Welcome to another article series on understanding Ethereum. In this article, we will explore the EVM and know why it’s referred to as the world computer, we will also explore other Ethereum fundamental aspects like blocks, gas, accounts and transactions by providing practical example to help you understand Ethereum as a whole.

By the end of this article, you should be able to understand what a world computer is and the other terminologies are to help you interact with Ethereum effortlessly.

Let’s dive in and understand Ethereum.

What is Ethereum?

Ethereum is one of the most widely used blockchain platforms in the world, known for enabling decentralized applications (dApps), smart contracts, and it’s native currency, Ether (ETH). Where Bitcoin is mainly a digital currency, Ethereum is more like a global computer, it runs programs and enforces agreements without a central authority.

What is the Ethereum Virtual Machine (EVM)?

At the heart of Ethereum is the  Ethereum Virtual Machine (EVM), a decentralized computing environment responsible for running smart contracts. Every Ethereum node includes an EVM, and each one executes the same contract instructions to ensure that all nodes reach the same result.

The EVM is described as Turing complete, meaning that, in theory, it can perform any computation given enough time and resources. This makes it flexible enough to support a wide range of applications, from simple token transfers to complex decentralized finance systems.

Unlike traditional applications that run on a single server, smart contracts on Ethereum are executed independently by thousands of nodes across the network. This decentralized execution model improves reliability and security, since no single party controls the outcome.

To maintain safety, the EVM isolates contract execution in a restricted environment. Even untrusted or malicious code cannot access files, networks, or system resources outside the blockchain. This controlled sandbox is what allows Ethereum to safely run code from anyone, anywhere.

Together, these properties allow Ethereum to function as a shared global platform for computation, often described as a “world computer.”

Blocks: The Building Blocks of the Chain

Ethereum organizes its data in blocks, similarly to pages in a ledger. Each block includes:

• List of transactions (payments, contract calls)

• Hash of the previous block (keeps blocks chained)

• Timestamp and block number

• Nonce (used in consensus)

• Block’s own hash

Blocks are chained together cryptographically, meaning that altering one block would change every future block, securing the whole history of activity.

Validators (Previously called miners before the “The Merge”) are responsible for proposing and verifying.

Gas: The Fuel of Ethereum

Gas is the fuel for computation on Ethereum. Every time you want to send ETH or run a smart contract, you pay a little gas. This helps prevent spam or misuse of the network and ensures that people don’t overload the network with heavy computations, and it also rewards process transactions.

-          Gas refers to the unit that measures computation effort.

-          User attach a gas limit and gas price when they submit a transaction.

Example:

When you send a transaction, you set a gas limit.

If gasLimit = 100,000

But execution only needs gasUsed = 60,000

You only pay for the gas actually used.

Total fee = gasUsed × (baseFee + priorityFee)

The remaining 40,000 gas is simply unused and never charged,

not refunded from the base fee.

note that: The more complex the operation (like calling a smart contract), the more gas it consumes. If a transaction runs out of gas before completing, it fails — but the spent gas isn’t returned.

-          The fee paid = gas used x gas price

Before 2021, Ethereum fees worked like an auction:

• Users guessed how much to pay

• Highest bidders got in first

• Fees were unpredictable and often overpaid

EIP-1559 changed this by splitting fees into two parts:

• a base fee (fixed by the network)

• a priority fee (a tip chosen by the user)

The base fee is the minimum required fee for a transaction to be included in a block, its:

-           Set automatically by the network

-          Adjusts up or down based on congestion

-          Same for everyone in that block

-          Burned (permanently removed from circulation)

This exists to:

-          Makes fees predictable

-          Prevents bidding wars

-          Reduces ETH supply over time

Note: because it’s burnt,

-          Validators do not receive the base fee

-          It’s not a “payment” to anyone

The priority fee is an optional tip you add to reward validators for processing your transaction sooner.

