Ethereum Primer

Non-technical introduction to Ethereum.
Vetted by Ethereum core developers.

Ethereum Primer
19 July 2015 – 1.0 – Henning Diedrich

What is Ethereum?

• A Platform for Decentralised Apps, Smart Contracts and DAOs

• A global, anonymous network of computers that anyone can join

• A massively many-times mirrored, global computer:
the least efficient and most open and reliable way to compute,

 every computer in the network stores and computes the same
• Bitcoin 2.0:
with a focus on smart contracts instead of being a digital currency
• the software to run Ethereum is free

How does Ethereum work?

• The Ethereum network per se is lifeless


 1. user input into an EOA triggers a compute cycle
2. messages from the EOAs trigger contracts to execute
3. contracts can call other contracts

 4. the network computes until all calls are resolved

• Ethereum has myriads of accounts as its global state
an account can be manually controlled, an EOA, or
a contract, having code and local storage


How does Ethereum compare?

• Bitcoin: Ethereum is the logical improvement of Bitcoin,
allowing for complex, scriptable transactions and going for better scale

• BitTorrent: Ethereum is a platform to create decentralised,
un-censorable applications like BitTorrent, adding application state and trade

• Napster: allowing for new, arbitrary markets, Ethereum will enable the
dis-intermediation of entrenched intermediaries across many industries

What is Ethereum not?

• Not a better solution to every database problem (at all)
• Not a digital currency (but maybe also)

• Not fast (at all) but very productive

• Not anonymous or privacy protecting
• Not as safe nor lacking progress as Bitcoin for a while

• (At seem point soon:) not wasting electricity like Bitcoin

What is a Blockchain?

A blockchain is a new type of database that turns many wisdoms about databases on their head:


• public: anyone can see every transaction

• decentralised: mirrored tens of thousands of times

• unprotected: anyone has access, can mirror it and use it

• anonymous: ownership identification by 33 character keys

• audit-friendly: past data is verifiable and cannot be tampered
• hard to scale: every mirror currently is a full copy

What is a Đapp?


• A Đapp is a decentralised application running on a blockchain
i.e. hosted and executed identically on many computers
thus not depending on any one hoster

• as such hard to tamper with, or shut off

• independent of the parties taking part in a transaction

• verifiable as to its correctness by all

• BitTorrent and Bitcoin could be called Dapps
• Ethereum is a platform to build Đapps

What is a Smart Contract?

A Đapp that can

• move money, usually Bitcoins

• deliver digital goods

• trigger delivery of real-world goods and services
• be triggered to execute by an external condition
• function as independent, verifiable middle-man
• dis-intermediate intermediaries in any market

What is a DAO?


A decentralized, autonomous organisation (DAO) likely


• is a complex smart contract, or a bunch of them

• owns digital assets, e.g. Bitcoin, domain names,

• shares of other DAOs, digital titles to real-world assets
• provides useful service to the real world or other DAOs
• buys services from the real world or other DAOs

• sustains itself

• has major legal challenges

What is Ether?

Ether is the token of Ethereum, i.e. the ‘Bitcoins’ of Ethereum

• Ether is not primarily meant to be another digital currency

• Đapps will likely use Bitcoin

• Ether is used to pay for calculations on the blockchain

i.e. for executing Đapps and smart contracts.

• This use of Ether is called gas and it is counted per operation

• The Ethereum foundation sells Ether
to fund development of the open source Ethereum software system

Will Ethereum change the World?

probably

The paradigm Ethereum is based on, is the logical extension
of what Bitcoin pioneered. 


It enables a genuinely new way to interact, based on decades
of research. 


If not Ethereum, something similar will power smart contracts,
and impact commerce like the highways and the internet did.

copyright notice: this document is in the public domain.

