Understand Ethereum, its Features, and its Working Mechanism

· 3 min read
Understand Ethereum, its Features, and its Working Mechanism
Ethereum was founded by Vitalik Buterin and Gavin Wood in 2015. 

Ethereum is a decentralised, open-source blockchain platform that was launched in 2015. It is designed to enable developers to build decentralised applications (dApps) and smart contracts on its blockchain. In this blog post, we will explore the features and working mechanism of Ethereum.

Features of Ethereum

  1. Decentralisation: Ethereum is a decentralized platform, which means it does not rely on a central authority to manage or govern it. Instead, it is managed by a network of users who maintain the blockchain by verifying transactions.
  2. Smart Contracts: Ethereum allows developers to write smart contracts, which are self-executing contracts that can automatically execute the terms of an agreement when certain conditions are met. This feature enables developers to build decentralized applications on top of the Ethereum blockchain.
  3. Ether: Ether (ETH) is the native cryptocurrency of the Ethereum platform. It is used to pay for transaction fees and as a reward for miners who maintain the blockchain.
  4. Interoperability: Ethereum is designed to be interoperable with other blockchain platforms, enabling developers to build applications that can interact with multiple blockchains.

Working Mechanism of Ethereum

  1. Transactions: Transactions are the fundamental building blocks of the Ethereum blockchain. When a user sends Ether or executes a smart contract, a transaction is created and broadcast to the Ethereum network.
  2. Mining: Ethereum uses a proof-of-work consensus mechanism to validate transactions and maintain the blockchain. Miners use computational power to solve complex mathematical problems, and the first miner to solve the problem is rewarded with Ether.
  3. Gas: Gas is a unit of measurement for the computational power required to execute a transaction or a smart contract on the Ethereum blockchain. Users must pay a fee in Ether for the gas required to execute their transactions or smart contracts.
  4. Smart Contracts: Smart contracts are self-executing contracts that are written in programming languages like Solidity. Once a smart contract is deployed on the Ethereum blockchain, it cannot be modified or deleted.

What makes Ethereum Important?

The blockchain is at the heart of Ethereum; it is the database that stores the information used by the protocol.

Ethereum can run code across a distributed system. As a result, programs cannot be tampered with by third parties. They are added to Ethereum's database (the blockchain) and can be programmed to prevent the code from being edited. Furthermore, users can audit the code before interacting because the database is visible to everyone.

Anyone from anywhere can launch applications that cannot get halted. Furthermore, because ethereum's native unit, Ether, stores value, these applications can regulate how data gets transferred. Ether is the currency that powers Ethereum. Finally, smart contracts are programs that comprise applications. In most cases, they can get programmed to run without human intervention.

Data Storage in Ethereum

Consider Ethereum's blockchain to be a book of record that you are constantly adding pages to. Each page is referred to as a block containing information about transactions. We must include an exceptional value at the top when adding a new page. Anyone should be able to tell from this value that the new page was added after the previous one and not just randomly inserted into the book. This process is called hashing. Hashing transforms data into a unique identifier (or hash). The likelihood of two pieces of data producing the same hash is astronomically low. It's also a one-way process: you can easily calculate a hash, but it's nearly impossible to reverse the hash to obtain the information used to generate it.

Data is stored using trie (tree-like) data structures. Account balances, for example, are not explicitly kept in the Ethereum network blocks. Only root node hashes of payments, stages and invoices get stored in the blockchain. Permanent data and Ephemeral data are the two types of data in Ethereum. Transactions are Permanent data, and the balance of an account address is Ephemeral data. Permanent Data gets stored in the transaction trie and can never be changed. Ephemeral Data gets recorded in the state trie and can be altered accordingly whenever a payment happens. The record-keeping for Ethereum is similar to that of a bank.


Ethereum is a powerful blockchain platform that enables developers to build decentralized applications and smart contracts. Its decentralized nature, smart contract functionality, and interoperability with other blockchain platforms make it a popular choice for developers. Understanding how Ethereum works can help you appreciate the potential of this innovative technology.