Learning Objectives – after this chapter you will be able to:
- Explain what Ethereum is and how it extends Bitcoin’s idea.
- Define Turing completeness and the role of the EVM.
- Describe Ethereum nodes, execution and consensus clients, and node types.
- Distinguish Mainnet, testnets and private networks.
Ethereum
- Ethereum builds on Bitcoin’s innovation with one big improvement: it is a programmable blockchain.
- It lets you send value in its native currency, Ether (ETH), just as Bitcoin lets you send BTC – and it also lets you deploy and run smart contracts, which power decentralized applications (dApps).
- The Ethereum blockchain is a public, append-only database that keeps a record of every transaction that has ever taken place on it, together with the current state of every account and contract.
- Ethereum is Turing-complete.
Turing-complete: able, in principle, to compute anything that any computer can compute, given enough time and resources. On Ethereum the “enough resources” part is limited by gas, so programs cannot run forever.
Key Points
| Decentralized | Thousands of independently operated nodes maintain the network; there is no central server. |
| Immutable | Once transactions are finalized, they practically cannot be altered. |
| Pseudonymous | Users are identified by addresses rather than names. Note that Ethereum is not private by default – every transaction is public. |
| Censorship-resistant | No single party can stop a valid transaction or shut down a deployed contract. |
| No third-party control | Transfers and contract execution do not need approval from a bank or company. |
| Proof-of-Stake | Since September 2022 Ethereum is secured by validators who stake ETH (Chapter 16), with a new slot every 12 seconds. |
Ethereum Nodes
- Ethereum is a peer-to-peer network of computers called Ethereum nodes. Anyone with suitable hardware can run a node.
- Since The Merge, a full node runs two pieces of software together:
- Execution client – executes transactions in the EVM and keeps the state. Examples: Geth (go-ethereum) – the Go implementation of Ethereum – plus Nethermind, Besu, Erigon and Reth.
- Consensus client – runs Proof-of-Stake and follows the chain head. Examples: Prysm, Lighthouse, Teku, Nimbus and Lodestar.
- Every node runs the Ethereum Virtual Machine (EVM), which executes contract bytecode. The EVM has its own stack, memory and persistent storage (Chapter 25), and all nodes must reach the same result.
- Node types: a full node verifies every block and keeps recent state; an archive node also keeps every historical state; a light node downloads only block headers and asks full nodes for proofs.
- Client diversity – using many different client implementations – protects the network from a bug in any single client.
Ethereum Networks
| Network | Purpose |
|---|---|
| Mainnet | The real public Ethereum blockchain where ETH has real value. |
| Public testnets | Copies of the protocol with free test ETH (from “faucets”) for testing. Sepolia is the recommended testnet for application developers, and Hoodi is used for validator and staking tests. Older testnets such as Ropsten, Rinkeby, Kovan and Goerli have been deprecated. |
| Local / development networks | Single-machine chains created by tools such as Hardhat, Foundry (Anvil) or Ganache for fast testing. |
| Private / consortium networks | Permissioned Ethereum-based networks run by organisations. |
Testnets change over time; check the ethereum.org “Networks” page (see references) for the current list.
Bitcoin vs Ethereum
| Basis | Bitcoin | Ethereum |
|---|---|---|
| Main purpose | Peer-to-peer digital money | Programmable platform for smart contracts and dApps |
| Native currency | BTC (smallest unit: satoshi) | ETH (smallest unit: wei) |
| Consensus | Proof-of-Work | Proof-of-Stake (since 2022) |
| Block time | About 10 minutes on average | 12-second slots |
| Programming | Limited Bitcoin Script | Turing-complete EVM (Solidity, Vyper) |
| Data model | UTXO (unspent transaction outputs) | Account-based (balances and state) |
| Supply | Capped at 21 million BTC | No fixed cap; issuance offset partly by fee burning |
Key Takeaways
- Ethereum = blockchain + Turing-complete EVM, enabling smart contracts and dApps.
- A full node runs an execution client (e.g. Geth) and a consensus client (e.g. Lighthouse).
- Developers test on local networks and testnets such as Sepolia before deploying to Mainnet.
