Ethereum

Feb 27, 2024 3:14:38 PM

The first to introduce the idea of smart contracts was the Ethereum network. In 2013, a young programmer and blockchain expert named Vitalik Buterin noticed that the newly created networks behaved like Swiss army knives: they had many uses, but always with limited use defined by their construction.

He took his idea to create a general-purpose blockchain for Bitcoin core developers, but that was not approved. It would be a very radical change to the Bitcoin . Thus, Vitalik decided to create his own protocol. The Ethereum whitepaper was published in 2014. Through an initial public sale of Ether tokens, more than 18 million dollars were raised, financing the network’s development.

Ethereum has introduced a general-purpose virtual machine, the Ethereum Virtual Machine. That would be able to run any script, regardless of its complexity.

Along with smart contracts, Ethereum also introduces the concept of gas. To execute a transaction on Ethereum, be it sending ether to another account or invoking a smart contract function, the user has to pay a fee in ether, the so-called gas fee. The amount to be paid depends on the computational complexity to be performed, as well as on the market value of the gas.

Introducing the gas fee solves several problems inherent in the proper functioning of the blockchain. Charging a fee that is proportional to the computational complexity to be performed can prevent so-called distributed denial-of-service attacks. If some malicious agent wants to overload the blockchain, it will have a high cost in ether. This acts as a deterrent.

An even more critical issue that gas fee solves is the so-called Halting problem. If any smart contract transaction, maliciously or not, generates an infinite loop, the gas fee will prevent such execution from crashing the blockchain. This behavior is essential for a virtual machine to run generic scripts. In technical terms, it allows the Ethereum virtual machine to be Turing-complete.