Hello, I am preparing a 4-part article series for the future developments of the Ethereum network. Starting with the basic concepts post 🙂
Bitcoin: P2P Electronic Cash System is a consensus model that has entered our lives with the WhitePaper written by Satoshi Nakamato. It is a demonstration that there is no random node formation in P2P networks that do not have a trust relationship (Distrusted Relation) between nodes.
The underlying idea actually goes back to the late 90s and early 2000s. Based on the need for effort/strength/time to get a job done, and the first linked examples can eliminate solving a small, processor-solvable puzzle on every mail sent, to prevent spam mail. Thanks to this puzzle, tens of thousands of mailboxes would not be spammed as a single repository, but it would create a problem for the user when sending an individual or group mail. This idea never materialized because the technological infrastructure was insufficient in this regard and it was a huge problem for the passengers who sent legal mail for advertising.
Fluid PoW gives us a hash puzzle and the difficulty of this puzzle is changed every 2016 blocks as a group with the total power in the system. This puzzle can only be solved with a system we call brute force, based on trying all the basic possible components, and it is based on basic luck. The more numbers you can try at the same time, the more puzzles you have the chance to solve. Due to these outputs, people are entering the system with more and more power and the total power in the system is constantly increasing. Currently, the total power consumed to run the Bitcoin network has been made more than the annual electricity consumption of a small European school like Belgium. This situation rightly revolts environmentalists.
It is a consensus model developed by a dear friend of ours named Vitalik Buterin, who “trying” to do the same work as PoW without so much waste. It would not be wrong to say that it is based on Capitalism 🙂 . In this system, a person’s being a miner and receiving the reward is related to how much he owns that cryptocurrency. For example, let me have 1000 Ether and Ali have 10 Ether. When we both want to mine and generate income on the Ethereum 2.0 network, my probability of being selected is 100 times higher than that of Ali. The main reason why I call this system capitalist is that while it makes the rich richer, the poor don’t get much.
But as you can imagine, almost no energy is consumed for this process and it does not spend the world’s limited resources like Bitcoin PoW.
EVM (Ethereum Virtual Machine)
Before defining the EVM, it would be more accurate to define the VM first. Virtual Machine (Virtual Machine) is a program that acts like a computer inside our computer, but without the risk of accessing and damaging the files on your computer. They are mainly used to test operating systems, open suspicious files and create backups of operating systems.
EVM, on the other hand, is a Virtual Machine where the Ethereum Network runs on nodes in the systems. It executes the byte-code versions of the Smart Contracts written on the Ethereum network and enables them to work on the Ethereum network.
Smart Contract (Smart Contracts)
To summarize smart contracts in a single sentence, “They are contract-based codes that run on the Ethereum network and are compiled by the EVM. “Smart contracts are also the cornerstone of the Ethereum Network. Thanks to Smart Contracts, we can write our own ICOs, conclude contracts with Companies, Fundraise, make conditional money transfers. Other usage areas are; you can design payment transactions and games in the infrastructure of Gambling / Betting sites, you can write projects that change in-game assets in Online Games.
I will upload the next article, Ethereum 2.0 Serenity Part 2: History of Ethereum, as soon as possible.