# * **Ethereum Transations and Ethereum Consensus Algorithm**
Before we talk about Ethereum Transactions and it's consensus algorithm, let's start by talking about `What is Ethereum?`


> Ethereum is a decentralized platform that enables developers to build and deploy smart contracts and decentralized applications (DApps). It operates on its own blockchain and uses a cryptocurrency called Ether (ETH). Launched in `2015` by `Vitlik Buterin` and a group of developers, Ethereum has become one of the most prominent blockchain platforms in the world.

Before we dive into Ethereum Transactions, let's get to know what `Transaction` itself is.

`Transaction` is a process or action that requires exchanging or transferring something of value, such as money(financial transaction), Data(Data transaction) etc.

Let's now come to the main purpose of the article which is (Ethereum Transaction):

**What is Ethereum Transaction**
An Ethereum transaction is a `cryptographic` operation that transfers data or value from one address to another within the Ethereum network. These transactions are crucial for the functioning of the platform, enabling everything from simple value transfers to complex interactions with smart contracts.

**Structure of an Ethereum Transaction**
An Ethereum transaction consists of several key components:

* Nonce: A counter that ensures each transaction can only be processed once.
* Gas Price: The amount of Ether the sender is willing to pay per unit of gas.
* Gas Limit: The maximum amount of gas units that can be consumed by the transaction.
* To: The recipient's address.
* Value: The amount of Ether to be transferred.
* Data: Optional field to include data for smart contracts.
* V, R, S: Cryptographic components that ensure the transaction's validity and integrity.

**How Ethereum Transactions Work**
1. Creation: A user initiates a transaction by signing it with their private key.
2. Broadcast: The signed transaction is broadcast to the Ethereum network.
3. Mining: Miners validate and include the transaction in a new block.
4. Confirmation: The transaction is confirmed once the block is added to the blockchain.

note: These transactions can be found on [etherscan.io](https://etherscan.io)

**Gas Fee**
Gas is a unit that measures the amount of computational effort required to execute operations like transactions and smart contracts. The gas price is determined by the sender, and the total transaction fee is calculated as:

**Transaction Fee=Gas Price×Gas Used**

# Ethereum's Consensus Algorithm
Ethereum uses a consensus algorithm to agree on the state of the blockchain. Initially, Ethereum used a Proof of Work (PoW) algorithm but has transitioned to Proof of Stake (PoS) with the Ethereum 2.0 upgrade.

**Proof of Work (PoW)**
In PoW, miners compete to solve complex mathematical puzzles to validate transactions and create new blocks. This process is energy-intensive and relies on significant computational power.

1. **Advantages:**
* Proven security model.
* Decentralization through mining competition.

2. **Disadvantages**
* High energy consumption.
* Slower transaction processing times.

**Proof of Stake (PoS)**
With Ethereum 2.0, the network transitioned to PoS, where validators replace miners. Validators are chosen based on the amount of Ether they stake as collateral. They validate transactions and propose new blocks, earning rewards in return.

1. **Advantages:**
* Reduced energy consumption.
* Increased transaction throughput.
* Enhanced security and decentralization.

2. **Disadvantages**
* Initial centralization risk as large holders have more influence.
* Complex implementation and transition from PoW.

**How PoS Works in Ethereum**
1. Staking: Users lock up a certain amount of Ether to become validators.
2. Selection: Validators are randomly chosen to propose and validate blocks.
3. Validation: Selected validators confirm transactions and create new blocks.
4. Reward and Penalty: Validators earn rewards for honest validation but can be penalized (slashed) for malicious behavior.
***Conclusion***
Ethereum transactions are the backbone of the platform, enabling value transfer and interaction with smart contracts. The transition from PoW to PoS marks a significant milestone in Ethereum's evolution, aiming to improve scalability, security, and energy efficiency. Understanding these concepts is essential for anyone looking to delve into the world of Ethereum and blockchain technology