Ethereum basic concepts

Ethereum builds on top of the Bitcoin blockchain, including key features such as a distributed ledger containing chained blocks, the proof-of-work algorithm, and so on. However, its biggest addition is the introduction of smart contracts, which are coded in a Turing-complete scripting language. Because of this new addition, unlike Bitcoin or its non-smart contract close relatives, Ethereum allows developers to address generic business problems.

Before getting to the basic concepts, we summarize some useful facts on Ethereum as follows:

  • Ethereum has three main ingredients:
    • Decentralization: For guaranteed execution
    •  Hashes: For safeguarding the world state
    •  Signatures: For authorizing programs and transactions

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