Ethereum

What is Ethereum?

Ethereum is a decentralised “world computer.”
It is not controlled by any company or government. Instead, it runs on thousands of computers (called nodes) around the world that work together to store data, run programs, and verify transactions. Unlike Bitcoin, Ethereum is designed to run applications using smart contracts.

What are dApps and smart contracts?

dApps are decentralised applications that run on Ethereum.
They use smart contracts, which are self-executing programmes that automatically carry out rules and agreements without needing a middleman.

How can Ethereum be described simply?

Ethereum can be described as:
“A global computer that anyone can use, and no one owns.”

Why was Ethereum created?

Ethereum was created in 2015 to overcome the limitations of Bitcoin.
Its main goals were to make blockchains programmable, allow developers to build applications, and go beyond just sending money.

How is Ethereum different from traditional companies like Google or banks?

Instead of relying on central companies, Ethereum allows people to use apps directly on the blockchain without intermediaries.

How does Ethereum work?

Ethereum works by connecting thousands of computers worldwide.
Each computer keeps a copy of the system, agrees on what is correct, and runs smart contracts together. There is no central server or single point of control.

What problem is “Lack of Turing Completeness” in Bitcoin?

Bitcoin’s programming language is very limited.
It can only handle simple tasks like sending money and cannot run complex programs.

How does Ethereum solve this problem?

Ethereum allows full programming with complex logic, enabling apps, games, financial systems, and advanced applications.

What is “Value-Blindness” in Bitcoin?

Bitcoin transactions cannot easily depend on conditions.
They mainly just move money and cannot respond well to “if/then” situations.

How does Ethereum fix Value-Blindness?

Ethereum uses smart contracts to allow conditional rules such as time-based payments, automatic transfers, and “if/then” logic.

What does “Lack of State” mean in Bitcoin?

Bitcoin stores very little information.
It mainly records who sent money and who received it, but does not remember much else.

How does Ethereum solve the Lack of State problem?

Ethereum stores “state,” including balances, contract data, app information, and history. This allows applications to remember past actions.

What is “Blockchain-Blindness” in Bitcoin?

Bitcoin scripts cannot easily access past data, analyse the blockchain, or check complex conditions. They are limited in what information they can see.

How does Ethereum overcome Blockchain-Blindness?

Ethereum contracts can read past transactions, check balances, use blockchain data, and verify complex conditions.

What are DApps?

DApps (Decentralised Applications) are apps that run on Ethereum without being controlled by a single company.

How does Ethereum work?

Ethereum works using smart contracts, which are programs that run automatically when certain conditions are met.

What is a smart contract?

A smart contract is a self-executing program that follows the rule:
“If X happens, then do Y automatically.”

Why are smart contracts trusted?

Once uploaded to Ethereum, smart contracts cannot be changed, are visible to everyone, and run automatically without needing a middleman.

What is Ether (ETH)?

Ether (ETH) is Ethereum’s digital currency. It is used to pay transaction fees (gas) and reward people who run the network.

hy is ETH important?

ETH acts like fuel for Ethereum. Without ETH, transactions and smart contracts cannot run.

What is the main drawback of Ethereum?

Ethereum is currently slow and expensive. It can process about 15 transactions per second.

What does “Open” mean in Ethereum?

Open” means anyone can use Ethereum without permission.
You do not need to sign up, create an account, or get approval. Anyone, anywhere, can use it.

What does “Borderless” mean?

“Borderless” means Ethereum works the same in every country.
You can use it in the UK, India, Nigeria, or Brazil without needing banks or middlemen.

What does “Censorship-resistant” mean?

It means no one can easily block you from using Ethereum.
No government, company, or authority can stop your transactions or freeze your access.

What does “Immutable” mean?

“Immutable” means it cannot be changed once it is created.
Once a smart contract is uploaded, its rules and conditions cannot be edited.

What does “Transparent” mean?

“Transparent” means everyone can see what is happening.
All transactions are public and can be checked by anyone on the blockchain.

Why is transparency useful?

It prevents hidden transactions and fraud, because all activity is visible to the public.

What does “Global and Decentralised” mean?

It means Ethereum has no single owner or controller.
Thousands of computers around the world run the system together.

What is Ethereum’s main big idea?

Ethereum aims to go beyond just digital money.
Its goal is to be a platform for apps, contracts, and services, similar to how the internet supports many different activities.

What does “Beyond Digital Money” mean?

: It means Ethereum is not just for sending money.
It is designed to support agreements, applications, and services, making it “the internet for transactions.”

What does “Unify all applications into one platform” mean?

t means many different services could run on one shared system instead of separate companies.

