Bitcoin and Cryptocurrency Technologies

The simple binary Merkle tree used in Bitcoin would work for this purpose as it allows efficient proofs
of inclusion (provided miners ensure that no tree will include two different states for the same
address). But we also want fast lookups and the ability to efficiently update an address’s value. To do
this Ethereum uses a slightly more complicated tree structure called a ​Patricia tree​, also known as a
prefix tree, trie, or radix tree. Each Ethereum block includes the root of a Merkle Patricia tree
committing to the state of every address, including contract addresses. Each contract’s state, in turn,
includes a tree committing to the entire state of its storage.
Another tricky issue with an account‐based ledger is preventing replay attacks. In Bitcoin, since every
transaction consumes its input UTXOs, the same signed transaction can never be valid twice. With
Ethereum’s design, we need to make sure that if Alice signs a transaction saying “pay 1 ether to Bob”,
Bob can’t broadcast the transaction over and over again until Alice’s account is drained. To avoid this,
every account in Ethereum has a transaction counter tracking how many transactions it has sent. The
statement Alice really signs is “I authorize my ​n​th transaction to be a payment of 1 ether to Bob.” This
transaction can’t be replayed because after it is processed, Alice’s transaction counter will increment
and is part of the global state.
To summarize, Ethereum uses more powerful data structures than Bitcoin as part of its ledger.
Although we haven’t looked at the details, it allows efficient proofs of a variety of types of statements
about accounts, contracts, and transactions.
Ethereum project. ​Ethereum was initially described in late 2013 and launched its first release, dubbed
Frontier, in 2015. Ethereum utilized a pre‐sale, making units of the ether currency publicly available
for a fixed price in Bitcoin, with all of the proceeds going to the Ethereum Foundation.
This is a slower pace of development compared to many altcoins, but it reflects that fact that
Ethereum is much more complex. In addition to EVM, a new programming model, and new data
structures, Ethereum made significant changes to Bitcoin’s consensus protocol as well. The block time
is targeted at 12 seconds instead of 10 minutes. To lessen the impact of stale blocks, which comprise a
larger fraction of blocks in Ethereum than in Bitcoin, Ethereum uses an alternative protocol called
GHOST to compute the consensus branch. It also uses a different proof‐of‐work. Currently, it’s a mix
of hash functions designed to be memory hard, though in the future Ethereum plans to switch to a
proof‐of‐stake system.
This represents another major departure in philosophy from Bitcoin. The Ethereum project is
stewarded by a non‐profit foundation and is relatively centralized in planning and decision making.
There is an announced schedule of future versions of the protocol that will introduce changes based
on early Ethereum experience. These will be hard forks by design, and furthermore, every Ethereum
contract will be destroyed in between versions. So Ethereum is still very much an experimental
system with major changes planned. As of 2015, it’s premature to invest too much in building real
applications on top of Ethereum. But it’s a very promising system. Perhaps future versions of this
textbook might even be called “Ethereum and Cryptocurrency Technologies.”
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