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Blockchain Basics

Table of contents

Hash

  • Blockchain 101
  • Hash:, a unique fixed length string, meant to identify a piece of data. 
    SHA256
Keccak256
  • Signing transaction, Explorer Public & Private key
  • Private key »> public key »> address. The final wallet address hex came from private key to public key.

Gas intro

  • Watch gas explanation on Youtube
  • EIP1559
  • EIP1559 explained on Youtube

  • Gwei converter

  • Gas: A unit of computational measurement. The more complex your transaction is the more gas you pay. Gas is paid towards miners and validators.

  • Gas Limit & Usage by txn: 60,000 | 21,000 (35%), you see this line in etherscan.io, meant this transaction had used 21,000 (Wei) gas. This is standard gas price for sending a ETH from account to account. It would cost more if doing other things like minting NFT, depositing to DiFi contract.
  • Transaction fee = Usage by txn 21,000 x Gas price (Gas price would be the cost for a Transaction at the time, it fluctuates depends on how busy the network is).
  • Burnt (Gwei) = Base Gwei * Usage by Txn (21,000 Wei). Burnt fee is entirely burnt, it doesn’t go anywhere. In long term, the network will contains less and less ETH.
  • Minor’s fee = Transaction fee - Brunt fee

Difference between Gas and Transaction fee

Gas Fee is a measure of computational work for transactions and smart contracts, while the Transaction Fee is the total cost incurred for the transaction to be included in a block. Both are critical for the functioning of blockchain networks like Ethereum, serving as a mechanism to allocate network resources and compensate miners.

Consensus

  • Consensus is how Blockchain decide what the state of the chain is.

  • PoW & PoS are sybil resistance mechanism

  • Proof of Work » miner
    • Miners are paid by Block Reward and Transaction Fee
    • ETH 1.0 and BTC are Proof of Work
  • Proof of Stake » validator
    • ETH 2.0 will be Proof of Stake, shard Blockchain

Blockchain attacks

  • Sybil attack
  • 51% attack

Layers - for scalability

Sharding and Rollups are scalability solutions

  • Shard - sharding represents one approach to solving the “scalability trilemma,” aiming to achieve scalability and speed without compromising on security and decentralization.
  • Layer 1 - base layer blockchain implementation (like: Bitcoin, Ethereum, Avalanche)
  • Layer 2 - any application built on top of a layer 2 (like Arbitrum, Optimism). ARB & OPT also known as Rollups. Rollups drives security on the base layer, side chain like Algorand drives security from their own protocol.