Ethereum Transaction

Understanding Ethereum Transactions

An Ethereum transaction is a set of instructions that are cryptographically signed and initiated by an account to update the state of the Ethereum network. These transactions play a crucial role in transferring Ether (ETH) from one account to another.

In the world of cryptocurrencies, an Ethereum transaction is typically initiated by an externally-owned account, which is managed by a human rather than a contract. For example, if Johnny wants to send 2 ETH to Jim, Johnny’s account will be debited while Jim’s account will be credited. This transfer of funds is made possible through a transaction.

Once an Ethereum transaction is created, it must be validated by the network based on Ethereum’s consensus rules. After validation, the transaction is included in a block and added to the blockchain.

The transaction itself consists of an RLP-encoded array that contains various details, including the recipient’s address, the amount of Ether to be transferred, optional binary data, gas limit, gas price, nonce, and signature.

The recipient’s address represents the account to which the transaction is being sent.

The value indicates the amount of Ether being transferred from the sender to the recipient, which can sometimes be zero.

The data field is optional and can contain any arbitrary binary data. During contract deployment, this field is often used to send the contract’s bytecode.

The gas limit specifies the maximum amount of gas that can be consumed by the transaction, while the gas price determines the cost per unit of gas paid by the sender. The nonce serves as a unique sequence number for each sender and must match the next available sequence number. Finally, the signature is used to identify and authenticate the sender of the transaction.