Ethereum Tutorial for Beginners

What is Ethereum?

Ethereum is an open-source, decentralized blockchain platform that offers smart contract functionality. It is a distributed computing platform that supports the development of decentralized applications (DApps) using blockchain technology. Ethereum provides a runtime environment called the Ethereum Virtual Machine (EVM), which executes code across a worldwide network of public nodes.

Ethereum is the largest programmable blockchain in production. It helps you build smart contracts and decentralized applications without any downtime, censorship, or third-party interference. Ethereum lets developers create and publish next-generation distributed applications that anyone with an internet connection can use.

Why do you need Ethereum?

Centralized systems are still the most widespread model for software applications. This model directly controls the operation of individual units and the flow of information from a single point. In this kind of system, individuals depend on a central authority to send and receive information.

However, the issues with a centralized system are:

• Single point of control and failure
• It can be corrupted or censored easily
• Performance bottlenecks under load
• Silo effect that locks user data inside one provider
• Limited transparency for end users

Ethereum addresses these issues by replacing the single trusted server with a peer-to-peer network that shares one consistent state.

The Solution is Decentralized Applications

Decentralized applications never rely on a centralized backend. Instead, they interact directly with a blockchain. Refer to this tutorial to learn more about BlockChain.

The term DApp is a combination of two words: decentralized and application. In simple words, a DApp is an application, tool, or program that runs on a decentralized network such as the Ethereum blockchain. Once deployed, the DApp logic is governed by code, not by a company or a single administrator.

History of Ethereum

• 2013: Vitalik Buterin, a developer involved in Bitcoin, was the first to describe Ethereum in a white paper.
• 2014: A Swiss firm, Ethereum Switzerland GmbH, developed the first Ethereum software project, and a public crowdsale raised funds to support development.
• 2015: Frontier, the first live version of Ethereum, was launched on July 30, 2015.
• March 14, 2016: A planned protocol called Homestead became the second major upgrade of the Ethereum network.
• May 2016: Ethereum received wide media coverage when The DAO raised a record $150 million in a crowd sale.
• July 2016: The network split into two chains: Ethereum (ETH) and Ethereum Classic (ETC) after The DAO incident.
• June 2017: Ethereum rallied above $400, marking a sharp rise from the start of the year.
• December 2020: The Beacon Chain went live, starting Ethereum’s move toward Proof of Stake.
• September 15, 2022: The Merge happened. Ethereum switched from Proof of Work to Proof of Stake, cutting energy use by roughly 99.95 percent.
• April 2023: The Shanghai upgrade enabled staked ETH withdrawals.
• March 2024: The Dencun upgrade introduced proto-danksharding (EIP-4844) to lower fees for Layer 2 rollups.

What is Smart Contract?

A Smart Contract is a computer program that executes automatically when its conditions are met. It is a transaction protocol that allows blockchain users to exchange money, property, shares, or any digital asset. It also helps users perform actions such as voting without a central authority. A smart contract acts as a virtual third-party agent that automatically enforces the terms of an agreement written in code.

Traditional Contracts vs. Smart Contracts

Below is the difference between traditional contracts and smart contracts:

Simple Solidity Smart Contract Example

Here is a minimal Solidity contract that stores and updates a number. It shows the basic shape of every Ethereum smart contract.

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.20;

contract SimpleStorage {
    uint256 public storedValue;

    function set(uint256 _value) public {
        storedValue = _value;
    }

    function get() public view returns (uint256) {
        return storedValue;
    }
}

Key Terms in Ethereum

• Currency Issuance: In traditional finance this is managed by a country’s central bank. On Ethereum, ETH is issued by protocol rules rather than a monetary authority.
• Decentralized Autonomous Organization (DAO): A digital organization that operates without hierarchical management. A DAO is a combination of computer code, a blockchain, smart contracts, and members who vote on proposals.
• Smart Contract: A digitally signed agreement between two or more parties that relies on a consensus system and executes automatically when conditions are met.
• Smart Property: Physical or digital assets whose ownership is tracked on Ethereum and transferred by smart contract logic.
• Ethereum Wallet: A gateway to decentralized applications on the Ethereum blockchain. It helps you hold and secure Ether and other crypto-assets built on Ethereum, such as ERC-20 tokens and NFTs.
• Solidity: Solidity is the most widely used smart contract language on Ethereum. It is a general purpose, statically typed language designed to run inside the EVM environment.
• Transactions: A transaction is a signed message sent from one account to another that may carry Ether, contract data, or both.
• Ethereum Virtual Machine (EVM): The EVM is the sandboxed runtime environment for smart contracts. The code running inside the EVM has no direct access to the network, filesystem, or other processes on the host node.
• Gas: A unit that measures the computational work needed to run an operation on Ethereum.
• Layer 2 (L2): Networks such as Arbitrum, Optimism, Base, and zkSync that process transactions off the main chain and settle proofs back to Ethereum to lower fees.

