1/14/23, 7:09 PM Intro to Ethereum | ethereum.

org

INTRO TO ETHEREUM
Last edit: @jmcook1186 ↗ , November 22, 2022

See contributors

Edit page

On this page

WHAT IS A BLOCKCHAIN?

A blockchain is a public database that is updated and shared across many computers in a
network.

"Block" refers to data and state being stored in consecutive groups known as "blocks". If you
send ETH to someone else, the transaction data needs to be added to a block to be successful.

"Chain" refers to the fact that each block cryptographically references its parent. In other words,
blocks get chained together. The data in a block cannot change without changing all
subsequent blocks, which would require the consensus of the entire network.

https://ethereum.org/en/developers/docs/intro-to-ethereum/ 1/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

Every computer in the network must agree upon each new block and the chain as a whole.
These computers are known as "nodes". Nodes ensure everyone interacting with the blockchain
has the same data. To accomplish this distributed agreement, blockchains need a consensus
mechanism.

Ethereum uses a proof-of-stake-based consensus mechanism. Anyone who wants to add new
blocks to the chain must stake at least 32 ETH into the deposit contract and run validator
software. They then can be randomly selected to propose blocks that other validators check
and add to the blockchain. In this model, there is usually only one chain, but network latency
and dishonest behavior can cause multiple blocks to exist at the same position near the head of
the chain. To resolve this, a fork-choice algorithm selects one canonical set of blocks. The blocks
selected are the ones that form the heaviest possible chain, where 'heavy' refers to the number
of validators that have endorsed the blocks (weighted by the ETH they have staked). There is a
system of rewards and penalties that strongly incentivize participants to be honest and online
as much as possible.

If you want to see how blockchain hashes data and then the previous block references all the
past blocks, be sure to check out this demo ↗ by Anders Brownworth and watch the
accompanying video below.

Watch Anders explain hashes in blockchains:

Blockchain 101 - A Visual Demo

Intro to Ethereum

https://ethereum.org/en/developers/docs/intro-to-ethereum/ 2/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

WHAT IS ETHEREUM?

Ethereum is a blockchain with a computer embedded in it. It is the foundation for building apps
and organizations in a decentralized, permissionless, censorship-resistant way.

In the Ethereum universe, there is a single, canonical computer (called the Ethereum Virtual
Machine, or EVM) whose state everyone on the Ethereum network agrees on. Everyone who
participates in the Ethereum network (every Ethereum node) keeps a copy of the state of this
computer. Additionally, any participant can broadcast a request for this computer to perform
arbitrary computation. Whenever such a request is broadcast, other participants on the network
verify, validate, and carry out ("execute") the computation. This execution causes a state change
in the EVM, which is committed and propagated throughout the entire network.

Requests for computation are called transaction requests; the record of all transactions and the
EVM's present state gets stored on the blockchain, which in turn is stored and agreed upon by
all nodes.

Cryptographic mechanisms ensure that once transactions are verified as valid and added to the
blockchain, they can't be tampered with later. The same mechanisms also ensure that all
transactions are signed and executed with appropriate "permissions" (no one should be able to
send digital assets from Alice's account, except for Alice herself).

WHAT IS ETHER?

Ether (ETH) is the native cryptocurrency of Ethereum. The purpose of ETH is to allow for a
market for computation. Such a market provides an economic incentive for participants to
verify and execute transaction requests and provide computational resources to the network.

Any participant who broadcasts a transaction request must also offer some amount of ETH to
the network as a bounty. The network will award this bounty to whoever eventually does the
work of verifying the transaction, executing it, committing it to the blockchain, and
broadcasting it to the network.

https://ethereum.org/en/developers/docs/intro-to-ethereum/ 3/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

The amount of ETH paid corresponds to the resources required to do the computation. These
bounties also prevent malicious participants from intentionally clogging the network by
requesting the execution of infinite computation or other resource-intensive scripts, as these
participants must pay for computation resources.

ETH is also used to provide crypto-economic security to the network in three main ways: 1) it is
used as a means to reward validators who propose blocks or call out dishonest behavior by
other validators; 2) It is staked by validators, acting as collateral against dishonest behavior—if
validators attempt to misbehave their ETH can be destroyed; 3) it is used to weight 'votes' for
newly proposed blocks, feeding into the fork-choice part of the consensus mechanism.

WHAT ARE SMART CONTRACTS?

In practice, participants don't write new code every time they want to request a computation on
the EVM. Rather, application developers upload programs (reusable snippets of code) into EVM
state, and users make requests to execute these code snippets with varying parameters. We call
the programs uploaded to and executed by the network smart contracts.

At a very basic level, you can think of a smart contract like a sort of vending machine: a script
that, when called with certain parameters, performs some actions or computation if certain
conditions are satisfied. For example, a simple vendor smart contract could create and assign
ownership of a digital asset if the caller sends ETH to a specific recipient.

