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Glossary

Internal Transaction

November 21, 2023 - Around 3 mins mins to read

Understanding Internal Transactions

An internal transaction refers to the outcome of smart contract logic that is activated by an external transaction – the transaction transmitted from the EOA to the smart contract.

Smart contracts play a vital role in the Ethereum blockchain. They are self-executing digital contracts that automate business processes. These contracts encode the provisions and do not require any legal or central authority to enforce them.

In essence, Ethereum smart contracts are computer programs installed on the blockchain. They are used to manage Ether balance, maintain a state between code invocations, and facilitate transactions. Like other elements on the blockchain, smart contracts are accessible to the public.

Smart contract transactions are typically irreversible and traceable. They are sent through externally owned accounts (EOAs), which are often private and owned by individuals. These interactions trigger predefined procedures and generate byproducts known as “internal transactions”. A single engagement with a smart contract can result in multiple internal transactions. These transactions involve the transfer of value when executing a smart contract or token transfer.

Specific Ether and token transactions require the execution of a smart contract. These transactions appear as internal transactions in the main ETH transaction history and are not publicly visible.

Transactions on the Ethereum chain involve changes to its state, meaning they write data to the chain instead of reading it.

Among the various state changes that can occur on Ethereum, transactions are the ones that users are most interested in. Developers can use address activity notifications to inform users about their transactions, such as the exchange of value between two Ethereum accounts.

Unlike regular transactions, internal transactions do not have a cryptographic signature and are typically stored off-chain, meaning they are not part of the blockchain itself. Some internal transactions are stored on-chain, but this is not very common due to the additional gas required. These internal transactions exclusively transfer Ether and affect address balances.

When internal transactions occur, there is limited information available about them. As a result, users are often unaware when their address, wallet, or contract is involved in an internal transaction.

Tracing internal transactions can be a time-consuming process that puts a strain on nodes. Insufficient node power can lead to crashes during tracing, causing issues for the rest of the data on that node.

In addition, the results of tracing internal transactions can be massive, making storage and retrieval challenging. Nodes typically limit the tracing operation to a specific number of blocks, usually covering about 30 minutes worth of blocks. Therefore, the time period following a smart contract interaction is crucial for collecting information on any potential occurrences. Overall, tracking internal transactions requires time, node capacity, and processing power. This may not be feasible for every blockchain user and crypto enthusiast, despite being a simple and readily available operation.

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Coincu

Glossary

Internal Transaction

Understanding Internal Transactions

An internal transaction refers to the outcome of smart contract logic that is activated by an external transaction – the transaction transmitted from the EOA to the smart contract.

Smart contracts play a vital role in the Ethereum blockchain. They are self-executing digital contracts that automate business processes. These contracts encode the provisions and do not require any legal or central authority to enforce them.

In essence, Ethereum smart contracts are computer programs installed on the blockchain. They are used to manage Ether balance, maintain a state between code invocations, and facilitate transactions. Like other elements on the blockchain, smart contracts are accessible to the public.

Smart contract transactions are typically irreversible and traceable. They are sent through externally owned accounts (EOAs), which are often private and owned by individuals. These interactions trigger predefined procedures and generate byproducts known as “internal transactions”. A single engagement with a smart contract can result in multiple internal transactions. These transactions involve the transfer of value when executing a smart contract or token transfer.

Specific Ether and token transactions require the execution of a smart contract. These transactions appear as internal transactions in the main ETH transaction history and are not publicly visible.

Transactions on the Ethereum chain involve changes to its state, meaning they write data to the chain instead of reading it.

Among the various state changes that can occur on Ethereum, transactions are the ones that users are most interested in. Developers can use address activity notifications to inform users about their transactions, such as the exchange of value between two Ethereum accounts.

Unlike regular transactions, internal transactions do not have a cryptographic signature and are typically stored off-chain, meaning they are not part of the blockchain itself. Some internal transactions are stored on-chain, but this is not very common due to the additional gas required. These internal transactions exclusively transfer Ether and affect address balances.

When internal transactions occur, there is limited information available about them. As a result, users are often unaware when their address, wallet, or contract is involved in an internal transaction.

Tracing internal transactions can be a time-consuming process that puts a strain on nodes. Insufficient node power can lead to crashes during tracing, causing issues for the rest of the data on that node.

In addition, the results of tracing internal transactions can be massive, making storage and retrieval challenging. Nodes typically limit the tracing operation to a specific number of blocks, usually covering about 30 minutes worth of blocks. Therefore, the time period following a smart contract interaction is crucial for collecting information on any potential occurrences. Overall, tracking internal transactions requires time, node capacity, and processing power. This may not be feasible for every blockchain user and crypto enthusiast, despite being a simple and readily available operation.

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