Brief Overview: Evolution of Bitcoin

1. 2008–2009: Inception

o Bitcoin was introduced by Satoshi Nakamoto through a whitepaper.

o Genesis block mined in January 2009.

2. 2010–2012: Early Adoption

o First real-world transaction (10,000 BTC for pizza).

o Bitcoin exchanges and mining communities emerged.

3. 2013–2016: Growth & Scrutiny

o Price surged; Mt. Gox collapsed.

o Second halving event reduced rewards to 12.5 BTC.

4. 2017–2019: Mainstream Attention

o Price hit $20,000 in 2017.

o SegWit upgrade; Bitcoin Cash forked.

5. 2020–2022: Institutional Adoption

o Companies like Tesla and MicroStrategy invested in Bitcoin.

o El Salvador adopted it as legal tender.

o Taproot upgrade enhanced privacy and scripting.

6. 2023–2024: Maturity & Innovation

o Lightning Network adoption increased.

o Spot Bitcoin ETFs approved.

o 2024 halving reduced block reward to 3.125 BTC.

Bitcoin has evolved from digital cash to a global digital asset and store of value.
Bitcoin Mining is the process of verifying bitcoin transactions and storing them in a
blockchain(ledger). It is a process like gold mining but instead, it is a computer process
that creates new bitcoin in addition to tracking Bitcoin transactions.

Bitcoin mining is a computation-intensive process that uses complicated computer code

to generate a secure cryptographic system. The bitcoin miner is the person who solves
mathematical puzzles (also called proof of work) to validate the transaction. Anyone with
mining hardware and computing power can take part in this. Numerous miners take part
simultaneously to solve the complex mathematical puzzle, the one who solves it first,
wins 6.25 bitcoin as a part of the reward. Miner verifies the transactions (after solving the
puzzle) and then adds the block to the blockchain when confirmed. The blockchain
contains the history of every transaction that has taken place in the blockchain network.
Once the minor adds the block to the blockchain, bitcoins are then transferred which
were associated with the transaction.

For the miners to earn rewards from verifying the bitcoin Transactions, two things must
be ensured:

1. The miners must verify the one-megabyte size of the transaction.

2. For the addition of a new block of transaction in the blockchain, miners must have
the ability to solve complex computational maths problems called proof for work
by finding a 64-bit hexadecimal hash value.

Bitcoin is a digital currency where there are chances of copying, counterfeiting, or double
spending the same coin more than once. Mining solves these problems by making the
above illicit activities extremely expensive and resource intensive. Thus, it can be
concluded that it is more beneficial and cost-effective to join the network as a miner than
to try to undermine it.

Bitcoin miners are very essential for the smooth functioning of the bitcoin network for the
following reasons:

• Miners’ job is just like auditors i.e. to verify the legitimacy of the bitcoin
transactions.

• Miners help to prevent the double-spending problem.

• Miners are minting the currency. In the absence of miners, Bitcoin as the network
would still exist and be usable but there would be no additional bitcoin.

There are several benefits of mining a bitcoin:

• Mining bitcoin helps support the Bitcoin ecosystem.

• Bitcoin mining helps miners to earn rewards in form of bitcoins.

• It is the only way to release new cryptocurrencies into circulation.

 • It is used to check counterfeiting and double spending.

Mining Rewards
Miners are incentivized with:

• Block Subsidy: A fixed number of new bitcoins per block (halved every ~4 years).

• Transaction Fees: Fees paid by users included in the mined block.

Key Concepts

• Nonce: A variable miners adjust to find a valid hash.

• Difficulty: Adjusted every 2016 blocks (~2 weeks) to maintain 10-minute block
intervals.

• Mining Pools: Groups of miners combine computing power to earn rewards

more consistently.
Double Spending

In digital cash systems, double spending involves the same funds being sent to
two recipients at the same time. Double spending is possible because it is almost
impossible for a recipient to tell whether funds being spent have already been
spent without the involvement of third-party verification service.

In digital-cash systems, ensuring that funds are not duplicated is of paramount

importance. Digital cash systems will not work if X receives ten units but copies
and pastes them ten times to create a total of 100 units. Digital cash systems will
also not work if X sends the same ten units to Y and Z simultaneously. In other
words, there must be a mechanism that ensures that funds in the system are not
being double spent. Two approaches can be used to prevent double spending: the
centralized approach and the decentralized approach.

