week 3 ethereum and blockchain applications

what core principles do all blockchains rely on

a decentralized cryptographically secure ledger validated by consensus

what is bitcoin mainly designed for

to be a secure peer to peer digital currency

what is ethereum mainly designed for

programmable “world computer” for building and running decentralized applications

what is the main difference between bitcoin and ethereum

bitcoin focuses on digital money while ethereum focuses on programmable applications

how are bitcoin and ethereum similar

they both use blockchain principles: decentralization, cryptographic security and consensus

what is the ethereum virtual machine (EVM)

single global virtual computer that runs smart contracts on ethereum

what does the evm run

smart contracts

why is the evm considered a distributed system

it is run simultaneously by thousands of individual computers of nodes that maintain the same state

what does it mean that ethereum maintains a consistent state

nodes agree on the current condition of the ethereum network including balances, contracts and stored data

what is ethereums core innovation compared to bitcoin

ethereum is programmable and turing complete, so it can run general computable programs

what does turing complete mean in this context

it mean ethereum can run any computable program, assuming enough time and resources

why does turing completeness matter for ethereum

lets ethereum support complex smart contracts and decentralized applications, not just simple payments

what language are ethereum smart contracts commonly written in

solidity

what is solidity

higher level programming language build for writing smart contracts on the EVM

why does ehtereum use solidity instead of a language like python

solidity designed for the evm, where every instruction has precitable execution behavior and gas counts

what does evm compatibility mean

code run on EVM using instructions EVM understands

why do evm instructions have assigned gas costs

so the network can calculate how much money execution should cost

what is gas in ethereum

fee paid to execute operations on the ethereum network

why is gas important for smart contracts

prevents people from running unlimited or overly expensive computation for free

what does automatic execution mean for smart contracts

automatically execute transations when called, without manual approval

what does predictable outcomes mean for smart contracts

the result of a smart contract call can be checked and verified

why are smart contract outcomes predictable

the same contract call should produce the same result when run under the same conditions

what does it mean that smart contracts are public

variables and information stored on the contract are visible and transparent

why is public smart contract data useful

allows ppl to verify what the contract is doing

what does immutable mean for smart contracts

once a smart contract is deplooyed, it cannot be changed

why can immutability be useful

users can trust that the contract logic will not secretly change later

why is immutability risky

bugs are hard / impossible to fix after deployment unless the system was designed with upgradeability

why must smart contracts be deterministic

every node independently executes the contract and must get the same result

what does deterministic mean

same input and state always produce the same output

why cant smart contracts use normal random number generators

randomness could make different nodes get different results, breaking consensus

why are floating point numbers avoided in smart contracts

floating point calculations can behave differently across systems so they may break deterministic execution

what do smart contracts usually use instead of floating point numbers

integers with fixed decimal scaling

can smart contracts run by themselves whenever they want

no only when a transaction calls them

what does no listeners mean for smart contracts

smart contracts canot independently watch for events and react on their own

what does no cron jobs mean for smart contracts

cannot automatically run on a schedule by themselves

how do smart contracts get triggered

by transactions or calls from useres, other contracts, or external automation services

how is a smart contract deployed on ethereum

by creating a transaction containing the compiled bytecode of the contract

what makes a contract deployment transaction special

it has no “to” address and places the contract bytecode in the transaction’s data field

what is bytecode

low level machine readable instructions that the evm can execute

why must solidity code be compiled before deployment

because the evm executes bytecode, not high level solidity code directly

what is the ethereum virtual machine

execution environment that runs ethereum smart contracts

what is the evm similar to

traditional instruction set architectures like x86, ARM, or RISC-V

what does the evm consist of

a set of basic instructions / opcodes for computation

what is gas in ethereum

gas is the computational fee required to execute evm instructions

why does every evm instruction cost cas

to measure and charge for computation and resource usage

how is the total cost of a transaction calculated

gas used X (base fee + priority fee)

