What Is an Ethereum Transaction?
An Ethereum transaction is a cryptographically signed instruction from an account that initiates an action to update the state of the Ethereum network.
It represents the transfer of value or the execution of a function within the Ethereum ecosystem.
In the context of cryptocurrencies, an Ethereum transaction is typically initiated by an externally-owned account, which is an account managed by a human rather than a smart contract.
From Initiation to Immutable Record
Once a transaction is created, it needs to be validated and agreed upon by the Ethereum network according to its consensus rules.
If the network determines the transaction to be valid, it is included in a block, which is then added to the blockchain.
The blockchain serves as a decentralized and immutable ledger of all transactions and state changes in the Ethereum network.
The structure of an Ethereum transaction is defined by a message encoded using the Recursive Length Prefix (RLP) encoding format.
This message contains various fields, including:
- Recipient: The account address to which the transaction is being sent.
- Value: The amount of Ether (ETH) to transfer from the sender to the recipient. This value can be zero if the transaction is for executing a function on a contract without transferring Ether.
- Data: An optional field that can contain arbitrary binary data. In the case of contract deployment, it typically includes the bytecode of the contract.
- Gas Limit: The maximum amount of gas that the transaction can consume during execution.
- Gas Price: The price the sender is willing to pay for each unit of gas consumed by the transaction.
- Nonce: A sequence number that is specific to the sender’s account and ensures the transaction’s order and uniqueness.
- Signature: Data that identifies and authenticates the sender of the transaction.
By including these details in a transaction, Ethereum provides a flexible and powerful platform for executing various actions, including value transfers, smart contract interactions, and decentralized application (dApp) operations.