Ethereum: Why aren’t balances stored on the blockchain?
When it comes to managing assets and transactions on the Ethereum network, we often wonder why balances aren’t stored directly on the blockchain. In this article, we’ll look at the reasons behind this design decision and how attaching new balances to each transaction can be more efficient.
Current Approach: A Brief Overview
Currently, when a user makes a transaction on the Ethereum network, the following happens:
The sender’s account is asked to retrieve their balance.
The sender can then send Ether (ETH) or other assets to the recipient’s address.
Once the transaction is processed, the sender’s new balance is updated.
While this approach has its advantages, it also has some drawbacks. Here are some reasons why balances are not stored directly on the blockchain:
Scalability: As the Ethereum network grows in terms of transactions and users, storing balances directly in each block can lead to increased transaction processing time and costs.
Security:
If an attacker were to manipulate a user’s account balance, they could potentially gain control over their assets. By storing balances on the blockchain, it is much more difficult for an attacker to exploit this vulnerability.
Lack of efficiency: As mentioned earlier, traversing the entire blockchain to determine a user’s balance can be time-consuming and expensive.
Alternative: Appending new balances to each transaction
Now imagine a scenario where balances are stored directly in each block. This is known as “block-based ledgering.”
Here’s what would happen:
When a transaction is processed, the sender’s new balance (including any pending transactions or fees) is calculated and included in the block.
The updated balance is then broadcast to all nodes on the network.
This approach has several advantages:
Improved scalability:
Not having to look up balances on the blockchain allows for significantly reduced transaction processing times.
Improved security: With block-based ledgering, it is much harder for attackers to manipulate a user’s balance without affecting other transactions in the same block.
Efficient use of network resources: By storing balances directly in each block, the network can save on computational resources and reduce the amount of data that needs to be processed.
Conclusion
While storing balances on the blockchain may seem like an efficient solution, it does come with some drawbacks. In this article, we explored why balances are not stored directly on the Ethereum network. However, when considering alternative approaches such as block-based ledgering, it becomes clear that there are ways to improve scalability, security, and performance.
As the Ethereum network evolves, both developers and users need to stay up to date with the latest developments and potential solutions. Who knows? Maybe one day we will see a future where balances are stored directly in each block!
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“Ethereum 2.0: What You Need to Know”
“How to Use Ethereum Smart Contracts”
“The Benefits of Decentralized Finance (DeFi) on Ethereum”
Ethereum: Why aren’t balances on the blockchain?
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Ethereum: Why aren’t balances stored on the blockchain?
When it comes to managing assets and transactions on the Ethereum network, we often wonder why balances aren’t stored directly on the blockchain. In this article, we’ll look at the reasons behind this design decision and how attaching new balances to each transaction can be more efficient.
Current Approach: A Brief Overview
Currently, when a user makes a transaction on the Ethereum network, the following happens:
While this approach has its advantages, it also has some drawbacks. Here are some reasons why balances are not stored directly on the blockchain:
If an attacker were to manipulate a user’s account balance, they could potentially gain control over their assets. By storing balances on the blockchain, it is much more difficult for an attacker to exploit this vulnerability.
Alternative: Appending new balances to each transaction
Now imagine a scenario where balances are stored directly in each block. This is known as “block-based ledgering.”
Here’s what would happen:
This approach has several advantages:
Not having to look up balances on the blockchain allows for significantly reduced transaction processing times.
Conclusion
While storing balances on the blockchain may seem like an efficient solution, it does come with some drawbacks. In this article, we explored why balances are not stored directly on the Ethereum network. However, when considering alternative approaches such as block-based ledgering, it becomes clear that there are ways to improve scalability, security, and performance.
As the Ethereum network evolves, both developers and users need to stay up to date with the latest developments and potential solutions. Who knows? Maybe one day we will see a future where balances are stored directly in each block!
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