Note

If you are new to the blockchain technology, taking our Introduction to Blockchain Technology self-paced course is highly recommended. Also, for a comprehensive coverage of blockchain development in Ethereum or mastering Solidity programming, taking our below self paced courses is highly recommended:

• Learn Solidity Programming by Examples
• Introduction to Ethereum Blockchain Development

Recap

In our previous series, we covered the following articles:

• A beginner Guide to Blockchain Technology
• How Decentralized Peer-To-Peer Network Works
• How blocks are added to the blockchain
• How Public and Private Keys of Cryptography Work
• What Is A Cryptographic Hash Function
• How Digital Signature Works In Blockchain
• The role and types of consensus mechanism in blockchain

In this article, we learn how accounts are created and managed in Ethereum.

Ethereum Account

As we discussed earlier, instead of the UTXO model, Ethereum manages accounts and transactions differently than Bitcoin. In Ethereum, it introduces the world state concept, the collection of all accounts on the blockchain network. World state presents the global state of the Ethereum network, which is constantly updated following any transaction execution. It is a kind of a global database, which is replicated to all Ethereum nodes behind the scene.

Like your bank account, an Ethereum account is used for holding ethers and transacting with each other. It has a 20-byte cryptographic address, an account balance, and state transitions between accounts. The address identifies the owner of the account.
In addition to the address, an Ethereum account contains four fields:

• Nonce: A counter used to identify distinct transactions
• Balance: The account’s current ether balance
• Contract code: Optional cryptographic hash code pointing to smart code associated with the contract creation
• Storage: Optional cryptographic hash code pointing to the account’s storage

The following diagram further illustrates the structure of an Ethereum account:

In Ethereum, a transaction is a state transition of account from one state to another, which is initiated by an external entity. All transactions, whether it is ether movement from one account to another or smart contract code execution, will be collated into a block. Also, the resulting account states and transaction receipts are added to the block too. The new block will be mined by the blockchain network and added to the blockchain. Data in the blockchain is stored in supporting storage, usually a database. Depending on the Ethereum client implementation, it may be stored into a different type of database. For example, the Geth implementation uses Google LevelDB as the underlying database implementation for the global state, as shown here:

 

We will get into different types of accounts in the next section.

Two types of accounts

Accounts play an essential role in Ethereum. Ethereum introduces two types of accounts:

• One is the Externally Owned Account (EOA), which is used for ether transfer and is controlled by private keys. There is no code associated with EOA.
• Another one is a Contract Account (CA), which is used for contract creation and smart code execution. The EVM activates and executes the smart contract code logic whenever the contract account receives a message. Beyond normal operations, it may read from and write to internal storage or invoke smart contracts on the other contracts.

They are both state objects; an EOA has a balance, and a CA has both a balance and storage. Without CAs, Ethereum would be limited to the mere transfer of value between accounts, as with Bitcoin.

 

Externally owned account

Just like your personal or business account in a financial institute, an EOA is associated with an external entity as an owner who has an interest in the account or has ownership of the underlying cryptoassets. Every EOA has a pair of cryptographic keys. It is controlled by the owner’s private key. The owner uses its private key to digitally sign all transactions so that the EVM can securely validate the identity of the senders. In the world state, the account is linked to a public address, which is generated based on the owner’s public key. We will talk about the address in detail in the Address and walletarticle, as part of the discussion about the Ethereum wallet.

The following diagram shows the structure of the EOA:

As shown here, EOA has a balance associated the address, mainly used for ether transfer.

 

One-to-One Live Blockchain Classes

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Contract account

A CA, or a contract, has an ether balance and associated code, which is linked to the smart contract code in an EVM. It may have optional storage, which is pointing to EVM storage. A state change in a contract account may involve an update of the ether balance, the associated data in the storage, or both. A contract account has an associated address too, which is calculated using the Keccak-256 hash function, based on the address of its creator (sender) and the nonce:

The associated smart contract code is executed when it is triggered by transactions or messages received from other contracts. Once a new block is added to the blockchain, all participating nodes will execute the contract code again as part of the block verification process.