This is:

• Chosen by the user

• Paid directly to validators

• Encourages faster inclusion

• Especially useful during congestion

Validators need an incentive:

• They no longer earn the base fee

• The tip rewards them for prioritizing transactions

Think of it like

• Base fee = cover charge (mandatory)

• Priority fee = tip (optional, but helpful)

Gas is measured in gwei, a tiny fraction of ETH (1 gwei = 0.000000001 ETH).

Accounts: Who Can Interact on Ethereum?

An Ethereum account is simply a way to store ETH, send transactions, and interact with smart contracts on the Ethereum network. Every account has a unique address that others can use to send ETH or interact with it.

There are two kinds of Ethereum accounts, and understanding the difference is important.

Externally Owned Accounts (EOAs)

Externally Owned Accounts are the accounts people directly control. When you use a wallet app like MetaMask, you are interacting with an EOA.

An EOA is controlled by a private key, which acts like a secret password that proves ownership of the account. Creating an EOA is free, and it is the only type of account that can start a transaction, such as sending ETH or calling a smart contract.

Each EOA is based on a pair of cryptographic keys:

• The private key must be kept secret and gives full control over the account. If it is lost, the funds in the account are lost permanently.

• The public key is used to generate the account’s address, which is visible to everyone on the network.

An Ethereum address looks like this:

0x67Dc55b46dbE7d587568B221fA0B82b16D3Ded37

Contract Accounts

Contract accounts are not controlled by people, but by code. These accounts exist only after a smart contract is deployed to the Ethereum network.

Because the contract’s code must be stored on the blockchain, creating a contract account costs ETH. Contract accounts do not have private keys and cannot initiate transactions on their own. Instead, they run their code only when another account, usually an EOA interacts with them.

A contract account also has an Ethereum address, for example:

0x06012c8cf97bead5deae237070f9587f8e7a266d

What information does an account store?

Whether it belongs to a user or a contract, every Ethereum account stores some basic information.

The nonce tracks how many transactions the account has sent and helps prevent duplicate or replayed transactions.

An Ethereum address works like a bank account number. It’s a public identifier that allows others to send ETH to you. Behind the scenes, it’s a 20-byte hexadecimal value that uniquely represents an account on the Ethereum blockchain.
The balance records how much ETH the account holds, measured in wei, the smallest unit of ETH.

Contract accounts store additional data:

• A code hash, which uniquely identifies the contract’s code

• A storage root, which summarizes the contract’s stored data

How are accounts created?

A new EOA is created by generating a random private key. The corresponding Ethereum address is then derived mathematically using elliptic curve cryptography.

Contract accounts are created when a smart contract is deployed. Their address is determined by the creator’s address and the number of transactions the creator has sent.

Wallets vs. accounts

A common source of confusion is the difference between wallets and accounts.

An account is your actual presence on Ethereum, it holds ETH and interacts with contracts.
A wallet is just the tool or app that helps you manage that account and safely use your private keys.

You don’t store ETH in the wallet; the wallet lets you control your account on the blockchain.

Transactions: Moving Value and Changing State

Transactions are how users or contracts interact with Ethereum. They are signed messages that request an action on the network, such as transferring Ether, invoking a smart contract function, or interacting with a decentralized application (DApp).

Transactions are always initiated by an externally owned account (EOA), not by contracts themselves. Contracts can respond to transactions, but they can’t start one on their own

Each transaction includes:

• from and to addresses

• value (the amount of ETH being sent)

• nonce to prevent reuse

• gas limit and gas price

• signature authorizing the action

Validators (or previously miners) pick transactions from a pending pool, include them in a new block, and execute them in the EVM. Once enough blocks have followed a block, the transaction becomes effectively permanent.

Ethereum is more than just a cryptocurrency, it’s a decentralized platform that allows users to send Ether, run smart contracts, and build decentralized applications. Understanding the core elements; the EVM, blocks, gas, accounts, and transactions helps make sense of how the network works and why it’s secure, transparent, and flexible. Whether you’re sending ETH, deploying a contract, or exploring dApps, these building blocks form the foundation of everything on Ethereum.

