Ethereum beyond bitcoin
Blockchain 2.0
The previous post discussed cryptoassets as a broad term, with more potential, than cryptocurrency. In venturing beyond bitcoin, we see that facts on the ledger can go beyond financial transactions and no other project illustrates this better than Ethereum. Not only is it foundational to understanding blockchain, but it also shows us where crypto is headed next. This video, titled: “Ethereum in 25 minutes” by Vitalik Buterin himself, provides a quick introduction to the building blocks of the Ethereum blockchain.
The key points for context are actually covered in the first few slides of the video where Vitalik recounts how people were thinking about blockchain in 2013.
For Ethereum, the smart-phone analogy is less about being advanced, and more about being a platform — a platform for developers to build applications, any application they can dream of, because Ethereum doesn’t try to plan out every use case in advanced, like some of the other projects at the time. As a result, the thinking behind Ethereum’s ecosystem is not unlike the App Store or Google Play (see Stateofthedapps to see all applications built on Ethereum).
The rest of talk details Ethereum as a state transition system. Bitcoin is also a state transition system, so this is not exactly new territory. It’s simply another way of looking at blockchain.
If you think back to how a network of nodes and miners help secure the network through proof-of-work, you’ll remember the process of a node broadcasting to the network, a new transaction that needs to be added to the blockchain. Furthermore, each node could download the whole blockchain to see the history of transaction. By downloading a blockchain, that node takes the state of the network (i.e., consensus on facts) and produces a new state.
Since we’re no longer just doing financial transactions, the details around what gets sent in a transaction helps us see how Ethereum works differently from Bitcoin.
Here are some high-level messages from the video:
- Ethereum is a general-purpose platform for building decentralized applications on top
- New additions include: a) Built-in programming language, b) Smart contracts
- Ethereum is a state transition system
You can watch the 25 minute video for additional details on how transactions get executed, the concept of gas, merkle trees, ethereum virtual machine, new mining algorithms and much more. It’ll take longer than 25 minutes to really unpack. But fear not, in a follow-up post, we will dig into the details that are skimmed over here.