Centralized Approach

In general, the centralized approach is easier to implement. It involves one

overseer who controls the issuance, distribution, and verification of money.
Pretend Simon wants to receive $200 in digital cash. Provided that he has
sufficient balance in his count, he will first inform the bank of his request. Simon
will then randomly select ten numbers to assign each a value of $20 to. To prevent
the bank from looking into specific units, Simon obfuscates the random numbers
by attaching a blinding factor. He then turns over all the data to the bank, which
debits his account for $200, and signs a message certifying that each of the ten
pieces of information is redeemable for $20. Next, Simon goes to Erick’s
restaurant and purchases a meal for $20 by revealing one blinding factor to Erick
so that he can redeem the bill. Erick must redeem the bill immediately with the
bank to prevent Simon from spending that same bill with another merchant.
Meanwhile, the bank will check to make sure that the signatures are valid. If
everything checks out, the bank will credit Erick’s account $20.

Even though this setup is great for private transfers, it fails in resilience because
the bank can be the central point of failure at any time.

Decentralized Approach

In a decentralized approach, the bank is replaced with a blockchain, an open and

decentralized ledger that is available to all users. Blockchains verify transactions
using power-intensive algorithms, also known as proof-of-work systems.
Distributed Ledger and Double Spending

1. Distributed Ledger

A distributed ledger is a decentralized database maintained by multiple nodes across a

network. Each node holds a synchronized copy of the ledger, ensuring transparency,
fault tolerance, and consensus on the state of transactions.

• Blockchain is the most common type of distributed ledger, where data is stored
in blocks linked cryptographically.

• Transactions are validated through consensus algorithms (e.g., Proof of Work

in Bitcoin) before being added to the ledger.

2. Double Spending

Double spending is the risk that a digital currency can be spent more than once. Since
digital assets can be duplicated, preventing this is critical for maintaining trust.

Example: A malicious user attempts to send the same bitcoin to two different
recipients.

How Distributed Ledgers Prevent Double Spending

• Consensus Mechanisms: Ensure that only one version of the transaction

history is accepted by the network.

• Immutable Records: Once a transaction is validated and added to the

blockchain, it cannot be altered or duplicated.

• Verification by Multiple Nodes: All nodes check that the sender has sufficient
balance, and that the transaction has not been previously recorded.

• Time-Ordered Blocks: Transactions are stored in chronological order,

preventing the reuse of the same funds.

A distributed ledger ensures the integrity of digital transactions by preventing double

spending through decentralized consensus, cryptographic verification, and immutable
recordkeeping.
Cryptocurrency Exchange

To start buying and selling cryptocurrencies and other digital assets, the most common
way is to transact with Crypto Exchanges. Cryptocurrency exchanges are privately-
owned platforms that facilitate the trading of cryptocurrencies for other crypto assets,
including digital and fiat currencies and NFTs.

Centralized Cryptocurrency Exchanges (“CEX”)

Centralized cryptocurrency exchanges act as an intermediary between a buyer and a

seller and make money through commissions and transaction fees. You can imagine a
CEX to be like a stock exchange but for digital assets.

Popular Crypto Exchanges are Binance, Coinbase Exchange, Kraken and KuCoin. Much
like stock trading websites or apps, these exchanges allow cryptocurrency investors to
buy and sell digital assets at the prevailing price, called spot, or to leave orders that get
executed when the asset gets to the investor’s desired price target, called limit orders.

CEXs operate using an order book system, which means that buy and sell orders are
listed and sorted by the intended buy or sell price. The matching engine of the exchange
then matches buyers and sellers based on the best executable price given the desired lot
size. Hence, a digital asset’s price will depend on the supply and demand of that asset
versus another, whether it be fiat currency or cryptocurrency.

CEXs decide which digital asset it will allow trading in, which provides a small measure
of comfort that unscrupulous digital assets may be excluded from the CEX.

Decentralized Cryptocurrency Exchanges (“DEX”)

A decentralized exchange is another type of exchange that allows peer-to-peer

transactions directly from your digital wallet without going through an intermediary.
Examples of DEXs include Uniswap, PancakeSwap, dYdX, and Kyber.

