Understanding Ethereum Blockchain: An Example with Alice and Bob

Blockchain technology is revolutionizing the way we transfer value and data over the internet. At the heart of this technology is the concept of transactions - a transfer of value from one participant to another. In the context of the Ethereum network, transactions are used to transfer ether, the native cryptocurrency of the network. In this example, we'll explore how Alice can send ether to Bob using the Ethereum network.

Alice wants to send 1 ether to Bob using the Ethereum network. To do this, she creates a transaction specifying Bob's address as the recipient and 1 ether as the amount to be sent. Alice also specifies a gas limit of 100,000 units and a gas price of 10 Gwei per unit. This means she's willing to pay a total fee of 0.001 ether (100,000 units * 10 Gwei per unit) for the transaction to be processed.

The miners on the Ethereum network receive Alice's transaction and verify that it's valid and that Alice has enough ether to cover the cost of the transaction (including the gas fee). The miners then execute the transaction by running the code specified in the transaction and consuming the gas units that are required for each operation. If the gas limit is reached before the transaction is completed, the transaction will fail and any changes made by the transaction will be reverted.

Once the transaction is successfully executed, the miners add it to a block and broadcast the block to the network. Other nodes in the network validate the block and add it to their copy of the blockchain. Bob's account now has 1 ether, and the miners who processed the transaction receive the gas fee as compensation for their work.