Ethereum protocol and a life cycle of its transaction

  • consensus mechanism: Ethereum uses a Proof-of-Work (PoW) consensus algorithm, but plans to transfer to a Proof-of-Stake system. In the former, miners are required to validate transactions by performing computational work, solving mathematical problems. Under a POS system, ‘miners’ are chosen in a deterministic way, depending on the number of coins they choose to stake. A major reason for this change is that POW is way inefficient as far as energy is concerned, requiring huge amounts of electricity in the mining process. According to research, a single Bitcoin transaction required the same amount of electricity as powering 1.57 American households for one day.
  • transaction speed: ideally, the blockchain can process 15 transactions per second (average amount). The average block time (time taken for a block to be mined) for Ethereum is 15–20 seconds — this is faster than Bitcoin’s average of 10 minutes each block. Transaction, of course, can take longer due to the network’s congestion. Ethereum is constantly working to enhance the scalability of the network, and one solution is called Sharding.
  • programming language: Solidity is a custom programming language for writing smart contracts, created specifically for Ethereum. The main goal was to build a more massive foundational layer coupled with a powerful scripting language for all of these protocols to build upon. Ethereum is a modular, stateful, Turing-complete contract scripting system paired to a blockchain and developed with a philosophy of simplicity, universal accessibility and generalization.
  • number of projects, traction: there are currently more than 1400 projects built on top of the Ethereum platform, making it the most popular platform for the creation of dApps and tokens. Ethereum’s dominance as the platform of choice for new projects is attributed to its unifying standards, which simplifies integration into the Ethereum network.

Proecess of the Ethereum transactions

  • construct the raw transaction object **
  • sign the Transaction **
  • transaction is validated locally
  • transaction is broadcast to the network
  • miner Node accepts the transaction
  • miner Node finds a valid block and broadcasts to the network
  • local Node receives/syncs the new block

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