These decentralized exchanges rely on smart contracts, self-executing pieces of code on

a blockchain. These smart contracts allow for more privacy and less slippage (another
term for transaction costs) than a centralized cryptocurrency exchange.

On the other hand, even though smart contracts are rules-based, the lack of an
intermediary third party means that the user is left to their own, so DEXs are meant for
sophisticated investors.

Advantages of Centralized Cryptocurrency Exchanges

1. User-friendly

Centralized exchanges offer beginner investors a familiar, friendly way of trading and
investing in cryptocurrencies. As opposed to using crypto wallets and peer-to-peer
transactions, which can be complex, users of centralized exchanges can log into their
accounts, view their account balances, and make transactions through applications and
websites.

2. Reliable

Centralized exchanges offer an extra layer of security and reliability when it comes to
transactions and trading. By facilitating the transaction through a developed, centralized
platform, centralized exchanges offer higher levels of comfort.

3. Leverage

One of the other benefits of certain CEXs is the option to leverage your investments using
borrowed money from the exchange, called margin trading. It allows investors to reap
higher returns, but losses can also be amplified.

Disadvantages of Centralized Cryptocurrency Exchanges

1. Hacking risk

Centralized exchanges are operated by companies that are responsible for the holdings
of their customers. Large exchanges usually hold billions of dollars’ worth of bitcoin,
making them a target for hackers and theft.

An example of such an incident is Mt.Gox, which was once the world’s largest
cryptocurrency exchange company before it reported the theft of 850,000 bitcoins,
leading to its collapse.

2. Transaction fees

Unlike peer-to-peer transactions, centralized exchanges often charge high transaction

fees for their services and convenience, which can be especially high when trading in
large amounts.

3. Custody of digital assets and risk of fraud

Lastly and most importantly, most CEXs will hold your digital asset as a custodian in their
own digital wallet rather than allow you to store your private keys on your own digital
wallet. While more convenient when you want to trade, there are drawbacks, namely the
risk of the centralized cryptocurrency exchange failing and fraud.

Recent examples include the failure of the 50 USD billion algorithmic stablecoin
TerraUSD and sister token Luna, the bankruptcies of hedge fund Three Arrows Capital,
lender Celsius Network, broker Voyager Digital and the collapse of FTX and Alameda
Research.

Advantages of Decentralized Cryptocurrency Exchanges

1. Custody
Users of decentralized exchanges do not need to transfer their assets to a third party.
Therefore, there is no risk of a company or organization being hacked, and users are
assured of greater safety from hacking, failure, fraud, or theft.

2. Preventing market manipulation

Due to their nature of allowing for the peer-to-peer exchange of cryptocurrencies,

decentralized exchanges prevent market manipulation, protecting users from fake
trading and wash trading.

3. Less censorship

Decentralized exchanges do not require customers to fill out know-your-customer (KYC)

forms, offering privacy and anonymity to users. Since DEXs don’t exercise censorship,
more cryptocurrencies and digital assets are available than through a CEX. As a matter
of fact, many Altcoins are only available on DEXs.

Disadvantages of Decentralized Cryptocurrency Exchanges

1. Complexity

Users of decentralized exchanges must remember the keys and passwords to their crypto
wallets, or their assets are lost forever and cannot be recovered. They require the user to
learn and get familiar with the platform and the process, unlike centralized exchanges,
which offer a more convenient and user-friendly process.

2. Lack of fiat payments

DEXs are best for investors looking to switch from one digital asset to another and not
well suited for someone looking to buy or sell digital assets with fiat currency, called on
and off-ramping. It makes them less convenient for users that do not already hold
cryptocurrencies.

3. Liquidity struggles

Some 99% of crypto transactions are facilitated by centralized exchanges, which

suggests that they are accountable for most of the trading volume. Due to the lack of
volume, decentralized exchanges often lack liquidity, and it can be difficult to find buyers
and sellers when trading volumes are low.
Cryptocurrency Exchanges and Their Impact on the Global Black-Market Economy

1. Role of Cryptocurrency Exchanges

Cryptocurrency exchanges enable the trading and transfer of digital assets across
borders, often with minimal oversight. While they are central to the growth of the digital
economy, they also present opportunities for illicit financial activities when misused.