 

Next Article

In our next article (How Ethereum Manages Transactions), we discuss how transactions are processed and managed in Ethereum.

This article is written in collaboration with Brian Wu who is a leading author of “Learn Ethereum: Build your own decentralized applications with Ethereum and smart contracts” book. He has written 7 books on blockchain development.

Resources

Free Webinars on Blockchain

Here is the list of our free webinars that are highly recommended:

• Hyperledger Fabric for system admin versus developers
• How to harness blockchain for environmental and corporate sustainability
• Review of Initial Coin Offering, Security Token Offering and asset tokenization use cases and best practices
• Hyperledger Fabric Deployment on Cloud
• Hyperledger Fabric for entrepreneurship- 21 blockchain business use cases

 

Free Courses

Here is the list of our 10 free self-paced courses that are highly recommended:

• IT Career Roadmap Explained
• Web Design with Bootstrap
• User Experience Best Practices
• Intro to Search Engine Optimization
• Web Design with WordPress
• Introduction to Drupal CMS
• Intro to Joomla CMS
• Intro to Cybersecurity
• Introduction to Cloud Technology
• Recorded Live Webinars and Classes

 

Self-Paced Blockchain Courses

If you like to learn more about Hyperledger Fabric, Hyperledger Sawtooth, Ethereum or Corda, taking the following self-paced classes is highly recommended:

1. Intro to Blockchain Technology
2. Blockchain Management in Hyperledger for System Admins
3. Hyperledger Fabric for Developers
4. Intro to Blockchain Cybersecurity
5. Learn Solidity Programming by Examples
6. Introduction to Ethereum Blockchain Development
7. Learn Blockchain Dev with Corda R3
8. Intro to Hyperledger Sawtooth for System Admins

 

Live Blockchain Courses

If you want to master Hyperledger Fabric, Ethereum or Corda, taking the following live classes is highly recommended:

• Live and self-paced blockchain development with Ethereum
• Live and self-paced blockchain development with Hyperledger Fabric
• Live and self-paced blockchain development with Corda
• Immersive Blockchain Bootcamp with live and self-paced courses
• Live crash course for learning Ethereum with Solidity
• Live crash course for building DApps with Hyperledger Fabric
• Live crash course for building DApps with Corda
• Live full-stack blockchain development in Hyperledger and Ethereum

 

Articles and Tutorials on Blockchain Technology

If you like to learn more about blockchain technology and how it works, reading the following articles is highly recommended:

•  History and Evolution of Blockchain Technology from Bitcoin
•  Overview of Blockchain evolution and phases from Ethereum to Hyperledger
• Comprehensive overview and analysis of blockchain use cases in many industries
• Blockchain Crowdfunding Security Token or Initial Coin Offerings
• A beginner Guide to Blockchain Technology
• How Decentralized Peer-To-Peer Network Works
• How blocks are added to the blockchain
• How Public and Private Keys of Cryptography Work
• What Is A Cryptographic Hash Function
• How Digital Signature Works In Blockchain
• The role and types of consensus mechanism in blockchain
• How Proof-of-Work Consensus Works in Blockchain
• How Proof of Stake Consensus works in Blockchain

 

Articles and Tutorials on Ethereum and Solidity

If you like to learn more about blockchain development in Ethereum with Solidity, reading the following articles and tutorials is highly recommended:

