Unit III

Blockchain Platforms:
Ethereum

Mrs. T.N. Kute

 Syllabus
Blockchain Platform introduction, what is Ethereum, Ethereum
feature, Components of Ethereum Ecosystem, Ethereum
Programming Languages, Runtime Byte Code, Blocks and
Blockchain, How Smart Contracts Work.
Introduction to Tokenization: What is token, technology behind
tokenization, how blockchain tokenization can help in enterprise
systems, Tokenizing Shares and Fund Raising, challenges to
tokenization
• Textbooks:
T1- Imran Bashir,” Mastering Blockchain: Deeper insights into
decentralization, cryptography, Bitcoin, and popular Blockchain frameworks”,
Packt Publishing Limited, ISBN-13: 978-1787125445

T2-Arvind Narayanan, Joseph Bonneau, Edward Felten, Andrew Miller,

Steven Goldfeder, “Bitcoin and Cryptocurrency Technologies”, Princeton
University Press, ISBN: hardcover9780691171692 ebook: 9781400884155
 What is a blockchain platform?

• Blockchain technology is an advanced database mechanism

that allows transparent information sharing within a
business network. A blockchain database stores data in blocks
that are linked together in a chain.
• What are the 5 key blockchain platforms?
• Many blockchain platforms are the products of and supported
by nonprofit foundations, as is the case with a variety of
cryptocurrencies, among them Ethereum, Tron, Ripple, Stellar,
Solana and Polkadot.
 What is Ethereum
• Ethereum is a technology for building apps and organizations,
holding assets, transacting and communicating without being
controlled by a central authority.
• There is no need to hand over all your personal details to use
Ethereum - you keep control of your own data and what is
being shared.
• Ethereum has its own cryptocurrency, Ether, which is used to
pay for certain activities on the Ethereum network.
 Ethereum feature
• Ether: This is Ethereum’s cryptocurrency.
• Smart contracts: Ethereum allows the development and
deployment of these types of contracts.
• Ethereum Virtual Machine: Ethereum provides the
underlying technology—the architecture and the software—
that understands smart contracts and allows you to interact
with it.
• Decentralized applications (Dapps): A decentralized
application is called a Dapp (also spelled DAPP, App, or
DApp) for short. Ethereum allows you to create consolidated
applications, called decentralized applications.
• Decentralized autonomous organizations (DAOs):
Ethereum allows you to create these for democratic decision-
making.
 Components of Ethereum Ecosystem
• Component-1 :
Nodes –
There are two types of nodes in an Ethereum network. They are as
follows.
• Mining Node –
These nodes are responsible for writing all the transactions that have
occurred in the Ethereum network in the block.

• Ethereum Virtual Machine Node –

• These are the nodes in the Ethereum network in which Smart
Contracts are implemented. By default, this node utilizes a 30303
port number for the purpose of communication among themselves.
• Component-2
Ether – Ether is a type of cryptocurrency used in the Ethereum network
just like a bitcoin is used in a blockchain network.
• It is a peer-to-peer currency, similar to Bitcoin. It tracks and promotes each
transaction in the network.
• It is the second-largest cryptocurrency in the world.
• Component-3 :
Gas –
• Gas is an internal currency of the Ethereum network.
• We need gas to run applications on the Ethereum network, much as we
need gas to run a vehicle.
• To complete every transaction on the Ethereum network, a consumer must
first make a payment—send out ethers—and the intermediate monetary
value is known as gas.
• Gas is a unit of measurement on the Ethereum network for the computing
power used to execute a smart contract or a transaction.
• The price of gas is very low compared to Ether. The execution and resource
utilization costs are predetermined in Ethereum in terms of Gas units,
called gwei.
 Component-4
Ethereum Accounts –
• There are two types of Ethereum accounts. They are as follows.
• Externally owned account –
These accounts are used to store transactions.

• Contract account –
As the name itself suggests, these accounts store the details of Smart
Contracts.
• Component-5
Nonce –
For externally owned accounts, nonce means the number of
transactions via this account. For a contract account, nonce means
the number of contracts generated via this account.
• Component-6 :
Storage Root –
It is the main root node of a Merkle tree. Hash of all details of the
account is stored here. The root of the Merkle tree is the verification
of all transactions.
• Component-7 :
Ethash –
The intended PoW algorithm for Ethereum 1.0 is Ethash. It’s the
most recent version of Dagger-Hashimoto, however, it’s no longer
proper to call it that because many of the algorithms’ initial
characteristics have been dramatically altered in the previous month
of study and development. The original version may be found here.
 Ethereum Programming Languages
• Solidity programming stands apart from the other programming
languages and is the programming language of choice in Ethereum.
• Solidity is a brand-new programming language developed by
Ethereum, the second-largest cryptocurrency market by
capitalization.
• Solidity is an object-oriented programming language created
specifically by the Ethereum Network team for constructing and
designing smart contracts on Blockchain platforms.
• It's used to create smart contracts that implement business logic and
generate a chain of transaction records in the blockchain system.
• It acts as a tool for creating machine-level code and compiling it on
the Ethereum Virtual Machine (EVM).
• It has a lot of similarities with C and C++ and is pretty simple to
learn and understand. For example, a “main” in C is equivalent to a
“contract” in Solidity.
 EVM or Ethereum Virtual Machine