What is Ether?

Ether is the native value token of the Ethereum blockchain. It is listed as “ETH” on cryptocurrency exchanges. Ether helps you pay transaction fees and computational services on the Ethereum network. Every time a contract is executed on Ethereum, Ether is paid as a fee.

What is Ether?

Gas

To perform a transaction on the Ethereum network, a user must pay validators (after The Merge) using Ether through an intermediary unit called Gas. Gas measures the computational work required for running a smart contract or any other transaction.

In Ethereum, after the London upgrade (EIP-1559), the transaction fee is calculated as:

Transaction Fee = Gas Used * (Base Fee + Priority Fee)

Where:

• Gas Used: The amount of gas consumed by the computation.
• Base Fee: A protocol-set fee per unit of gas that is burned, removing ETH from circulation.
• Priority Fee: An optional tip paid to the validator to include the transaction faster.

Ethereum vs. Bitcoin

Here is the main difference between Ethereum and Bitcoin:

Next in this Ethereum guide, you will learn about the applications of Ethereum.

Applications of Ethereum

Below are the major applications of Ethereum today:

• Decentralized Finance (DeFi): Lending, borrowing, trading, and yield platforms such as Aave, Uniswap, and MakerDAO run on Ethereum without traditional banks.
• Stablecoins: USDC, DAI, and similar tokens use Ethereum smart contracts to move dollar-pegged value across the world in minutes.
• NFTs and Digital Ownership: Standards such as ERC-721 and ERC-1155 power digital art, in-game items, music, and tokenized collectibles.
• Banking and Payments: Ethereum’s decentralized system makes it much harder for an attacker to gain unauthorized access to individual records.
• Agreements: Using a smart contract, agreements can be maintained and executed without any unauthorized alteration.
• Prediction Markets: Platforms such as Polymarket and Augur use Ethereum smart contracts to settle bets on real-world events.
• Digital Identity Management: Decentralized identifiers (DIDs) and verifiable credentials can be issued and verified on Ethereum to fight identity theft and data monopolies.
• Supply Chain Tracking: Goods, certifications, and provenance records can be logged on Ethereum to give buyers an audit trail.
• DAOs: Communities use Ethereum to vote on shared treasuries, governance, and product direction without a central operator.

Calling a Smart Contract from JavaScript (ethers.js)

Most DApps talk to Ethereum from a web frontend. Below is a short JavaScript snippet that reads the stored value from the SimpleStorage contract using ethers.js.

// Read a value from an Ethereum smart contract
import { ethers } from "ethers";

const provider = new ethers.JsonRpcProvider("https://mainnet.infura.io/v3/YOUR_KEY");
const address  = "0xYourContractAddress";
const abi      = [ "function get() view returns (uint256)" ];

const contract = new ethers.Contract(address, abi, provider);

async function readValue() {
    const value = await contract.get();
    console.log("Stored value:", value.toString());
}

readValue();

Advantages of Ethereum

Following are the advantages of Ethereum:

• Allows you to upload programs and request them to be executed by the network.
• High uptime and strong resistance to denial-of-service attacks.
• Ethereum helps you create tradable tokens that can serve as a new currency, virtual share, or governance right.
• Persistent and tamper-resistant data storage.
• You can build virtual organizations and DAOs.
• Helps you develop decentralized applications used by millions of wallets.
• Helps you build fault-tolerant and highly secure decentralized apps.
• Proof of Stake consensus uses far less energy than legacy blockchains.
• A mature developer ecosystem with tools such as Hardhat, Foundry, Remix, and ethers.js.

Disadvantages of Ethereum

• The Ethereum Virtual Machine is slower than a centralized server, so you should not use it for large computations.
• Storage on the main chain is expensive, so most apps move data to Layer 2 or off-chain storage such as IPFS.
• Scalability still has trade-offs, although rollups and danksharding are closing the gap.
• Fixing bugs or upgrading deployed contracts is hard because contract code is immutable by default.
• Some applications require verification of user identity, and there is no central authority to verify it on-chain.
• User experience around wallets, seed phrases, and gas can still be confusing for beginners.

If you want to learn about creating your own cryptocurrency, here is a free tutorial you will want to check out: How to Create Your Own Cryptocurrency?

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