2. Impact on the Black-Market Economy

a. Anonymity and Pseudonymity

• Some exchanges (especially non-KYC compliant or decentralized ones) allow

users to trade without revealing identities.

• This feature can be exploited to facilitate money laundering, terrorist financing,

or illegal trade (e.g., drugs, weapons, counterfeit goods).

b. Cross-Border Fund Transfers

• Cryptocurrencies enable fast, borderless transactions.

• Black-market actors can move large sums internationally without traditional

banking scrutiny.

c. Use in Dark Web Transactions

• Many illegal marketplaces on the dark web use cryptocurrencies (primarily

Bitcoin, Monero) for anonymous transactions.

• Exchanges serve as the on- and off-ramps to convert these assets to fiat.

d. Ransomware and Extortion

• Cybercriminals demand ransom in crypto, often laundered through exchanges to

obfuscate the money trail.

3. Mitigation and Regulation

• KYC/AML Compliance: Many centralized exchanges now require user verification

to curb misuse.

• Blockchain Forensics: Companies like Chainalysis and Elliptic provide tools to

trace illicit funds.

• Regulatory Oversight: Governments are enforcing stricter controls, licensing

requirements, and transaction monitoring.
4. Dual-Edged Nature

While exchanges have facilitated legitimate economic growth, innovation, and financial
inclusion, their misuse highlights the need for balanced regulation—enabling
innovation while minimizing criminal exploitation.

Conclusion

Cryptocurrency exchanges have contributed to both economic empowerment and the

expansion of black-market activity due to their decentralized and borderless nature.
Effective regulatory frameworks, compliance measures, and technological
monitoring are essential to address the associated risks without stifling the potential of
blockchain technologies.
Ethereum architecture and its components

Ethereum is a decentralized, open-source blockchain platform that enables developers

to build and deploy smart contracts and decentralized applications (dApps).

The components of the Ethereum network form the foundation of its decentralized
platform, enabling the creation and execution of smart contracts and decentralized
applications (dApps). Key elements include Ethereum nodes, the Ethereum Virtual
Machine (EVM), and the consensus mechanism that ensures transaction validity.
Additionally, supporting components like Ether (ETH), wallets, and oracles enhance
functionality and user interaction.

1. Ethereum Nodes

Nodes are individual computers that participate in the Ethereum network, maintaining
the blockchain and validating transactions.

1. Full Nodes: Store a complete copy of the Ethereum blockchain and validate all
transactions and blocks. They ensure the integrity of the network.

2. Light Nodes: Store only a subset of the blockchain data, relying on full nodes for
transaction verification. They are less resource-intensive, making them suitable
for devices with limited storage.

3. Archive Nodes: Store all historical states of the Ethereum blockchain, allowing
users to access past versions of the blockchain for analysis or research.

2. Ethereum Virtual Machine (EVM)

The EVM is the decentralized runtime environment that executes smart contracts on the
Ethereum network. It allows developers to deploy and run their code in a consistent
manner across all nodes. The EVM is crucial for executing complex computations,
facilitating the development of dApps.

3. Smart Contracts

Smart contracts are self-executing agreements with the terms of the contract directly
written into code.

1. Automation: They automatically execute actions when predefined conditions are

met, reducing the need for intermediaries.

2. Transparency: The code and conditions are visible and verifiable on the
blockchain, ensuring trust among participants.

3. Programmable Logic: Developers can create complex logic and workflows using
programming languages like Solidity.

4. Transactions

Transactions are the primary units of data on the Ethereum network, representing the
transfer of value or information.

1. Transaction Structure: Each transaction contains details like sender and

recipient addresses, value (in Ether), gas limit, and nonce (transaction count).

2. Gas and Transaction Fees: Gas is a unit that measures the computational effort
required to execute operations. Users pay gas fees in Ether to incentivize miners
or validators for processing their transactions.

5. Consensus Mechanisms

The consensus mechanism ensures that all nodes in the network agree on the validity of
transactions and the state of the blockchain.

1. Proof of Work (PoW): Originally used by Ethereum, where miners solve complex
mathematical problems to validate transactions.