Welcome to another article series on understanding Ethereum. In this article, we will explore the EVM and know why it’s referred to as the world computer, we will also explore other Ethereum fundamental aspects like blocks, gas, accounts and transactions by providing practical example to help you understand Ethereum as a whole.

By the end of this article, you should be able to understand what a world computer is and the other terminologies are to help you interact with Ethereum effortlessly.

Let’s dive in and understand Ethereum.

What is Ethereum?

Ethereum is one of the most widely used blockchain platforms in the world, known for enabling decentralized applications (dApps), smart contracts, and it’s native currency, Ether (ETH). Where Bitcoin is mainly a digital currency, Ethereum is more like a global computer, it runs programs and enforces agreements without a central authority.

What is the Ethereum Virtual Machine (EVM)?

At the heart of Ethereum is the  Ethereum Virtual Machine (EVM), a decentralized computing environment responsible for running smart contracts. Every Ethereum node includes an EVM, and each one executes the same contract instructions to ensure that all nodes reach the same result.

The EVM is described as Turing complete, meaning that, in theory, it can perform any computation given enough time and resources. This makes it flexible enough to support a wide range of applications, from simple token transfers to complex decentralized finance systems.

Unlike traditional applications that run on a single server, smart contracts on Ethereum are executed independently by thousands of nodes across the network. This decentralized execution model improves reliability and security, since no single party controls the outcome.

To maintain safety, the EVM isolates contract execution in a restricted environment. Even untrusted or malicious code cannot access files, networks, or system resources outside the blockchain. This controlled sandbox is what allows Ethereum to safely run code from anyone, anywhere.

Together, these properties allow Ethereum to function as a shared global platform for computation, often described as a “world computer.”

Blocks: The Building Blocks of the Chain

Ethereum organizes its data in blocks, similarly to pages in a ledger. Each block includes:

• List of transactions (payments, contract calls)

• Hash of the previous block (keeps blocks chained)

• Timestamp and block number

• Nonce (used in consensus)

• Block’s own hash

Blocks are chained together cryptographically, meaning that altering one block would change every future block, securing the whole history of activity.

Validators (Previously called miners before the “The Merge”) are responsible for proposing and verifying.

Gas: The Fuel of Ethereum

Gas is the fuel for computation on Ethereum. Every time you want to send ETH or run a smart contract, you pay a little gas. This helps prevent spam or misuse of the network and ensures that people don’t overload the network with heavy computations, and it also rewards process transactions.

-          Gas refers to the unit that measures computation effort.

-          User attach a gas limit and gas price when they submit a transaction.

Example:

When you send a transaction, you set a gas limit.

If gasLimit = 100,000

But execution only needs gasUsed = 60,000

You only pay for the gas actually used.

Total fee = gasUsed × (baseFee + priorityFee)

The remaining 40,000 gas is simply unused and never charged,

not refunded from the base fee.

note that: The more complex the operation (like calling a smart contract), the more gas it consumes. If a transaction runs out of gas before completing, it fails — but the spent gas isn’t returned.

-          The fee paid = gas used x gas price

Before 2021, Ethereum fees worked like an auction:

• Users guessed how much to pay

• Highest bidders got in first

• Fees were unpredictable and often overpaid

EIP-1559 changed this by splitting fees into two parts:

• a base fee (fixed by the network)

• a priority fee (a tip chosen by the user)

The base fee is the minimum required fee for a transaction to be included in a block, its:

-           Set automatically by the network

-          Adjusts up or down based on congestion

-          Same for everyone in that block

-          Burned (permanently removed from circulation)

This exists to:

-          Makes fees predictable

-          Prevents bidding wars

-          Reduces ETH supply over time

Note: because it’s burnt,

-          Validators do not receive the base fee

-          It’s not a “payment” to anyone

The priority fee is an optional tip you add to reward validators for processing your transaction sooner.

