Web3 Bootcamp

Beyond Bitcoin

Agenda

Lecture 1

• Bitcoin – history, how it works, and limitations
• Ethereum – history, what problem does it solve, and smart contracts
• Ethereum Alternatives

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Activity 1: Setting up a MetaMask wallet

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Lecture 2

• Wallets – how to interact with blockchains
• Ethereum transactions and gas

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Activity 2: Using your wallet

Lecture 1

Byzantine Generals Problem Review

Decentralized Systems can’t agree on on a single common truth

Byzantine Generals Problem Review

Blockchain Solves the “Byzantine General Problem!”

Decentralized Systems can’t agree on on a single common truth

Introduction to Bitcoin

• is a type of blockchain
• was the first blockchain
• is not the only blockchain, so “blockchain” and “bitcoin” shouldn’t be used interchangeably.

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Bitcoin Was the first Blockchain to Solve the Byzantine Generals Problem

Decentralized Systems can’t agree on on a single common truth

Bitcoin Was the first Blockchain to Solve the Byzantine Generals Problem

Decentralized Systems can now agree on on a single common truth

Bitcoin History and Terminology

The Bitcoin whitepaper was published on October 28, 2008 by Satoshi Nakamoto.

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A whitepaper is “a document released by developers that explains the technology and purpose of the project they are working on”.

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Title of the whitepaper: “Bitcoin: A Peer-to-Peer Electronic Cash System”.

Bitcoin: A Peer-to-Peer Electronic Cash System

Unlocks the ability to conduct financial transactions without a middleman.

Bitcoin: A Peer-to-Peer Electronic Cash System

Example: Alice wants to pay Bob $10

Alice

Traditional

Bitcoin: Peer-to-Peer

Bob

Middleman

$10

$10

$10

Limitations of Bitcoin

Bitcoin’s sole use is to transfer value electronically.

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What if we want to use the power of decentralization to create other applications?

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Two options:

1. Create a new blockchain for every application.
2. Create a blockchain that can used to create other applications.

Intro to Ethereum

History

Following Bitcoin, many wanted to create more use cases for blockchain.

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The popular approach at the time was to create an application specific blockchain.

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This would be like creating a new App Store anytime you wanted to create a new App.

Gaming

Transportation

Social Media

History

In 2014, Vitalik Buterin published a whitepaper for Ethereum: A Next-Generation Smart Contract and Decentralized Application Platform.

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Vitalik’s idea was to create a tool for anyone to easily create a new decentralized application.

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On July 30, 2015, the Ethereum network was officially launched.

Smart Contracts

The key innovation of Ethereum is smart contracts.

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A Smart Contract is a program on a blockchain that executes when certain preconditions are met.

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Allow users to automate agreements rather than using a centralized intermediary.

Simple Smart Contract - Insurance

Alice wants to purchase fire insurance for her house, so she asks her friend Bob if they can enter into an insurance agreement.

Simple Smart Contract - Insurance

If Alice’s house has a fire within a year, the fire department will submit a transaction to the contract and Alice will be paid the money in the contract.

Alice

Bob

$100,100

“Fire has occurred.”

Simple Smart Contract - Insurance

But, if one year goes by and the fire department has not submitted a transaction, Bob receives the money.

Alice

Bob

$100,100

Smart Contract Benefits

• Reduce the number of intermediaries
• Composable – smart contracts can interact with other smart contracts freely
• Execute and run autonomously on the blockchain
• Open Source – Anyone can see the code for any smart contract (reduces the need to build the same thing twice).

Ethereum Competitors

• Cardano – Created in 2017 and seen as the first blockchain to “improve” on Ethereum with a new consensus mechanism
• Solana – Known for extremely high transaction throughput (on average, the network processes 3,000 transactions per second).
• Avalanche – Another high throughput blockchain that combines the Ethereum virtual machine with its own consensus.
• Many more…

Demo Time!

Create a MetaMask wallet.

Lecture 2

Wallets

Internet 🡪 Browsers

Blockchains 🡪 Wallets

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Wallets enable users to interact with blockchains the applications built on top of them.

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There are many different wallets for different blockchains, but MetaMask is the most universally used.

Network

Address

Balance

Components of an Ethereum Transaction

• Transaction Hash: Unique identifier of the transaction
• Block Number: The block the transaction is located in starting at 0 (the genesis block)
• Timestamp: Time of the transaction
• From: The address that originated the transaction
• To: The address that received the transaction
• Value: The amount of Ether that was sent in the transaction
• Transaction Fee: The cost for sending the transaction
• Gas Price: Will talk more about in the next slides

Etherscan

Gas

Ethereum is essentially a world computer: anyone can write and execute programs on it.

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How do we make sure that no one is hogging the network power? Gas!

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Users must pay to perform computations and run programs on the network. They do this by paying gas.

Gas

If you don’t pay enough gas in your transaction, your transaction will fail.

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Gas Examples:

• Base Transaction - 21,000 Gas
• ERC20 Transfer - 65,000 Gas
• Creating a simple smart contract - 120,000 Gas
• Creating an NFT - 350,000 Gas

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Current gas price = [fill in here]

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The average Eth transaction costs [fill in here].

Demo Time!

Send a transaction using your MetaMask wallet.