Definition of Ethereum Blockchain
Ethereum is a decentralized, open-source blockchain platform that supports smart contracts — self-executing contracts written in code. It was proposed by Vitalik Buterin in 2013 and launched in 2015.
Unlike Bitcoin (which is mostly a currency system), Ethereum enables developers to build decentralized applications (DApps), DeFi, NFTs, and much more using Ethereum Virtual Machine (EVM).
Ethereum as a Transaction-Based State Machine
According to Ethereum’s Yellow Paper (by Dr. Gavin Wood), Ethereum is defined as a transaction-based state machine.
- State machine = A system that changes state based on inputs (transactions).
- Ethereum begins with a genesis state and transitions to new states as each transaction is executed.
- Each transaction is like an instruction that modifies account balances, contract storage, and state variables.
State Transition Function in Ethereum
The state transition function can be mathematically expressed as:
State + Transaction → State'
Where:
State= current world state before executing the transactionTransaction= input action like transfer, contract call, etc.State'= new state after transaction execution
Diagram: Ethereum State Transition Function
Example:
- Initial State
S:- Address A = 5 ETH
- Address B = 2 ETH
- Transaction: A sends 2 ETH to B
- Final State
S':- Address A = 3 ETH
- Address B = 4 ETH
✅ The Ethereum client executes the transaction and updates the world state accordingly.
Components of Ethereum Blockchain
| Component | Description |
|---|---|
| Accounts | Two types: Externally Owned (EOA) and Contract accounts |
| Transactions | Actions triggered by EOAs; changes the world state |
| EVM (Ethereum Virtual Machine) | Executes bytecode instructions in smart contracts |
| World State | Global mapping of all Ethereum accounts and contract storage |
| Gas | Unit of computational cost; prevents infinite loops in contracts |