Ethereum in BlockChain

Ethereum is a blockchain based distributed computing platform that enables developers to build and deploy their decentralized applications.

Features of Ethereum :-

• Cryptocurrency
• Smart Contract
• Ethereum Virtual Machine 
• Dapp
• DAO

Cryptocurrency  :-

Ether (ETH) is a cryptocurrency that runs Ethereum network.

• It is used to pay for the computation resources and transaction fees on the Ethereum network.
• like Bitcoin, Ether is also a peer to peer currency.
• Apart from paying for transactions.Ether is also used to buy gas, which is used to pay for computation.

Note :- Gas is the execution fee paid by a user running a transaction in Ethereum.

• Ether can be utilized for building decentralized applications, smart contracts and making standard peer to peer payments.

Smart Contract :-

• A smart contract is a computer program that facilitates the exchange of money, shares, property etc..

 Note :- These contracts can be created by any user on Ethereum network.

• It contains the terms and conditions of a mutually agreed contract between the peers.
• For the verification process, smart contract is carried out among anonymous parties of the network without the need of a central authority.
• It provides the transfer of any asset or currency in a transparent and trustworthy manner.

What happens in traditional system of contract?

• Agreement
• Third Party for execution
• Data tampering is possible

What happens in smart contract?

• Agreement coded in a program
• Result is verified by users of Ethereum blockchain network.
• Once a contract is executed, it cannot be tampered.

Let's consider an example, where Jack has give a contract of $500 to Elsa for developing his company's website.
Note :- EVM is a runtime compiler to execute smart contract code

Ethereum Virtual Machine :-

EVM is a virtual machine designed to operate as a runtime environment for Ethereum based smart contracts.

Note :- EVM is operated in a sandboxed environment (isolated from main network). This is perfect testing environment.

• Any programming language in the smart contract is compiled into 'bytecode'.
• The bytecode can be read and executed using an Ethereum feature called Ethereum Virtual Machine (EVM).
• EVM guarantees security by preventing cyber attacks. 

 How does EVM work?

Note :- All the nodes on Ethereum network execute smart using their EVM's.

Proof of Work 

DAPP :-

• A Dapp (decentralized application) consists of backend code that runs on a distributed P2P network.
• It is a software designed to work on an Ethereum network (without being controlled by a centralized system).
• It provides direct interaction between end users and providers. 
• An application qualifies as Dapp when it is open sourced and uses tokens.

 Note :- Dapp allows the backend code and data to be decentralized.

DAO :-

• Dcentralized Autonomous Organization is a digital organization that aims to operate without the need of hierarchical management.
• It exists on the blockchain network where it is governed by its protocols and rely upon smart contracts.
• It manages business decision through smart contracts or voting system.

How its works?

• People add funds to the DAO
• Based on that, each member is given a token which represents the percentage of shares in the DAO.
• These tokens are used to vote in the DAO where the proposal status is decided based on maximum votes.