3.2 Ethereum: Types of Ethereum Accounts

Externally Owned Accounts (EOA)
EOA is an account controlled by a private key that has the ability to send Ethers and messages from it.

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Smart Contract

A code running on top of the Blockchain containing the set of rules for the nodes to agree upon so that they interact with each other.

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Features of Smart Contracts

• The simplest form of decentralization
• Lowers transaction cost
• Eliminates the need for the third party
• Automatic agreement enforcement
• A higher degree of security
• Turns legal obligations into automated processes

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Characteristics of Smart Contract

• Self-verifying
• Self-executing
• Cost Saving
• Tamper Resistant

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Process of Smart Contracts

• An optional contract between the parties is written as a code into the Blockchain. The individuals involved are anonymous, but the contact is made through a public ledger
• A trigger event like an expiration date or a strike price is hit, and the contract executes itself according to the coded terms
• Regulators can use the Blockchain to understand the activities in the market while maintaining the privacy of an individual’s position

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