• The Ethereum Virtual Machine (EVM) provides a runtime

environment for Ethereum smart contracts.
• It is primarily concerned with ensuring the security and execution of
untrusted programs through the use of an international network of
public nodes.
• EVM is specialized in preventing Denial-of-Service attacks and
certifies that the programs do not have access to each other's state,
as well as establishing communication, with no possible
interference.
Data Types of Solidity Programming
 Advantages of Solidity Programming
• Apart from the primary functionality of Solidity Programming, there
are many other features provided by Solidity programming that
cause it to have an edge over other Ethereum based languages.
• Apart from fundamental data types, Solidity programming also
allows complex data types and member variables.
• It provides an Application Binary Interface (ABI) to enable type
safety. If the compiler discovers a data type mismatch for any
variable, the ABI generates an error.
• It refers to the ‘Natural Language Specification,' which is used to
turn user-centric specifications into language that machines can
understand.
 Runtime Byte Code
• This is the code that is stored on-chain that describes a smart
contract.
• This code does not include the constructor logic or constructor
parameters of a contract, as they are not relevant to the code that
was used to actually create the contract.
 Blocks and Blockchain
• Block – a collection of data that contains a timestamp and other
encrypted information about recent transactions that need to be
validated by the network before being added to the chain
• How are blocks added to a blockchain?
• There are different consensus mechanisms used to verify
transactions and add new blocks to a blockchain. In cryptocurrency,
the most common methods are proof-of-work and proof-of-stake
• Blockchain is a linear chain of blocks
• Each block contains a set of transactions and other essential details.
• Blocks are linearly connected and cryptographically secured.
• Each block header contains the previous block hash, current block
hash, nonce, Merkle root, and other details.
• All blocks are connected linearly by carrying the hash of the previous
block.
• The previous block hash is used to compute the current block hash.
• The first block with no previous block hash is called “Genesis Block.”
• For adding a new block to the network, the blockchain follows consensus
mechanisms like proof of work (PoW), proof of stake (PoS), etc.
 How Smart Contracts Work.
• A smart contract is a sort of program that encodes business logic and
operates on a dedicated virtual machine embedded in a blockchain
or other distributed ledger.
• Step 1: Business teams collaborate with developers to define their
criteria for the smart contract's desired behavior in response to
certain events or circumstances.
• Step 2: Conditions such as payment authorization, shipment receipt,
or a utility meter reading threshold are examples of simple events.
• Step 3: More complex operations, such as determining the value of a
derivative financial instrument, or automatically releasing an
insurance payment, might be encoded using more sophisticated
logic.
• Step 4: The developers then use a smart contract writing platform to
create and test the logic. After the application is written, it is sent to
a separate team for security testing.
• Step 5: An internal expert or a company that specializes in vetting
smart contract security could be used.
• Step 6: The contract is then deployed on an existing blockchain or
other distributed ledger infrastructure once it has been authorized.
• Step 7: The smart contract is configured to listen for event updates
from an "oracle," which is effectively a cryptographically secure
streaming data source, once it has been deployed.
• Step 8: Once it obtains the necessary combination of events from
one or more oracles, the smart contract executes.
• Identify Agreement: Multiple parties identify the cooperative
opportunity and desired outcomes and agreements could include
business processes, asset swaps, etc.
• Set conditions: Smart contracts could be initiated by parties
themselves or when certain conditions are met like financial market
indices, events like GPS locations, etc.
• Code business logic: A computer program is written that will be
executed automatically when the conditional parameters are met.
• Encryption and blockchain technology: Encryption provides secure
authentication and transfer of messages between parties relating to
smart contracts.
• Execution and processing: In blockchain iteration, whenever
consensus is reached between the parties regarding authentication and
verification then the code is executed and the outcomes are
memorialized for compliance and verification.
• Network updates: After smart contracts are executed, all the nodes on
the
• network update their ledger to reflect the new state. Once the record is
posted and verified on the blockchain network, it cannot be modified, it
 Introduction to Tokenization
• it is a process through which a blockchain token is issued to
digitally represent any real tradable asset in a way that you can
trade with a single fraction of the asset as well.
• Tokenization is a capability that leverages blockchain technology to
securitize assets, both traded and non-traded. Key benefits of
tokenization include increased liquidity, faster settlement, lower
costs and bolstered risk management.
• Among the many different forms of tokenization seen on the
blockchain are platform tokens, governance tokens, utility
tokens, and non-fungible tokens, or NFTs.
• What is the Purpose of Tokenization?
• The purpose of tokenization is to protect sensitive data while
preserving its business utility. This differs from encryption, where
sensitive data is modified and stored with methods that do not allow
its continued use for business purposes.
how blockchain tokenization can help
in enterprise systems
• Tokenization in an enterprise blockchain-based solution presents
many opportunities to increase operational efficiency.
• Tokens also help optimize business processes and enable new
platforms with partners across industries. Use of standards-based
tokens provides interoperability and wider acceptance.