No technical content is created out of thin air, there must be more technical building blocks at the time of its birth to form a series of technical innovations afterwards.

Blockchain and Cryptocurrency

In 2008, Satoshi Nakamoto published his famous “Bitcoin White Paper”, which demonstrated a decentralized system for peer-to-peer transactions and used the blockchain as the underlying technology. The key innovation of Bitcoin is the combination of blockchain (i.e. timestamp) and Proof of Work (PoW) consensus mechanism to form a cryptocurrency based on cryptographic scarcity, trust without regulation, and tamper-evident distributed ledger technology backing it.

The blockchain technology creates an unmodifiable decentralized ledger and the consensus protocol is a set of rules of the game for all participants to agree on, which enables them to pick out the blocks that can be incorporated into the blockchain among the many candidate blocks. Accordingly, the consensus is that the longest blockchain is the one that is legitimate and valid, and if an attacker wants to create a longer chain containing malicious transactions, it must exceed the sum of the computations of everyone else in the network. Obviously, no one would repeat the same calculations that everyone else has done in order to tamper with a transaction, which guarantees the blockchain’s tamper-evidence.

Cryptocurrency, the most widespread application that accompanies blockchain, protects on-chain accounts based on asymmetric key encryption algorithms, making it impossible for any transaction to take place without ownership of the corresponding account. The cryptographically protected and transmitted tokens make it impossible for anyone to make fraudulent transactions, which creates a payment network that allows bitcoins to be stored and traded globally in real time without any intermediaries or auditing.

Smart Contract Platforms

The smart contract platform was first proposed by the ethereum blockchain, giving the blockchain programmable functionality. Smart contracts are code that runs on the blockchain and can create or exchange arbitrary data or tokens. Their power lies in the fact that smart contracts allow users to code any type of transaction with peace of mind, or even create rare assets using specific features.

Many traditional business terms can be converted into smart contracts, and such “contracts” also use algorithms to enforce terms. Smart contracts can be used not only in the financial sector, but also in gaming, data management and supply chains.

In terms of the Ethernet blockchain, Ethernet is the equivalent of a huge computer with many smart contract applications. Developers can integrate various applications into the smart contract platform, but in order to limit the waste of blockchain resources, Ethernet will charge a certain transaction fee (gas) for each smart contract and the transactions running on it, which also ensures the security of the Ethernet blockchain.