Transcript

1. 19 July 2015 – Henning Diedrich! ! ! ! ! ! ! ! ! ! ! ! ! ! rev 1.0 Ethereum – primer 10 pages non-technical introduction vetted for correctness by Ethereum core devs.
2. What is Ethereum? ✤ A Platform for Decentralised Apps, Smart Contracts and DAOs
 (bear with us) for scriptable economies without intermediaries! ✤ A global, anonymous network of computers that anyone can join
 the software to run Ethereum is free! ✤ A massively many-times mirrored, global computer:
 the least efficient and most open and reliable way to compute,
 every computer in the network stores and computes the same! ✤ Bitcoin 2.0:
 but with a focus on smart contracts instead of digital currency 2
3. How does Ethereum work? ✤ Ethereum has myriads of accounts as its global state! ✤ an account can be manually controlled, an EOA*,
 similar to a bank account holding Ether! ✤ or a contract, having code and private data
 roughly similar to a function
 ✤ The Ethereum network per se is lifeless! 1. user input into an EOA triggers a compute cycle! 2. messages from the EOAs trigger contracts to execute! 3. contracts can call other contracts! 4. the network computes until all calls are resolved! 
 *EOA = externally owned account 3
4. How does Ethereum compare? ✤ Bitcoin: Ethereum is the logical improvement of Bitcoin, allowing for complex, scriptable transactions and going for better scale! ✤ BitTorrent: Ethereum is a platform to create decentralised, un-censorable applications like BitTorrent, adding application state and trade! ✤ Napster: allowing for new, arbitrary markets, Ethereum will enable the dis-intermediation of entrenched intermediaries across many industries 4
5. What is Ethereum not? ✤ Not a better solution to every database problem (at all)! ✤ Not a digital currency (but maybe also)! ✤ Not fast (at all) but very productive! ✤ Not anonymous or privacy protecting! ✤ Not as safe nor lacking progress as Bitcoin for a while! ✤ Not going to be wasting electricity like Bitcoin 5
6. What is a Blockchain? A blockchain is a new type of database 
 that turns many wisdoms about databases on their head:
 ✤ public: anyone can see every transaction! ✤ decentralised: mirrored tens of thousands of times! ✤ unprotected: anyone has access, can mirror it and use it! ✤ anonymous:* ownership identification by 40 character keys! ✤ audit-friendly: past data is verifiable and cannot be tampered! ✤ hard to scale: every mirror currently is a full copy! *really pseudonymous 6
7. What is a Đapp? A Đapp is a decentralised application! ! ✤ running on a blockchain ! ✤ i.e. hosted and executed identically on many computers! ✤ thus not depending on any one hoster ! ✤ as such hard to tamper with, or shut off! ✤ independent of the parties taking part in a transaction! ✤ verifiable as to its correctness by all
 ✤ BitTorrent and Bitcoin could be called Dapps! ✤ Ethereum is a platform to build Đapps 7
8. What is a Smart Contract? A Đapp that can! ✤ move money, usually Bitcoins! ✤ deliver digital goods! ✤ trigger delivery of real-world goods and services! ✤ be triggered to execute by an external condition! ✤ function as independent, verifiable middle-man! ✤ dis-intermediate intermediaries in any market 8
9. What is a DAO? A decentralized, autonomous organisation (DAO) likely
 ✤ is a complex smart contract, or a bunch of them! ✤ owns digital assets, e.g. Bitcoin, domain names,
 shares of other DAOs, digital titles to real-world assets! ✤ provides useful service to the real world or other DAOs! ✤ buys services from the real world or other DAOs! ✤ sustains itself! ✤ has major legal challenges 9
10. What is Ether? ✤ Ether is the token of Ethereum,
 i.e. the ‘Bitcoins’ of Ethereum! ✤ Ether is not meant to be another digital currency – 
 Đapps will likely use Bitcoin. Maybe also Ether.
 Issuing a new currency is easy and takes only one smart contract! ✤ Ether is used to pay for calculations on the blockchain
 i.e. for executing Đapps and smart contracts. ! ✤ This use of Ether is called gas and it is counted per operation! ✤ The Ethereum foundation sells Ether to fund development of the open source Ethereum software system 10
11. Will Ethereum change the World? ✤ probably
 
 The paradigm Ethereum is based on, is the logical extension of what Bitcoin pioneered. 
 
 It enables a genuinely new way to interact, based on decades of research. 
 
 If not Ethereum, something similar will power smart contracts, and impact commerce in ways like the highways and the internet did.
 
 The technology allows for the reassesment of many systems which traditionally require trusted intermediaries. 11
12. ! ! ! Facts vetted by ! ! Gavin Wood, founder and C++ implementation lead, Ethereum – @gavofyork! ! Heiko Hees, Python implementation lead, Ethereum! ! Opinions of the author! ! Henning Diedrich, architect, IBM blockchain group – @hdiedrich! ! Ethereum logo used with permission, (c) Ethereum Foundation, www.ethereum.org.! ! This document is in the public domain.!