For example, services like:

• Uber

• PayPal

• Airbnb

• TikTok

• Banks

could all run on one decentralised network.

Why don’t developers need their own network on Ethereum?

Because Ethereum already provides security, storage, payments, and verification.
Developers only need to upload their app and use the existing system.

What is “Programmable Money”?

Programmable money means money that follows rules written in smart contracts.

Instead of:
“Here is £100. Do what you want,”
it becomes:
“Here is £100, but only if conditions are met.”

How does programmable money work in real life?

For example, in a rent contract:
Money is only paid if the landlord fixes the heating.
If not, the money is refunded automatically.
No lawyer or middleman is needed.

Why is programmable money useful?

It reduces arguments, delays, and fraud because payments happen automatically according to rules.

Is Ethereum only for finance?

No. Ethereum is a general-purpose platform that can run many systems, including:

• Voting

• Games

• Insurance

• Crowdfunding

• Music royalties

• Certificates

• Social payments

How can Ethereum be compared to modern tech platforms?

It is like combining Google Cloud, banks, and legal systems into one public, decentralised system.

What is a “Decentralised Airbnb” example?

It shows how Ethereum could replace central companies.

In normal Airbnb:

• The company controls bookings

• Takes fees

• Holds money

• Can ban users

On Ethereum:

• A smart contract manages bookings

• Money is held automatically

• Hosts are paid after the stay

• No company controls it

What is Ethereum’s general attitude to change?

Ethereum prefers to improve quickly, even if this causes short-term problems.
It focuses on innovation rather than keeping everything unchanged forever.

What approach does Ethereum avoid?

Ethereum avoids the idea of never changing anything just to prevent mistakes.
It believes this leads to slow progress and outdated systems.

How can this be explained using a real-life example?

It is like how Netflix updates its app.

One option is never updating (very stable but outdated).
The other option is frequent updates (better features but occasional bugs).
Ethereum chooses frequent updates

What is the “stability” approach like? (Bitcoin-style)

This approach focuses on never changing the system.

It means:

• Very safe

• Rarely breaks

• No new features

• Becomes outdated over time

What is the “innovation” approach like? (Ethereum-style)

This approach focuses on regular updates.

It means:

• Better performance

• New features

• Faster systems

• Occasional bugs and crashes

Why does Ethereum prefer innovation?

Because frequent improvements help the system grow, stay competitive, and meet new demands.

What does “frequent upgrades” mean for Ethereum?

It means Ethereum regularly changes how it works to improve speed, cost, and security.
Each update carries some risk, but Ethereum accepts this.

What was the PoW → PoS change?

It was a major upgrade where Ethereum changed from an energy-heavy system (PoW) to a more efficient one (PoS).

It is like switching from petrol cars to electric cars:
Hard to do, but better in the long run.

Why was the PoW → PoS change risky?

Because changing a core system could cause technical problems and affect users and apps.

What is the “Difficulty Bomb”?

The Difficulty Bomb is a mechanism that makes old versions of Ethereum unusable over time.
It forces users to upgrade to newer systems.

Why did Ethereum use the Difficulty Bomb?

To prevent people from staying on outdated versions and to encourage adoption of improvements.

What problems can frequent upgrades cause?

They can cause temporary bugs, crashes, and compatibility issues for some apps and users.

What are financial applications on Ethereum?

Financial applications allow people to send money, get loans, invest, and trade without using banks.

How do financial services normally work today?

Normally, you need banks, paperwork, approval, fees, and waiting times to send money or get loans.

How do financial services work on Ethereum?

On Ethereum, you use an app to:

• Send money instantly

• Get loans automatically

• Earn interest

• Trade assets

All without a bank. A computer program makes the decisions.

What is asset tokenisation?

Asset tokenisation means dividing a real asset into digital tokens.

For example, a £200,000 house can be split into 200,000 tokens, each worth £1.

Why is asset tokenisation useful?

It allows people to buy small parts of expensive assets, like owning “shares” of a house.

What are semi-financial applications?

Semi-financial applications focus on records, proof, and identity rather than money.

How can Ethereum be used for identity verification?

Your identity, such as student status, can be stored securely on Ethereum.
Anyone can check it, and no one can fake it.

Why is blockchain identity better than traditional ID?

Traditional IDs can be lost, copied, or hacked.
Blockchain identities are secure and difficult to fake.

How does Ethereum help with data integrity (records)?

Once data like medical records is saved on Ethereum, it cannot be changed.
This ensures doctors and users always see accurate information.

What are non-financial applications on Ethereum?

Non-financial applications help run social and organisational systems fairly, such as voting and clubs.

How does voting work on Ethereum?

Votes are recorded permanently on the blockchain.
Anyone can check them, and cheating is very difficult.