• Review of Architecture and Components of Ethereum
• Comprehensive Blockchain Ethereum Developer Guide from Beginner to Advance Level
•  How to Write Ethereum Smart Contracts with Solidity in 1 hour
• Review of Architecture and Components of Ethereum
• How Ethereum Manages Accounts
• How Ethereum Manages Transactions
• How Smart Contracts Work in Ethereum
• How Ether and Gas Work in Ethereum
• How Ethereum Virtual Machine works
• How address and wallet work in Ethereum
• How mining works in Ethereum
• List of Tools and Technologies in Ethereum Ecosystem
• Review of challenges in distributed systems
• Review of Cap Theorem in Distributed Systems
• Horizontal Scaling versus Vertical Scaling in Distributed Systems
• How to Scale up Ethereum Blockchain Applications
• Review of scaling solutions for Ethereum
• How to Manage Ethereum State Channel with Raiden
• How Plasma Chains Work in Ethereum
• How Sharding and Gasper work in Ethereum
• How Proof-of-Stack Consensus Works in Ethereum
• A roadmap for Implementing Ethereum 2.0
• How to work with Decentralized Data and Content Storage in Ethereum
• How Decentralized Messaging with Whisper Works in Ethereum
• Review of Infura for Ethereum Development
• Review of Infura Ethereum API
• How to Use Remix with Infura for Ethereum Development
• How Ethereum Client API Works
• How Ethereum IPFS Storage Works
• How to Install and Start Ethereum IPFS Storage
• How to Run Ethereum IPFS Storage
• How to Work with Ethereum Swarm Storage
• How to Install Ethereum Swarm Storage
• How to Handle Ethereum Messages with Whisper
• Review of Popular Ethereum Smart Contract Libraries
• Review of Private and Permissioned blockchain
• How to Set up a Local Private Ethereum Blockchain
• How to Run Geth on a Local Private Ethereum Blockchain
• How to Build a Local Private Ethereum Blockchain with Mining
• How to Run Geth on a Local Private Ethereum Blockchain with Mining
• How to Create an Account on a Local Private Ethereum Blockchain
• How to Use Ethereum Optional Flags with New Chains
• Review of Ethereum Options for Development and Testing
• Review of Ethereum Developer Chain Options
• Review of Ethereum API and Console Options
• Review of Ethereum Networking Options
• Review of Ethereum Transaction Pool Options

 

Articles and Tutorials on Hyperledger Family

If you like to learn more about blockchain development with Hyperledger, reading the following articles and tutorials is highly recommended:

• Introduction to Hyperledger Architecture, Projects, Tools and Libraries
• Complete Review of Hyperledger Fabric Architecture and Components
• Hyperledger Fabric for System Administers versus Developers
• How to use Prometheus and Grafana to monitor Hyperledger Fabric
• Blockchain Developer Guide- How to Install Hyperledger Fabric on AWS
• Blockchain Developer Guide- How to Install and work with Hyperledger Sawtooth
• Blockchain Developer Guide- How to Install Hyperledger Burrow on AWS
• Blockchain Developer Guide- How to Install Hyperledger Iroha on AWS
• Blockchain Developer Guide- How to Install Hyperledger Indy and Indy CLI on AWS
• Blockchain Developer Guide- How to Install Hyperledger Seth and Docker on AWS
• Blockchain Developer Guide- How to Configure Hyperledger Sawtooth Validator and REST API on AWS
• Blockchain Developer Guide- How to Build Transaction Processor as a Service and Python Egg for Hyperledger Sawtooth
• Blockchain Developer Guide- How to Deploy Ethereum Smart Contracts with Hyperledger Burrow
• Blockchain Developer Guide- How to Create Cryptocurrency Using Hyperledger Iroha CLI
• Blockchain Developer Guide- How to Explore Hyperledger Indy Command Line Interface
• Blockchain Developer Guide- Comprehensive Blockchain Hyperledger Developer Guide from Beginner to Advance Level
• Introduction to Hyperledger Sawtooth Blockchain Development

 

Articles and Tutorials on R3 Corda

If you like to learn more about blockchain development on Corda , reading the following articles and tutorials is highly recommended:

• Introduction to R3 Corda Blockchain Development

 

Articles and Tutorials on Other Blockchain Platforms

If you like to learn more about blockchain development in other platforms, reading the following articles and tutorials is highly recommended:

• Introduction to Quorum Blockchain Development