Any developer can create a smart contract and make it public to the network, using the
blockchain as its data layer, for a fee paid to the network. Any user can then call the smart
contract to execute its code, again for a fee paid to the network.

Thus, with smart contracts, developers can build and deploy arbitrarily complex user-facing
apps and services such as: marketplaces, financial instruments, games, etc.

TERMINOLOGY

Blockchain
https://ethereum.org/en/developers/docs/intro-to-ethereum/ 4/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

The sequence of all blocks that have been committed to the Ethereum network in the history of
the network. So named because each block contains a reference to the previous block, which
helps us maintain an ordering over all blocks (and thus over the precise history).

ETH

Ether (ETH) is the native cryptocurrency of Ethereum. Users pay ETH to other users to have
their code execution requests fulfilled.

More on ETH

EVM

The Ethereum Virtual Machine is the global virtual computer whose state every participant on
the Ethereum network stores and agrees on. Any participant can request the execution of
arbitrary code on the EVM; code execution changes the state of the EVM.

More on the EVM

Nodes

The real-life machines which are storing the EVM state. Nodes communicate with each other to
propagate information about the EVM state and new state changes. Any user can also request
the execution of code by broadcasting a code execution request from a node. The Ethereum
network itself is the aggregate of all Ethereum nodes and their communications.

More on nodes

Accounts

Where ETH is stored. Users can initialize accounts, deposit ETH into the accounts, and transfer
ETH from their accounts to other users. Accounts and account balances are stored in a big table
in the EVM; they are a part of the overall EVM state.
https://ethereum.org/en/developers/docs/intro-to-ethereum/ 5/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

More on accounts

Transactions

A "transaction request" is the formal term for a request for code execution on the EVM, and a
"transaction" is a fulfilled transaction request and the associated change in the EVM state. Any
user can broadcast a transaction request to the network from a node. For the transaction
request to affect the agreed-upon EVM state, it must be validated, executed, and "committed to
the network" by another node. Execution of any code causes a state change in the EVM; upon
commitment, this state change is broadcast to all nodes in the network. Some examples of
transactions:

Send X ETH from my account to Alice's account.

Publish some smart contract code into EVM state.

Execute the code of the smart contract at address X in the EVM, with arguments Y.

More on transactions

Blocks

The volume of transactions is very high, so transactions are "committed" in batches, or blocks.
Blocks generally contain dozens to hundreds of transactions.

More on blocks

Smart contracts

A reusable snippet of code (a program) which a developer publishes into EVM state. Anyone
can request that the smart contract code be executed by making a transaction request. Because
developers can write arbitrary executable applications into the EVM (games, marketplaces,
financial instruments, etc.) by publishing smart contracts, these are often also called dapps, or
Decentralized Apps.

https://ethereum.org/en/developers/docs/intro-to-ethereum/ 6/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

More on smart contracts

FURTHER READING

Ethereum Whitepaper

How does Ethereum work, anyway? ↗ - Preethi Kasireddy (NB this resource is still valuable
but be aware that it predates The Merge and therefore still refers to Ethereum's proof-of-
work mechanism - Ethereum is actually now secured using proof-of-stake)

Know of a community resource that helped you? Edit this page and add it!

RELATED TUTORIALS

A developer's guide to Ethereum, part 1 – A very beginner-friendly exploration of Ethereum

Back to top ↑

Was this article helpful?

Yes No

NEXT
Intro to Ether
👉

https://ethereum.org/en/developers/docs/intro-to-ethereum/ 7/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

Website last updated: January 13, 2023

Use Ethereum Learn

Find wallet What is Ethereum?

Get ETH What is ether (ETH)?

Decentralized applications (dapps) Ethereum wallets

Layer 2 Community guides and resources

Run a node History of Ethereum

Stablecoins Ethereum Whitepaper

Stake ETH Ethereum upgrades

Ethereum security and scam prevention

Ethereum glossary

Ethereum governance

Blockchain bridges

Zero-knowledge proofs

Ethereum energy consumption

What is Web3?

Ethereum Improvement Proposals

Developers Ecosystem

Get started Community hub

Documentation Ethereum Foundation

Tutorials Ethereum Foundation Blog ↗

Learn by coding Ecosystem Support Program ↗

Set up local environment Ethereum bug bounty program

Ecosystem Grant Programs

Ethereum brand assets

Devcon ↗

Enterprise About ethereum.org

Mainnet Ethereum About us

Private Ethereum Jobs

Enterprise Contributing

Language support

Privacy policy

Terms of use

Cookie policy

Contact ↗

https://ethereum.org/en/developers/docs/intro-to-ethereum/ 9/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

https://ethereum.org/en/developers/docs/intro-to-ethereum/ 10/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

https://ethereum.org/en/developers/docs/intro-to-ethereum/ 11/12
1/14/23, 7:09 PM Intro to Ethereum | ethereum.org

https://ethereum.org/en/developers/docs/intro-to-ethereum/ 12/12