Understanding Blockchain
Blockchain technology emerged prominently with Bitcoin's release in 2009. It functions as a distributed ledger where transactions are recorded in a peer-to-peer network. Once confirmed, these transactions become immutable—they cannot be altered or deleted.
Key Features:
- Decentralization: No central authority controls the ledger.
- Transparency: All transactions are public and verifiable.
- Security: Cryptographic techniques ensure data integrity.
Visualize Blockchain as a chain of blocks, each containing multiple transactions linked cryptographically to the preceding block.
Transactions and Blocks
Transactions:
- Atomic operations modifying the ledger’s state.
- Examples: Transferring tokens (Bitcoin) or executing code (Ethereum).
Blocks:
- Group validated transactions.
- Miners add blocks to the ledger via consensus protocols (e.g., Proof of Work).
Public Key Cryptography (PKI):
- Private Key: Signs transactions.
- Public Key: Derives a wallet address for receiving transactions.
- Tokens: Represented as native currency (e.g., Ether in Ethereum).
How tokens enter circulation:
- Miners validate blocks and earn rewards (e.g., Bitcoin’s "Coinbase" transaction).
- Rewards are distributed, enabling token flow across the network.
Consensus Protocols
Proof of Work (PoW):
- Miners solve complex mathematical problems to validate blocks.
- Drawback: High energy consumption.
Proof of Stake (PoS):
- Validators stake tokens to participate.
- Ethereum 2.0: Transitioning to PoS for scalability and efficiency.
Wallets
Types:
- Deterministic: Recoverable via a seed phrase.
- Non-deterministic: Irrecoverable if private keys are lost.
Remember: "Not your keys, not your coins"—custodial wallets (e.g., exchanges) hold your private keys.
Ethereum and Smart Contracts
Ethereum:
- Extends Bitcoin’s functionality by enabling arbitrary code execution via Smart Contracts.
Smart Contracts:
- Self-executing programs stored on the Blockchain.
Use Cases:
- Token creation (e.g., ERC-20).
- Decentralized Finance (DeFi).
Key Aspects:
- Execution Context: Isolated from external systems.
- Gas: Paid in Ether for computation/storage.
- Immutability: Code cannot be updated post-deployment.
Example:
pragma solidity >=0.8.4;
contract MyCoin {
mapping (address => uint) balances;
event Transfer(address indexed _from, address indexed _to, uint256 _value);
constructor() {
balances[tx.origin] = 10000;
}
function sendCoin(address receiver, uint amount) public returns(bool) {
require(balances[msg.sender] >= amount);
balances[msg.sender] -= amount;
balances[receiver] += amount;
emit Transfer(msg.sender, receiver, amount);
return true;
}
}Decentralized Applications (DApps)
Definition:
Front-end interfaces interacting with Smart Contracts via:
- Web3.js: JavaScript library for Ethereum.
- JSON-RPC: Nodes expose APIs for transaction submissions.
👉 Explore Ethereum Development Tools
Deploying Smart Contracts
Tools:
- Solidity Compiler (
solc): Converts code to EVM bytecode. - Ganache: Local Blockchain emulator for testing.
Deployment Steps:
- Compile contract (
solc --bin --abi MyCoin.sol). Deploy using Web3.js:
const instance = await MyCoin.deploy().send({ from, gas: 1000000 }); console.log(`Deployed at: ${instance.options.address}`);
FAQs
1. What’s the difference between Bitcoin and Ethereum?
Bitcoin focuses on decentralized payments, while Ethereum supports programmable contracts and DApps.
2. How is Gas calculated?
Gas = Computation cost + Storage cost. Price is set per transaction (e.g., 25 Gwei).
3. Can Smart Contracts be updated?
No—deploy a new contract to modify code.
4. What’s MetaMask?
A wallet for managing Ethereum keys and interacting with DApps.
5. How do I get testnet Ether?
Use faucets (e.g., Ropsten) for free test tokens.
Conclusion
Ethereum’s Smart Contracts revolutionize decentralized applications, though challenges like scalability persist. The ecosystem continues evolving with upgrades like Ethereum 2.0.