In this article you will learn about Blockchain, Cryptocurrency and Bitcoin. You will also learn the relationship between these and how it works.
What is Cryptocurrency
Cryptocurrency system is one of the distinguishing features of blockchain systems. Bitcoin is the first cryptocurrency application of blockchain. In bitcoin a user can send virtual cryptocurrency to another user. With the passage of time the blockchain system was adapted with the industrial needs and Ethereum blockchain came into market. In Ethereum the concept of decentralized applications (DApps) was introduced.
What is Decentralized Applications (DApps)
In DApps the smart contracts were introduced which excluded the third-party concept needed for the facilitation of two parties. In traditional third-party systems two parties rely on the third party for the credibility of any transaction that is run between them. In smart contracts the rules for any transaction of a blockchain system are defined in the form of source code and this source code is deployed into the Ethereum blockchain and then this source code becomes immutable. These smart contracts can be called by their public address which is generated after its deployment in the Ethereum main network. Smart contract examples include banking, insurance systems,
election systems, ownership transfer system etc.
Concept of Smart Contracts and Ethereum Virtual Machine
Smart contract source code is written in many languages. Solidity is the most widely used language for the creation of smart contracts. Whenever a smart contract is compiled and deployed into the Ethereum Virtual Machine (EVM) the source code of a smart contract is converted into bytecode. The reason is that the Ethereum Virtual Machine understands only bytecode . This bytecode generates different opcodes for the execution of a smart contract statement. The transactions of smart contracts are connected with the Ethereum cryptocurrency Ether. Each transaction of smart contract costs some Ethers. For the calculation of Ethers against the transactions of smart contracts the Gas system has been introduced.
What is Gas System in Blockchain Technology
The main feature of Gas system is that it ensures the transparency in smart contracts. Each opcode generated by the bytecode costs some gas. Gas is basically the computational unit which measures
how much cryptocurrency will be required by the miner to mine the transaction of a user in the Ethereum Network. Ethereum has officially defined the units of gas against each opcode. For example, the ADD opcode will cost 3 units of gas. Gas units against all opcodes are defined in Ethereum yellow paper. Gas consumed in a transaction is converted into ethers and miners receive ethers in their wallet after mining the transaction.
There are two types of smart contract transactions first is the contract creation transaction and second is the function execution transaction. First a smart is deployed into the Ethereum network and then the users can interact with that deployed smart contract by invoking its functions. Both these deployments, costs gas consumption. The users mention the gas limit and the gas price before the initiation any transaction.
Finally we can say that the gas system has been introduced by the Ethereum to ensure the credibility and transparency of the system.
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