The World Computer
Ethereum is often described as a "world computer." But what does that mean? Let's break it down from both a computer science perspective and a practical standpoint, comparing it to Bitcoin and other decentralized ledger technologies (often referred to as "blockchains" for simplicity).
From a computer science standpoint, Ethereum is a deterministic yet practically unbounded state machine. It has two core functions:
- A globally accessible singleton state.
- A virtual machine that alters this state.
Practically, Ethereum is an open-source, global, decentralized computing architecture where executable programs—called smart contracts—run. It uses blockchain technology to synchronize data and record state changes, while also tracking the cryptocurrency ether (ETH), which plans and limits resource expenditure.
Ethereum enables developers to build powerful decentralized applications (DApps) with built-in economic mechanisms. These DApps offer high availability, auditability, transparency, and neutrality—reducing reliance on censorship and mitigating counterparty risks.
Comparison with Bitcoin
Many entering Ethereum have prior experience with cryptocurrencies, especially Bitcoin. Ethereum shares common elements with other open blockchains:
- Peer-to-peer networks connecting participants.
- Consensus algorithms (e.g., Proof-of-Work) for state synchronization.
- Digital currency (ETH) and a global ledger (blockchain).
Blockchain Components
Open, public blockchains typically include:
- P2P Network: Propagates transactions and blocks via a "gossip" protocol.
- Consensus Rules: Govern state transitions in the state machine.
- Transactions: Represent state-transfer messages.
- State Machine: Processes transactions per consensus rules.
- Blockchain: A distributed database logging all state changes.
- Consensus Algorithm (e.g., Proof-of-Work): Decentralizes control.
- Open-Source Implementations: Client software (e.g., Geth, Parity).
Bitcoin’s reference implementation is Bitcoin Core; Ethereum relies on a reference specification (the Yellow Paper) with multiple client implementations.
Ethereum’s Development
Ethereum differs from Bitcoin in its goals and architecture:
- Purpose: Beyond payments, Ethereum is a programmable blockchain running a Turing-complete virtual machine (EVM). Unlike Bitcoin’s limited scripting, Ethereum supports arbitrary complexity.
- Innovation: Vitalik Buterin proposed Ethereum in 2013 to extend Bitcoin’s functionality. Co-founder Gavin Wood helped design the protocol, emphasizing a Web3 vision integrating decentralized storage (Swarm) and messaging (Whisper).
Ethereum’s Four Development Phases
Ethereum’s rollout is divided into four phases with hard forks:
- Frontier (2015): Initial launch.
- Homestead (2016): Stability improvements.
Metropolis (2017–2018):
- Byzantium (2017): Efficiency upgrades.
- Constantinople (2018): Transition to hybrid PoW/PoS.
- Serenity (Future): Full Proof-of-Stake.
| Fork Name | Block # | Key Changes |
|---|---|---|
| DAO | 1,192,000 | Addressed a major hack. |
| Tangerine Whistle | 2,463,000 | Adjusted gas costs. |
| Spurious Dragon | 2,675,000 | Enhanced DoS protections. |
Ethereum: A Generalized Blockchain
While Bitcoin tracks currency ownership, Ethereum manages generic data storage as key-value pairs, akin to RAM in computers. This flexibility allows Ethereum to function as a global singleton state machine—a decentralized computer where code execution and state changes are consensus-governed.
Ethereum’s Components
Key elements include:
- P2P Network: ÐΞVp2p protocol (TCP port 30303).
- EVM: Executes bytecode from smart contracts.
- Data Structures: Uses Merkle Patricia Trees in LevelDB.
- Consensus: Transitioning from PoW (Ethash) to PoS (Casper).
Turing Completeness
Ethereum’s EVM is Turing-complete, meaning it can perform any computation given finite resources. However, this introduces challenges:
- Halting Problem: Cannot predict if a program will terminate.
- Gas Mechanism: Limits resource usage by metering computations.
Example: A 2015 attack exploited undervalued EVM instructions, forcing a hard fork to adjust gas costs.
From Smart Contracts to DApps
Decentralized Applications (DApps) expand beyond smart contracts:
- Components: Smart contracts + web UI (+ decentralized storage/messaging).
- Web3 Vision: Integrates Ethereum, Swarm, and Whisper for a fully decentralized web stack.
👉 Explore Ethereum’s ecosystem
Ethereum’s Development Culture
Ethereum thrives on rapid innovation:
- Motto: "Move fast and fix things."
- Trade-offs: Prioritizes progress over backward compatibility.
- Implications: Developers must adapt to frequent changes and plan for migrations.
Why Learn Ethereum?
Ethereum flattens the blockchain learning curve:
- Accessibility: JavaScript-friendly for quick prototyping.
- Depth: Layers of complexity in security, economics, and decentralization.
FAQ
Q: Is Ethereum just for cryptocurrency?
A: No—it’s a platform for programmable contracts and DApps.
Q: What’s the difference between Bitcoin and Ethereum?
A: Bitcoin focuses on payments; Ethereum enables arbitrary computations.
Q: How does Ethereum handle infinite loops?
A: The gas system limits execution by requiring upfront resource allocation.
Q: What’s next for Ethereum?
A: Transition to Proof-of-Stake (Serenity) for scalability and sustainability.