How Ethereum Works
Posted By : Mohd Adnan | 23-Dec-2017
Ethereum was created with aim of abstracting away bitcoin's design so that the developers can create agreements and applications featuring new rules of ownership, additional steps, or alternative formats of transaction.The platform is built specifically for encouraging smart contracts. Such contracts help individuals to exchange shares, property, money, or any other valuable thing in a conflict-free and transparent way without the need of an intermediary.
Smart Contracts- An Outline
Smart contracts allow the network to transfer and exchange the value, validating the transactions only if meets certain set conditions. However, Bitcoin also supports smart contracts but it is limited to use of currency. Contrastingly, ethereum has replaced the restrictive language of bitcoin with a simple language empowering the developers to write programs of their own.
Working of Ethereum Blockchain in Detail
Ethereum Blockchain’s structure is almost the same as of bitcoin's. The only difference is of sharing the entire transaction history, which is possible with ethereum. Every network of node stores a copy of the transaction history. In addition, it also stores the recent state of every smart contract. The network keeps track of the current information for every single ethereum application. It maintains records of the user's balance, codes of all smart contracts and the location where it is stored.
It sounds complex, but the idea is quite simple. As soon as a transaction tales place, the total amount is divided by the network similarly like it is done with paper money. This is done to issue back the value and make the data behave like change or physical coins. For the future transactions, the network adds up the total value of change classified as unspent or spent. Unlike Bitcoins, Ethereum uses accounts for the process. Ether tokens not only appear in the individual’s wallet but are also portable to another accounts like the funds in bank accounts.
It is advised to ensure in-depth understanding of the ethereum concepts in order to avoid encounter with the security problems when transacting. Note that there is still a need for better tools to upgrade smart contract security. It is better to plat safe than to regret.