Understanding Ethereum from scratch

Vitalik 2025-11-3 18:49 93825人围观 ETH

1. The beginning of the story: The "second revolution" after Bitcoin. In 2009, the birth of Bitcoin allowed people to see the power of decentralized currency for the first time. However, the function of Bitcoin is very simple, it can only transfer money

1. The beginning of the story: the “second revolution after Bitcoin””

In 2009, the birth of Bitcoin allowed people to see the power of decentralized currency for the first time.
However, the function of Bitcoin is very simple, it can only transfer money and store value.

In 2013, a 19-year-old programmer, Vitalik Buterin, proposed a new idea:

“What if the blockchain could not only keep accounts, but also run any program? ”

Thus, Ethereum was born.
It is not just a "digital currency", but a globally distributed "decentralized computer".

2. What is Ethereum: a world computer

Ethereum = globally shared computing platform + decentralized ledger.

Each node saves the same blockchain data and runs the same program.
When you deploy a smart contract and initiate a transaction, all nodes in the network will verify, execute, and record it on the chain.

3. Ethereum (ETH): Fuel, Assets and Incentives

The native currency of Ethereum is called Ether (ETH).
ETH is the core energy of the entire system, both as a transaction medium and as a fuel for calculations.

You can understand it this way:

“Ethereum is the blood of Ethereum, and Gas is the way it flows. ”

Three identities of ETH:

Gas: ETH is consumed when executing smart contracts and transactions；
Pledge assets: To become a validator (Validator), you need to pledge 32 ETH；
Value carrier: used for payment, mortgage, and lending, and is the economic foundation of the entire ecology.

4. How is ETH generated? ——The evolution of the currency issuance mechanism

ETH does not exist in a vacuum. It went through two stages of "generation":

Phase 1: Proof of Work (PoW) - Mining Era

From its launch in 2015 until “The Merge” in 2022, Ethereum used PoW (Proof of Work).
Miners compete to produce blocks by calculating hash values, and the winner receives:

Newly issued ETH (block reward)；
Gas fees for all transactions.

To put it simply, ETH at that time was mined by "computing power".

Each block occurs approximately every 15 seconds, and at that time each block was awarded 2 ETH (more in the early days).
Therefore, the early generation method of ETH was similar to that of Bitcoin: relying on electricity + computing power.

Phase 2: Proof of Stake (PoS) - Staking Era

After the "The Merge" upgrade in 2022, Ethereum completely abandoned mining and switched to PoS (Proof of Stake, Proof of Stake).

The current generation method of ETH is:

Validator stakes 32 ETH；
Randomly selected by the system to create a new block；
Get a portion of the gas fee + newly issued ETH rewards；
If you cheat or go offline, you will be slashed.

So the "generation" of ETH is now more like bank interest or node dividends,
It does not rely on mining, but on participating in consensus.

Deflation Mechanism: EIP-1559’s “Combustion Engine””

The 2021 EIP-1559 upgrade introduces a “destruction mechanism”:
The Base Fee for each transaction will be automatically destroyed.

So ETH has two directions:

PoS rewards → additional issuance
Gas burning → reduce

When the network is active, the amount burned may be greater than the amount issued, and ETH will become a deflationary currency.
This is why ETH’s “inflation rate” is often below 0% today.

5. Gas: Ethereum’s metering and throttling system

Ethereum is not like a traditional server that “runs programs for free”;
Every operation and every call must consume "fuel" - Gas.

Gas is used for:

Limit code execution time；
Prevent abuse and endless loops；
Provide rewards to validators.

Gas cost calculation formula:

交易费用 = Gas Used × Gas Price

And "Gas Price" will fluctuate with the market, just like oil prices.

Part of the gas fee will be destroyed (deflation), and the other part will be given to the validator.
This is also the key economic mechanism for ETH to "self-regulate".

6. The core of technology: EVM and smart contracts

Smart Contract is the most important invention of Ethereum.
It is a self-executing blockchain program.

EVM (Ethereum Virtual Machine) is a virtual machine that all nodes run. It:

Execute smart contract；
Gas deducted；
Update on-chain status.

7. Ecology and Application

Today's Ethereum is not just a technology laboratory, but an entire economic ecosystem.

DeFi: Decentralized finance (Aave, Uniswap), decentralized lending (Aave), trading (Uniswap), stable currency (DAI), etc. are automatically executed by contracts, transparent, composable, and run around the clock.
NFT: digital art and asset ownership confirmation,

Digital art, game props, tickets and IDs. NFT allows "unique" digital items to be authenticated and circulated.
DAO: Decentralized Autonomous Organization. DAO is organized with on-chain voting and treasury contract governance. The rules are open and automatically executed. It can be used for community, foundation and open source collaboration.
Layer2: Extended network (Optimism, Arbitrum, zkSync). Layer 2 networks such as Optimism, Arbitrum and zkSync move a large number of transactions away from the main chain to reduce costs, and then submit the results back to Ethereum to take into account security and scalability.

8. Future Outlook

The future of Ethereum is called a “multi-stage upgrade path”:

The Merge: From PoW → PoS (Completed)
The Surge: Capacity expansion and sharding technology
The Verge: Data structure optimization (Verkle Tree)
The Purge: Clean historical data and run lightweight

9. Conclusion: Redefining trust

Ethereum allows us to collaborate without trust for the first time.
It is a new system, a new economy——
The "underlying code" of human society.

Future companies, organizations, and even national mechanisms,
All may run on systems like Ethereum.