Evaluation of Ethereum
- 1. Evaluation of Ethereum Giuseppe Andreetti 1
- 2. Targets • Understand the Ethereum protocol • Compare Ethereum protocol to Bitcoin protocol • Learn Ethereum programming language • Build an Ethereum app 2
- 3. • Introduction • How Ethereum works • How Bitcoin works • Comparison between Bitcoin and Ethereum • Development of an Ethereum app 3 Index
- 4. 1 - Introduction The blockchain technology is the technology on which Bitcoin is based, this type of implementation was described the first time by Satoshi Nakamoto (it is a fictitious name used by the unknown person or persons who designed bitcoin and created its original standard) in 2008 by a white paper: “Bitcoin: A Peer-to-Peer Electronic Cash System”. Ethereum it is an open-source project built by many people around the world. In 2014, Ethereum founders Vitalik Buterin, Gavin Wood and Jeffrey Wilcke began work on a next-generation blockchain that had the ambitions to implement a general, fully trust-less smart contract platform. 4
- 5. 2 - How Ethereum works Ethereum incorporates many features and technologies that will be familiar to users of Bitcoin, while also introducing many modifications and innovations of its own. Ethereum consists in a list of components that includes: • cryptographic token and address system • network of validators (miners) • a consensus algorithm • a blockchain ledger • the ethereum Virtual Machine • a set of programing languages • complex economic structures 5
- 6. 2.1 Smart Contracts Smart contracts are softwares “written” on a shared secure database, traceable and immutable, and they verify automatically at a certain date or event some stipulation pre-established between 2 or more host in the network. There are often hundred condition in a single smart contract or there are many smart contract interconnected. 6
- 7. 2.2 Programming language and Dapp In Ethereum it is implemented a scripting language. The objective of this type of implementation is to allow people to easily write Dapp (Decentralized application) trough the use of the blockchain technology. Dapp is a tool for people and organizations, on different sides of an interaction use, to come together without any centralized intermediary. These apps consists in 2 parts: a frontend part written in HTML (an interface) and a backend part. The backend operations are validated by all nodes on the network. 7
- 8. 2.3 Ethereum Virtual Machine The Ethereum Virtual Machine (EVM) is executed by all the participants of the network and with EVM they can read/write on a blockchain both executable code and data. EVM provide security and prevent Denial-of-service attacks (DDoS). “Gas” is the name for a special unit used in Ethereum for running a transaction or contract. 8
- 9. 2.4 Miners Ethereum miner nodes are responsible for validating transactions and the state transitions that update the ledger. Transactions are grouped in blocks by miners. Miners are responsible for validating the transaction block and performing a hard mathematical computation or proof of work (PoW) which goes along used to validate the block of transactions. Miners that validate Ethereum transactions get paid in Ethers Ethereum mining was set up so that it could only be conducted with graphics processing units (GPUs). 9
- 10. 2.5 Blockchain ledger A blockchain ledger is a ledger designed on a distributed database based on a peer to peer network where are registered all the transaction committed. Ethereum blockchain tracks the state of every account, and all state transitions on the Ethereum blockchain are transfers of value and information between accounts. There are two types of accounts: • Externally Owned Accounts (EOAs), which are controlled by private keys. • Contract Accounts, which are controlled by their contract code and can only be “activated” by an EOA. 10
- 11. 2.6 Cryptographic token Ether is the name of the tokens used on the network currency used within Ethereum. It is used to pay for computation within the EVM. Ether token are transferred between accounts, but to prevent spam and manage resources on the network is used Gas, an internal transaction pricing mechanism. 11
- 12. 3 - How Bitcoin works Bitcoin is an electronic money. Bitcoin does not use a central institution. It uses a distributed database between network nodes that trace transactions, and uses encryption to handle functional aspects such as new currency generation and bitcoin property attribution. The Bitcoin network allows the holding and the anonymous transfer of coins. 12
- 13. 3.1 The ledger Bitcoin relies on a network of volunteers, to collectively implement a replicated ledger. The ledger tracks the balance of all accounts in the system. Each node keeps a complete replica of the ledger. 13
- 14. 3.2 Transaction Bitcoins contain the public key of their owner (i.e. the address). When a user A transfers money to user B, renounces his property by adding the public key of B (his address) to the coins in question and signing them with his private key. Then it transmits these coins into a message through the peer-to-peer network ("transaction”). 14
- 15. 3.3 Blocks The ledger replicas have to be consistent among all the nodes of the network and respect the same temporal order. Bitcoin do this by tentatively committing transactions and then synchronizing at regular intervals by broadcasting a block created by one of the nodes. 15
- 16. 3.4 Blockchain Have to be a chronological order over the blocks and therefore about the transactions contained within them. The blocks are organized in a directed tree. Each block contains a reference to a previously found block. The block b referenced by a block b’ is called its parent. 16
- 17. 4 - Comparison Between Bitcoin and Ethereum Common Points: • It is an open-source project built by many people around the world • Blockchain technology • Blocks in both bitcoin and ethereum containing information such as the block number • Miners are tasked with solving a complex mathematical problem in order to mine a block 17
- 18. 4 - Comparison Between Bitcoin and Ethereum Differences: • Ethereum was designed to be adaptable and flexible. It is easy to create new applications • The Bitcoin blockchain is a list of transactions, Ethereum basic unit is the account • Ethereum blocks contain a copy of both the transaction list and the most recent state • Ethereum(Ethash) and Bitcoin(SHA-256), different hashing algorithms • ETH vs. BTC units • Ethereum Turing-complete vs Bitcoin limited set of instruction (C++) 18
- 19. 5 - Development of Ethereum App • Proof of Existence It is a digital notary that stores hashes of documents as proofs of their existence. It certifies that the data existed at that time. It use: • cryptographic digest • time in which the file is submitted 19
- 20. 5 - Development of Ethereum App • Proof of Existence Instrument used: • testrpc • Solidity • Truffle 20
- 21. Conclusion Ethereum has: • better technological foundation than Bitcoin • many uses in the financial services industry as well Smart contract will push the growth of it. 21