Question / Answer (15 questions)
Answer : Ethereum is a decentralized, open-source, programmable blockchain. It has a native currency, Ether (ETH), and a Turing-complete virtual machine (the EVM) that runs smart contracts and decentralized applications.
Answer : Bitcoin focuses on transferring value with a deliberately limited scripting language. Ethereum adds general-purpose programmability, so developers can deploy smart contracts that hold state and implement tokens, exchanges, DAOs and other applications.
Answer : Turing-complete means a system can, in principle, perform any computation given enough resources. Ethereum limits resources with gas: every operation costs gas and each transaction has a gas limit, so execution stops when gas runs out.
Answer : An Ethereum node is a computer running Ethereum client software that connects to other nodes, verifies blocks and transactions according to the protocol and keeps a copy of the blockchain data.
Answer : The execution client (e.g. Geth) executes transactions in the EVM and manages state, while the consensus client (e.g. Lighthouse or Prysm) runs Proof-of-Stake and decides which blocks are canonical. Together they form a complete node.
Answer : Geth (go-ethereum) is an Ethereum execution client written in the Go programming language. It is one of the original and most widely used Ethereum client implementations.
Answer : A full node verifies all blocks and stores the current state plus recent data. An archive node also stores every historical state, which is useful for block explorers and analytics. A light node stores only block headers and requests proofs from full nodes.
Answer : Client diversity means the network runs many independent client implementations. If one client has a bug, nodes using other clients keep the network correct, reducing the risk of a chain split or outage.
Answer : A testnet is a public Ethereum network used for testing, where test ETH has no real value and can be obtained from faucets. Sepolia is the recommended testnet for application developers; older testnets such as Rinkeby and Kovan are deprecated.
Answer : No. Ethereum is pseudonymous, not private. Every transaction and contract interaction is publicly visible; only the link between an address and a real-world identity is not directly recorded.
Answer : Bitcoin uses the UTXO model, where coins are tracked as unspent outputs of earlier transactions. Ethereum uses an account model, where each account has a balance, a nonce and, for contracts, code and storage.
Answer : The EVM executes smart-contract bytecode deterministically. Every node runs the same transactions through the EVM and must reach the same resulting state, which is how the network agrees on contract outcomes.
Answer : Tools such as Hardhat, Foundry (Anvil) or Ganache create a private blockchain on a developer’s machine with instant blocks and pre-funded accounts, allowing fast testing without spending real or test ETH.
Answer : Ethereum uses Proof-of-Stake since The Merge on 15 September 2022. Time is divided into 12-second slots, in each of which a validator may propose a block.
Answer : Valid transactions can be included by any of a large set of independent validators, and deployed contracts cannot be removed by any single party. This makes it very hard to block a particular user or application.
MCQ Test : Check Your Understanding (5 questions)
Select an option and press Check Answer, or answer all questions and press Submit Test to see your score. Each answer comes with an explanation.
Bibliography/References
The notes, questions and MCQs on this page are original explanations written for this course. The works listed below were consulted and are cited for attribution and further reading. Product names, logos and trademarks belong to their respective owners. Short quotations, where used, are marked and attributed.
- Buterin, V. (2013). Ethereum Whitepaper: A Next-Generation Smart Contract and Decentralized Application Platform. ethereum.org. https://ethereum.org/en/whitepaper/
- ethereum.org. (n.d.). Intro to Ethereum. Ethereum Developer Documentation. https://ethereum.org/en/developers/docs/intro-to-ethereum/
- ethereum.org. (n.d.). Nodes and clients. Ethereum Developer Documentation. https://ethereum.org/en/developers/docs/nodes-and-clients/
- ethereum.org. (n.d.). Networks. Ethereum Developer Documentation. https://ethereum.org/en/developers/docs/networks/
- ethereum.org. (n.d.). Ethereum Virtual Machine (EVM). Ethereum Developer Documentation. https://ethereum.org/en/developers/docs/evm/
- Wood, G. Ethereum: A Secure Decentralised Generalised Transaction Ledger (Ethereum Yellow Paper). https://ethereum.github.io/yellowpaper/paper.pdf
- Antonopoulos, A. M., & Wood, G. (2018). Mastering Ethereum: Building Smart Contracts and DApps. O’Reilly Media.