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Thursday, 27 September 2018

Ethereum in BlockChain

Ethereum is a blockchain based distributed computing platform that enables developers to build and deploy their decentralized applications.


Features of Ethereum :-
  • Cryptocurrency
  • Smart Contract
  • Ethereum Virtual Machine 
  • Dapp
  • DAO

Cryptocurrency  :-

Ether (ETH) is a cryptocurrency that runs Ethereum network.
  • It is used to pay for the computation resources and transaction fees on the Ethereum network.
  • like Bitcoin, Ether is also a peer to peer currency.
  • Apart from paying for transactions.Ether is also used to buy gas, which is used to pay for computation.
Note :- Gas is the execution fee paid by a user running a transaction in Ethereum.
  • Ether can be utilized for building decentralized applications, smart contracts and making standard peer to peer payments.



Smart Contract :-
  • A smart contract is a computer program that facilitates the exchange of money, shares, property etc..
 Note :- These contracts can be created by any user on Ethereum network.
  • It contains the terms and conditions of a mutually agreed contract between the peers.
  • For the verification process, smart contract is carried out among anonymous parties of the network without the need of a central authority.
  • It provides the transfer of any asset or currency in a transparent and trustworthy manner.
What happens in traditional system of contract?
  • Agreement
  • Third Party for execution
  • Data tampering is possible
What happens in smart contract?
  • Agreement coded in a program
  • Result is verified by users of Ethereum blockchain network.
  • Once a contract is executed, it cannot be tampered.
Let's consider an example, where Jack has give a contract of $500 to Elsa for developing his company's website.
Note :- EVM is a runtime compiler to execute smart contract code



Ethereum Virtual Machine :-

EVM is a virtual machine designed to operate as a runtime environment for Ethereum based smart contracts.
Note :- EVM is operated in a sandboxed environment (isolated from main network). This is perfect testing environment.
  • Any programming language in the smart contract is compiled into 'bytecode'.
  • The bytecode can be read and executed using an Ethereum feature called Ethereum Virtual Machine (EVM).
  • EVM guarantees security by preventing cyber attacks. 
 How does EVM work?

Note :- All the nodes on Ethereum network execute smart using their EVM's.

DAPP :-
  • A Dapp (decentralized application) consists of backend code that runs on a distributed P2P network.
  • It is a software designed to work on an Ethereum network (without being controlled by a centralized system).
  • It provides direct interaction between end users and providers. 
  • An application qualifies as Dapp when it is open sourced and uses tokens.
 Note :- Dapp allows the backend code and data to be decentralized.

DAO :-
  • Dcentralized Autonomous Organization is a digital organization that aims to operate without the need of hierarchical management.
  • It exists on the blockchain network where it is governed by its protocols and rely upon smart contracts.
  • It manages business decision through smart contracts or voting system.
How its works?
  • People add funds to the DAO
  • Based on that, each member is given a token which represents the percentage of shares in the DAO.
  • These tokens are used to vote in the DAO where the proposal status is decided based on maximum votes.

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