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Note
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Recap
In our previous article (How Ethereum Manages Accounts), we discussed how accounts are created and managed in Ethereum.
In this article, we learn how transactions are processed and managed in Ethereum.
Transactions and messages
Transactions and messages in Ethereum are a little bit confusing, largely because they are often discussed together. There are some subtle differences. The following diagram will give some clarity about the differences and commonalities between these two terms:
In Ethereum, the term transaction represents the signed data package of a message that is sent from an EOA to another account. The message itself instructs what action to take on the blockchain. They all require the initiator of the transaction to digitally sign the messages, and transactions will be recorded into the blockchain. Three types of transactions can happen:
- CA creation: In this case, an Externally Owned Account (EOA) – covered in our previous article– acts as the initiator or creator of the new contract account.
- A transaction between two EOAs: In this case, one EOA initiates an ether movement transaction by sending a message to the receiving EOA.
- A transaction between EOA and CA: In this case, the EOA initiates a message call transaction, and the CA will react with the referenced smart contract code execution.
The CA can send messages to other CAs or EOAs. Unlike the transaction, messages are virtual objects during the execution and will not be recorded into the blockchain. If an EOA is the recipient, the recipient’s account state will be updated and recorded in the world state. If a CA is the message recipient, they are accepted as function calls and the associated contract code will be executed.
From a data structure perspective, a transaction is a digitally signed message. According to web3.js, a message contains the following attributes. Apart from attribute, all others are optional:
| Attribute | Data type | Length | Description |
| from | DATA | 20 | This is a required field as the sender’s address. |
| to | DATA | 20 | This represents the receiver’s address. |
| gas | QUANTITY | This represents the gas value provided for the transaction execution. | |
| GasPrice | QUANTITY | This represents the unit gas price used for each paid gas. | |
| value | QUANTITY | This represents the ether value to be sent with this transaction. | |
|
data |
DATA |
This represents the compiled code of a contract when creating a contract account or the hash of the invoked method signature and encoded parameters during the contract invocation. | |
| nonce | QUANTITY | This represents a nonce. This allows you to overwrite your own pending transactions that use the same nonce. |
Transactions will have additional attributes. Ethereum uses an Elliptic Curve Digital Signature Algorithm (ECDSA) signature for digital signatures; r and s are outputs of an ECDSA signature, and v is the recovery ID.
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Next Article
In our next article (How Smart Contracts Work in Ethereum), we discuss how blockchain smart contracts work 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.
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