what are the two main parts of ethereum gas pricing

base fee and priority fee

what determines the base fee

protocol adjusts it depending on how full the previous block was

what happens to the base fee if the previous block was empty

base fee decreases

what happens to base fee if previous block was full

base fee increases

what happens to the base fee after it is paid

base feei s burned

who receives the priority fee

validator

why is the priority fee sometimes called a tip

users pay it to incentivize validators to include their transaction faster

what is hte max fee in ehtereum

maximum gas price user is willing to pay

what happens if the actual gas price is lower than the user’s max fee

unused portion is refunded to the user

why do gas fees help prevent attacks on ethereum

attackers must pay for every computation they force the network to preform

how to gas fees prevent infinite loop attacks

infinite computation would require infinite gas costing infinite money

why cant malicious code endlessly crash the network for free

computation always consumes paid gas

what does EOA stand for

externally owned account

what controls an EOA

private key

how is an eoa different from a stmart contract account

eoa is directly controlled by a user with a private key

what can an eoa do that a smart contract cannot directly do

initiate transactions

what kinds of transactions can occur directly between eoas

eth or token transfers

waht cryptographic components make up an eoa

a public key and a private key

what does private key do in an eoa

authorize and controls account availability

what does public key do in eoa

accounts public identity / address

why are floating point numbers avoided in smart contracts

can behave inconsistently across machines which break deterministic execution

what is the bull lifecycle of a smart contract

write solidity → compile to bytecode → deploy with transaction → run on EVM → pay gas for execution

what is the connection between solidity and gas

solidity compiles into evm instructions and each instruction has a gas cost

what is the connection between eoas and smart contracts

eoas initiate transactions that deploy or call smart contracts

what is a wallet in ethereum

interface of application that lets you interact with your ethereum account

does a wallet literally store your eth on your device

no, eth stored on blockchain you control it through your account

what are the main things wallets do

generate keys / addresses, sign transactions, broadcast transactions, store private keys, help manage balances / assets

what is keypair address generation

process of creating a private key and associates ethereum account / address

how can a wallet generate a private key

it can use user provided information, randomness and cryptographic hashing to produce a private key

what can be generated from a private key

public key and associated ethereum address / account

why is the private key important

controls the eth account and authorizes transactions

what happens if someone gets your private key

can control your account and move your assets

what does chain interaction mean for wallets

helps users sign transactions and send them to blockchain network

what odes it mean to sign a transation

using private key ot prove that your approve the transaction

what happens after a wallet signs a transaction

wallet can broadcast the signed transaction to the ethereum network

how to wallets usually broadcast transactions

use their own nodes or partner with node providers

why do wallet providers use nodes

let wallets read blockchain data and sent transactions into the network

what is private key storage

wallets job of securely storing your private key so you cna use it again later

why does why does a wallet need to store private keys securely

whoever controls private key controls the account

what does balance and asset management mean

Some wallets show your ETH and token holdings so you can track and manage your assets

can wallets show assets beside eth

yes

what is a hot wallet

cryptographic information in computer of phone software

what is the main benefit of hot wallets

more convenient and easier to use frequently

downside of hot wallets

less secure becaue crypto info is stored on the internet connected software

what is a cold wallet

store cryptographic info on dedicated hardware

benefit of cold wallets

mroe secure because private key is kept separate from normal internet connected software

downside to cold wallets

less convenient bc you need to carry or access a separate hardware device

what are ethereum nodes

participants in the ethereum network that help maintain, validate, and share blockchain data

what do ethereum nodes maintain

copy of ethereum blockchain

what do eth nodes validate

transactions and smart contract execution

why are nodes important to ethereum

keep ethereum decentralized, distributed, and secure

how do ethereum nodes communicate

through peer to peer network

what information do nodes share with each other

blocks, transactions, and other relevant network information

what is a full node

stores and verifies current blockchain state and validates blocks and transactions