This is:

• Chosen by the user

• Paid directly to validators

• Encourages faster inclusion

• Especially useful during congestion

Validators need an incentive:

• They no longer earn the base fee

• The tip rewards them for prioritizing transactions

Think of it like

• Base fee = cover charge (mandatory)

• Priority fee = tip (optional, but helpful)

Gas is measured in gwei, a tiny fraction of ETH (1 gwei = 0.000000001 ETH).

Accounts: Who Can Interact on Ethereum?

An Ethereum account is simply a way to store ETH, send transactions, and interact with smart contracts on the Ethereum network. Every account has a unique address that others can use to send ETH or interact with it.

There are two kinds of Ethereum accounts, and understanding the difference is important.

Externally Owned Accounts (EOAs)

Externally Owned Accounts are the accounts people directly control. When you use a wallet app like MetaMask, you are interacting with an EOA.

An EOA is controlled by a private key, which acts like a secret password that proves ownership of the account. Creating an EOA is free, and it is the only type of account that can start a transaction, such as sending ETH or calling a smart contract.

Each EOA is based on a pair of cryptographic keys:

• The private key must be kept secret and gives full control over the account. If it is lost, the funds in the account are lost permanently.

• The public key is used to generate the account’s address, which is visible to everyone on the network.

An Ethereum address looks like this:

0x67Dc55b46dbE7d587568B221fA0B82b16D3Ded37

Contract Accounts

Contract accounts are not controlled by people, but by code. These accounts exist only after a smart contract is deployed to the Ethereum network.

Because the contract’s code must be stored on the blockchain, creating a contract account costs ETH. Contract accounts do not have private keys and cannot initiate transactions on their own. Instead, they run their code only when another account, usually an EOA interacts with them.

A contract account also has an Ethereum address, for example:

0x06012c8cf97bead5deae237070f9587f8e7a266d

What information does an account store?

Whether it belongs to a user or a contract, every Ethereum account stores some basic information.

The nonce tracks how many transactions the account has sent and helps prevent duplicate or replayed transactions.

An Ethereum address works like a bank account number. It’s a public identifier that allows others to send ETH to you. Behind the scenes, it’s a 20-byte hexadecimal value that uniquely represents an account on the Ethereum blockchain.
The balance records how much ETH the account holds, measured in wei, the smallest unit of ETH.

Contract accounts store additional data:

• A code hash, which uniquely identifies the contract’s code

• A storage root, which summarizes the contract’s stored data

How are accounts created?

A new EOA is created by generating a random private key. The corresponding Ethereum address is then derived mathematically using elliptic curve cryptography.

Contract accounts are created when a smart contract is deployed. Their address is determined by the creator’s address and the number of transactions the creator has sent.

Wallets vs. accounts

A common source of confusion is the difference between wallets and accounts.

An account is your actual presence on Ethereum, it holds ETH and interacts with contracts.
A wallet is just the tool or app that helps you manage that account and safely use your private keys.

You don’t store ETH in the wallet; the wallet lets you control your account on the blockchain.

Transactions: Moving Value and Changing State

Transactions are how users or contracts interact with Ethereum. They are signed messages that request an action on the network, such as transferring Ether, invoking a smart contract function, or interacting with a decentralized application (DApp).

Transactions are always initiated by an externally owned account (EOA), not by contracts themselves. Contracts can respond to transactions, but they can’t start one on their own

Each transaction includes:

• from and to addresses

• value (the amount of ETH being sent)

• nonce to prevent reuse

• gas limit and gas price

• signature authorizing the action

Validators (or previously miners) pick transactions from a pending pool, include them in a new block, and execute them in the EVM. Once enough blocks have followed a block, the transaction becomes effectively permanent.

Ethereum is more than just a cryptocurrency, it’s a decentralized platform that allows users to send Ether, run smart contracts, and build decentralized applications. Understanding the core elements; the EVM, blocks, gas, accounts, and transactions helps make sense of how the network works and why it’s secure, transparent, and flexible. Whether you’re sending ETH, deploying a contract, or exploring dApps, these building blocks form the foundation of everything on Ethereum.