contract account receives a message its code activates, allowing it to read and write to internal storage and send other messages or create contracts in turn.

Messages and Transactions​


Every transaction in Ethereum contain:

  • The recipient of the message
  • A signature identifying the sender
  • The amount of ether to transfer from the sender to the recipient
  • An optional data field
  • A STARTGAS value, representing the maximum number of computational steps the transaction execution is allowed to take
  • A GASPRICE value, representing the fee the sender pays per computational step

The data field is an optional field taht a virtual machine can parse and use for example as function arguments to a contract.

  • The STARTGAS and GASPRICE fields are crucial for Ethereum's anti-denial of service model.
  • The fundamental unit of computation is gas; usually, a computational step costs 1 gas, but some operations cost higher amounts of gas because they are more computationally expensive, or increase the amount of data that must be stored as part of the state.
  • Every Ethereum transaction requires payment of a fee, which is collected by the miners to validate the transaction.
  • Reading from the blockchain is free of gas fee.
  • Writing costs you gas as it modifies the blockchain and the miners have to run computations to achieve consensus.


  • Essentially, a message is like a transaction, except it is produced by a contract and not an external actor.
  • A message is produced when a contract currently executing code executes the CALL opcode, which produces and executes a message.
  • Like a transaction, a message leads to the recipient account running its code.
  • Thus, contracts can have relationships with other contracts in exactly the same way that external actors can.

A message contains:

  • The sender of the message (implicit)
  • The recipient of the message
  • The amount of ether to transfer alongside the message
  • An optional data field
  • A STARTGAS value
Gas allowance

Note that the gas allowance assigned by a transaction or contract applies to the total gas consumed by that transaction and all sub-executions.

Code Execution​

  • The code in Ethereum contracts is written in a low-level, stack-based bytecode language, referred to as "Ethereum virtual machine code" or "EVM code".
  • The code consists of a series of bytes, where each byte represents an operation.

The operations have access to three types of space in which to store data:

  • Stack: a last-in-first-out container to which values can be pushed and popped
  • Memory: an infinitely expandable byte array
  • Storage: the contracts' long-term storage, a key-value store.

Writing to Storage persists for the long term, unlike Stack and *Memory


The code can also access the value, sender and data of the incoming message, as well as block header data, and the code can also return a byte array of data as an output.

Ethereum block Explorers​

  • Block explorers are your portal to Ethereum's data.
  • They are basically a search engine for all transactions related to the specific blockchain.
  • Blockchain explorers leverage the AAPI and nodes for fetching data from the blockchain.
  • You can use them to see real-time data on blocks, transactions, miners, accounts, and other on-chain activity.

:::demo :::

API, Nodes, and Clients​


A node is a computer running Ethereum client software. A client is an implementation of Ethereum that verifies all transactions in each block, keeping the network secure and the data accurate.

You can read more about Nodes & Clients here:

There are three types of nodes that can be run by an Ethereum client:

  • Full nodes
  • Light nodes
  • Archive nodes
Full Node
  • Stores full blockchain data (although this is periodically pruned so a full node does not store all state data back to genesis)
  • Participates in block validation, verifies all blocks and states.
  • All states can be derived from a full node (although very old states are reconstructed from requests made to archive nodes).
  • Serves the network and provides data on request.
  • This type of node is very expensive and resource intensive to run.
Light node
  • Instead of downloading every block, light nodes download block headers. These headers only contain summary information about the contents of the blocks.
  • Where there is a need for additional information, a light node will query the full node.
  • Light nodes enable users to participate in the Ethereum network without the powerful hardware or high bandwidth required to run full nodes.
  • In future, light nodes might run on mobile phones or embedded devices.
Archive nodes
  • Stores everything kept in the full node and builds an archive of historical states.
  • Aptly named, these nodes serve as a sort of archive for the blockchain data.
  • Archive nodes can save terabytes of data, which makes them less attractive for an average user.
  • Ethereum clients provide a JSON-RPC interface as per the Ethereum's specification.
  • This enables interaction with the Ethereum's blockchain data.

If you do not want to run your own node to use in light clients like wallets, there are third party, both centralized and decelitralized, API providers.

Centralised API Provider
  • Infura
  • Alchemy
Decentralized API Provider
  • Pokt Network

You can find Ethereum JSON-RPC Specification here.