An end-to-end transaction
Armed with the understanding of the foundational concepts of blockchain and Ethereum, it's time to see a complete end-to-end transaction and how it flows through multiple components and gets stored in the ledger.
In this example, Sam wants to send a digital asset (for example, dollars) to Mark. Sam generates a transaction message containing the from, to, and value fields and sends it across to the Ethereum network. The transaction is not written to the ledger immediately and instead is placed in a transaction pool.
The mining node creates a new block and takes all transactions from the pool honoring the gas limit criteria and adds them to the block. This activity is done by all miners on the network. Sam's transaction will also be a part of this process.
The miners compete, trying to solve the challenge thrown at them. The winner is the miner who can solve the challenge first. After a period (of seconds), one of the miners will advertise that they have found the solution to the challenge and that they are the winner and should write the block to the chain. The winner sends the solution of the challenge, along with the new block, to all other miners. The rest of the miners validate and verify the solution, and once satisfied that the solution is indeed correct and that the original miner has cracked the challenge, they accept the new block containing Sam's transaction to append in their instance of the ledger. This generates a new block on the chain that is persisted across time and space. During this time, the accounts of both parties are updated with the new balance. Finally, the block is replicated across every node in the network.
The preceding example can be well understood with the following diagram:
Figure 1.13 – The transaction flow in Ethereum
This is the time to introduce smart contracts after understanding some of the important concepts related to Ethereum. Smart contracts are one of the unique value propositions of Ethereum, and this book will delve deeper into smart contracts in subsequent chapters.