What is a DAO?

A DAO (Decentralised Autonomous Organisation) is an organisation run by rules in smart contracts instead of leaders.

How does a DAO work in practice?

Members vote on decisions.
If enough people agree, the smart contract carries out the result automatically, such as releasing money.

What does “Slow but Super Reliable” mean for Bitcoin?

It means Bitcoin:

• Changes very slowly

• Focuses on safety

• Uses a lot of energy (mining)

• Handles fewer users

• Relies on extra systems to cope with demand

Its attitude is: “Don’t touch it if it works.”

What does Ethereum represent in this example?

Ethereum represents a fast and modern system that upgrades often.
It focuses on speed, new features, and growth, even if problems sometimes occur.

How do Bitcoin and Ethereum differ in their attitude to change?

• Bitcoin: Changes slowly to avoid breaking anything.

• Ethereum: Changes quickly and fixes problems later.

How do they differ in speed and scalability?

• Bitcoin: Has limited capacity and gets crowded easily. It uses extra systems to help.

• Ethereum: Has wider capacity and tries to improve directly.

How do Bitcoin and Ethereum differ in energy use?

• Bitcoin: Uses mining, which consumes a lot of electricity.

• Ethereum: Uses staking, which uses much less energy.

What is the difference between stability and innovation?

• Bitcoin: Very stable and rarely breaks, but can become outdated.

• Ethereum: Always improving, sometimes breaks, but stays modern

What is the main philosophical difference between Bitcoin and Ethereum?

Bitcoin prioritises safety and long-term reliability.
Ethereum prioritises innovation and rapid development.

What was the Byzantium fork?

The Byzantium fork was a major Ethereum upgrade in 2017 that improved the network and prepared it for future changes.

Why was the difficulty bomb delayed in 2017?

It was delayed to stop mining from becoming too slow and expensive, which would have damaged the network.

What is the difficulty bomb?

It is a feature that makes mining harder over time to encourage Ethereum to move away from Proof of Work.

How did Byzantium help with Proof of Stake (PoS)?

It added technical upgrades that prepared Ethereum for switching from Proof of Work to Proof of Stake in the future.

What was the Constantinople fork?

t was an Ethereum upgrade in 2019 that improved the network and helped prevent future technical problems.

Why was the Constantinople fork important?

Because it stopped the blockchain from slowing down or freezing and made Ethereum more reliable.

How did Constantinople improve Ethereum for the future?

It improved how Ethereum works with future account addresses and smart contracts.

What was the Muir Glacier upgrade?

It was an Ethereum update in 2020 that delayed the difficulty bomb by about 600 days.

Why did Muir Glacier delay the difficulty bomb?

To stop mining from becoming too slow and to keep the network running smoothly.

What is the Beacon Chain?

It is a new blockchain launched in 2020 that introduced Proof of Stake to Ethereum.

Why was the Beacon Chain important?

Because it started Ethereum’s transition from Proof of Work to Proof of Stake.

What was the main achievement in 2020 for Ethereum?

Delaying mining slowdown with Muir Glacier and launching the Beacon Chain to begin Proof of Stake.

What was the London Hard Fork?

It was a major Ethereum upgrade in 2021 that changed how transaction fees work.

Why was the London Hard Fork important?

Because it made transaction fees more predictable and easier for users to understand.

What is EIP-1559?

It is a new fee system introduced in 2021 that replaced auction-style fees with a base fee and tip system.

How did EIP-1559 improve transaction fees?

It introduced a fixed base fee that adjusts automatically, reducing sudden fee spikes.

What was the Altair upgrade in 2021?

Altair added penalties for bad behaviour by validators, helping prepare Ethereum for full Proof of Stake.

What happened in 2022 with Gray Glacier and testnets?

• Gray Glacier delayed the difficulty bomb.

• Test networks successfully tested the Merge, making sure PoS would work properly.

What were the Bellatrix and Paris upgrades in September 2022?

• Bellatrix activated the PoS system.

• Paris completed the Merge and shut down PoW mining.
  This marked Ethereum’s full move to Proof of Stake.

Why was the Merge in 2022 so important?

It ended energy-intensive mining and replaced it with staking, reducing energy use by over 99%.

What did the Shanghai and Capella upgrades do in 2023?

They allowed validators to withdraw their staked ETH and rewards, completing the PoS system.

Why was the 2023 “Shapella” upgrade important?

It increased trust in staking by letting users access their locked funds.

What is the Cancun-Deneb (Dencun) upgrade in 2024?

It introduced Proto-Danksharding (EIP-4844), which reduced data storage costs for Layer-2 systems and lowered transaction fees.