The Ethereum whitepaper and the EVM

Wonder

1. Why does a computer replicated across thousands of machines need to charge for every single instruction?
2. What breaks if the code running on those machines can loop forever without penalty?
3. How can two different account models—UTXOs and in-place balances—represent the same wealth differently?

Explore

1. Vitalik Buterin, then nineteen, drafted the Ethereum white paper in late 2013, proposing a general-purpose computation platform rather than a specific currency. The project, announced publicly in January 2014, gathered co-founders including Gavin Wood, Joseph Lubin, Charles Hoskinson, Anthony Di Iorio, and Mihai Alisie. A crowdsale ran from July to August 2014, raising approximately 31,500 BTC for the venture. The network officially launched on 30 July 2015, marking a shift from bitcoin’s limited scripting to a fully programmable environment where developers could build complex applications directly on-chain.
2. The core of this architecture is the Ethereum Virtual Machine (EVM), a Turing-complete state machine replicated across every full node. Unlike bitcoin’s UTXO model, which tracks individual unspent outputs, Ethereum employs an account model where balances update in place. Each account—whether controlled by a private key or by code—maintains a nonce and a balance. When a transaction executes, the EVM processes it deterministically; every node computes the same result on its own, ensuring consensus without requiring trust between participants.
3. Smart contracts are programs written in high-level languages like Solidity that compile to low-level opcodes executed by the EVM. These contracts hold value and logic simultaneously. A contract can retain ether, execute conditional trades, or manage governance votes based on inputs from other accounts. Because execution is deterministic and many contracts publish their source code, anyone can check the logic before interacting with it. This transparency removes the need for trusted intermediaries in many financial applications, as the rules are enforced by software rather than human discretion.
4. To prevent infinite loops and denial-of-service attacks, every EVM operation consumes ‘gas,’ a unit of computation paid in ether. The sender specifies a gas limit upfront; if execution exhausts this fuel, state changes revert, but the consumed gas is still deducted. This economic constraint forces developers to write efficient code and shields the network from malicious or buggy contracts that could otherwise freeze the chain. Gas prices rise and fall with demand; originally users simply bid, and since 2021 a protocol-set base fee adjusts automatically, with tips on top (a later lesson).
5. The design choices in the EVM reflect a trade-off between expressiveness and security. Turing completeness allows for arbitrary computation but introduces complexity that can harbor vulnerabilities. The account model makes some programs simpler than UTXOs do, but contracts that call each other must be written carefully to avoid bugs such as reentrancy, the flaw behind The DAO hack (a later lesson). The EVM’s standardization enables a vast ecosystem of tools and auditors familiar with the specific instruction set.
6. Open a block explorer such as Etherscan and inspect any recent transaction that deployed a smart contract. Observe the ‘Contract Creation’ status and the gas used compared to the gas limit. Note how the transaction’s input data contains the compiled bytecode being stored at the new address. This concrete step reveals the mechanical reality of deployment: code is uploaded, verified by every node, and locked into the chain’s state machine, ready for execution upon future interaction.

Key facts

Exercise nine, six, three, one

Fact check

Dates, figures and claims checked against the published sources listed below.

• V. Buterin, 'Ethereum: A Next-Generation Smart Contract and Decentralized Application Platform' (2013/2014)
• G. Wood, 'Ethereum: A Secure Decentralised Generalised Transaction Ledger' (Yellow Paper, 2014)
• ethereum.org, 'History of Ethereum'