The main objective of Ethereum is to accept transactions from accounts, update their state, and maintain this state as current till another transaction updates it again. The whole process of accepting, executing, and writing transactions can be divided into two phases in Ethereum. There is a decoupling between when a transaction is accepted by Ethereum and when the transaction is executed and written to the ledger. This decoupling is quite important for decentralization and distributed architecture to work as expected.
Blockchain helps primarily in the following three different ways:
- Trust: Blockchain helps in creating applications that are decentralized and collectively owned by multiple people. Nobody within this group has the power to change or delete previous transactions. Even if someone tries to do so, it will not be accepted by other stakeholders.
- Autonomy: There is no single owner for blockchain-based applications. No one controls the blockchain, but everyone participates in its activities. This helps in creating solutions that cannot be manipulated or induce corruption.
- Intermediaries: Blockchain-based applications can help remove the intermediaries from existing processes. Generally there is a central body, such as vehicle registration, license issuing, and so on, that acts as registrar for registering vehicles as well as issuing driver licenses. Without blockchain-based systems, there is no central body and if a license is issued or vehicle is registered after a blockchain mining process, that will remain a fact for an epoch time-period without the need of any central authority vouching for it.
Blockchain is heavily dependent on cryptography technologies as we discuss in the following section.
