Introduction to Ethereum based Blockchain

What is Blockchain ?

  1. No central authority.
  2. Elimination of intermediaries
  3. Real-time settlement
  4. Drastic reduction in operational costs
  5. High levels of Transparency
  6. It enables bilateral settlement by eliminating midpoint failures, delays, collateral costs, and minimizes credit risks and exchange spreads.
  • Distributed agreement
  • Transaction verification
  • Uniqueness
  • Value transfer
  • Security
  • Cryptocurrency
  • Immutability
  • Platforms for smart contracts
  • Smart property
  • Smart contracts

Where Blockchain can be implemented ?

  • Voting — with a distributed ledger, we can validate each and every vote and ensure no manipulation by third parties is occurring.
  • Allows the unbanked to send money across borders — over 2 billion people do not have access to bank accounts, blockchain will enable them to send money home and economically better their families.
  • Secure data storage — encrypted data will be fractionally stored across the blockchain, giving only the owner of the data access to the data when required.
  • Contracts — smart contracts can be written into the blockchain to automatically trigger responses based on real time events.

Who controls the blockchain ?

How powerful is blockchain ?

Who will use blockchain ?

  1. The bitcoin network and blockchain system works very similar to the decentralized money management approach.
  2. The bitcoin network consists of thousands of computers (nodes), each of which maintains its own ledger. These computers communicate with each other by sending messages over the Internet.
  3. For example, if A was transferring 10 bitcoins to B, A would click initiate the transaction on the bitcoin wallet, and it would broadcast this transaction to all other bitcoin users.
  1. Anyone can join the bitcoin network by installing the bitcoin software.
  2. The software automatically downloads the global ledger — Blockchain, onto the computer.
  3. This distributed ledger allows bitcoin users to see every transaction that has ever happened in bitcoin’s history! Users can even browse through them online on sites.
  1. Contracts lives on the Ethereum blockchain.
  2. They have their own Ethereum address and balance.
  3. They can send and receive transactions.
  4. They are activated when they receive a transaction, and can be deactivated.
  5. The Ethereum Virtual Machine runs a turing complete language.
  6. They have a fee per CPU step, with extra for storage.
  7. The user can run the application on their local blockchain.
  1. suppose X holds 1 ethereum in virtual wallet with associated public and private key.
  2. X wants to send 1 ethereum to Y who also has a wallet.
  3. Y sends his ethereum wallet address and public key to X.
  4. X creates transaction message with Y’s address and transaction amount.
  5. X signs transaction with his private key and announces his public key for signature verification
  6. X broadcasts the transaction on ethereum network for all to see.

*note:The Public Key is hashed with SHA-3 to produce a 256-bit output. The upper 96 bits are discarded, and the lower 160 bits become the Account Address.

  1. Fully Distributed System: No centralized authority.
  2. Transparency: All transactions are publically recorded and available for scrutiny.
  3. Security: The ledger is distributed across thousands of computers, meaning a practical hack is near-impossible.
  4. Risk: No single authority has control, which means if there is a fault, the rest of the network continues.
  5. Privacy: The user, or bitcoin owner, is anonymous and doesn’t need to provide ID credentials.
  6. Dependency: Use of the blockchain eliminates dependency on the base layer service for functionality.
  7. High Network Effects: There can be substantial benefits from very large groups of people (or even everyone) using the same service.

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