Ethereum, a decentralized, open-source blockchain with smart contract functionality, was introduced by Vitalik Buterin in 2014 with the goal of creating a protocol for building decentralized applications (DApps). Today, we'll explore how Ethereum differs from Bitcoin, which focuses on digital peer-to-peer payments, by providing a platform for developers to build and deploy various types of DApps, such as cryptocurrencies and decentralized lending platforms.
One concern with Ethereum is scalability, as every transaction needs to be processed by every node in the network, similar to Bitcoin. However, Ethereum aims to mitigate this issue by:
Ensuring at least one full node is a miner, creating a lower bound on the number of full nodes.
Including an intermediate state tree root in the blockchain after processing each transaction, enabling verification protocols to circumvent the centralization problem.
Ethereum Virtual Machine (EVM)
Ethereum utilizes the Ethereum Virtual Machine (EVM), which executes as a stack machine with a depth of 1024 items. Each item is a 256-bit word, chosen for ease of use with 256-bit cryptography. The EVM executes compiled smart contract bytecode as a number of EVM opcodes, which perform standard stack operations like XOR, AND, ADD, SUB, etc.
Ethereum introduces a built-in Turing-complete programming language, allowing developers to write smart contracts and decentralized applications with arbitrary rules of ownership, transaction format, and state transition functions. This enables the creation of simple applications, such as Namecoin, in just a few lines of code, and more complex applications like currencies and reputation systems in under twenty lines.
Ethereum has a wide range of applications across finance, identity, reputation, prediction markets, file storage, and decentralized autonomous organizations. It also aims to develop a more environmentally friendly consensus mechanism than Bitcoin.
Ethereum explores crypto-economic scenarios, where systems combine economic incentives with cryptography, particularly in adversarial environments. The platform offers a platform for automating archaic systems and removing the inherent weaknesses of the trust-based model not only for payments and value transfer but also for more advanced applications and marketplaces.
An annotated version of the Ethereum Whitepaper can be found at https://ethereum.org/en/whitepaper, which provides a more in-depth understanding of the content and technical aspects of the whitepaper.
The Ethereum whitepaper offers a comprehensive insight into the project's vision, goals, technological solutions, and applications. It emphasizes the importance of decentralization, scalability, and crypto-economic scenarios while maintaining a focus on real-world utility and practicality.
The Ethereum Yellowpaper describes the Ethereum protocol in detail, specifying the Ethereum Virtual Machine (EVM) and the consensus mechanism used. All EVM implementations must adhere to the Ethereum Yellowpaper specification.
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