2. Proof of Stake (PoS): Ethereum is transitioning to PoS with Ethereum 2.0, where
validators are chosen based on the amount of Ether they hold and are willing to
“stake.” This mechanism aims to improve scalability and reduce energy
consumption.

Supporting Components of the Ethereum Network

Here is an overview of the supporting components:

1. Ether (ETH)
2. Decentralized Applications (dApps)

3. Decentralized Finance (DeFi)

DeFi protocols are financial applications built on the Ethereum blockchain that operate
without traditional intermediaries.

1. Lending and Borrowing: Platforms like Aave and Compound allow users to lend
and borrow assets through smart contracts.

2. Decentralized Exchanges (DEXs): Protocols such as Uniswap and SushiSwap

facilitate token trading directly from users’ wallets without a centralized entity.

3. Yield Farming: Users can earn rewards by providing liquidity to various pools
within these protocols.

4. Oracles

Oracles are third-party services that provide smart contracts with real-world data.

1. Data Integration: They enable smart contracts to access off-chain information,

such as market prices, weather data, and other external events.

2. Examples: Chainlink and Band Protocol are popular oracle services used in DeFi
and other applications.

5. Wallets

Wallets are tools that allow users to manage their Ether and tokens, enabling them to
send, receive, and interact with dApps.

1. Hot Wallets: Online wallets like MetaMask offer easy access to dApps but are
less secure than cold wallets.

2. Cold Wallets: Hardware wallets like Ledger and Trezor store private keys offline,
providing enhanced security for long-term storage.
DAOs (Decentralized Autonomous Organizations)

A Decentralized Autonomous Organization (DAO) is a blockchain-based organization

governed by smart contracts and collective member consensus, without centralized
control. DAOs operate transparently, with rules and decisions encoded on a blockchain.

Key Characteristics

Feature Description

Decentralization No central authority; governed by token holders or stakeholders.

Autonomy Executes rules via smart contracts on platforms like Ethereum.

Transparency All transactions and rules are visible on the blockchain.

Token-Based Governance decisions are made through proposals and voting,

Voting usually weighted by token ownership.

How DAOs Work

1. Smart Contracts define the DAO’s rules and automate operations.

2. Members purchase or earn governance tokens.

3. Proposals are submitted for any major action (e.g., funding, upgrades).

4. Voting occurs; if a proposal meets the required consensus, it is executed

automatically by the smart contract.

Use Cases

• Investment Funds (e.g., The DAO, MetaCartel Ventures)

• Grant Distribution (e.g., Gitcoin DAO)

• Protocol Governance (e.g., MakerDAO, Uniswap DAO)

• Decentralized Media (e.g., Bankless DAO)

Advantages

• Eliminates single points of failure or control.

 • Transparent and trustless execution.

• Global, borderless participation.

Challenges

• Legal and regulatory uncertainty.

• Governance issues (e.g., low voter participation, token monopolies).

• Smart contract vulnerabilities (e.g., The DAO hack in 2016).

Conclusion

DAOs represent a transformative model for organizing communities and managing

shared resources transparently and democratically. While still evolving, they are central
to the broader Web3 and decentralized finance (DeFi) ecosystem.
GHOST Protocol is a method used to improve how a blockchain network reaches
consensus in the blockchain. It was proposed to address some limitations of earlier
consensus mechanisms, especially those related to the handling of orphaned blocks and
network latency.

1. Block Selection: In a blockchain, multiple blocks can be created simultaneously,

leading to forks where different chains compete for inclusion in the blockchain.
GHOST helps the network decide which blocks to consider by focusing on the
“heaviest” chain, the one with the most accumulated work or the most
endorsements from other blocks.

2. Orphan Blocks: Sometimes, blocks that are not included in the main blockchain
are referred to as orphaned or stale blocks. GHOST deals with these by ensuring
they are still considered in the consensus process. Instead of discarding these
orphaned blocks, GHOST incorporates them into the decision-making process to
determine the most valid chain.

3. Greedy Heaviest Observed Subtree: The “greedy” aspect of the protocol refers
to the preference for the subtree (a portion of the blockchain) that has the most
accumulated work or the heaviest chain. This ensures that even if a chain
temporarily diverges, the network will eventually converge on the most robust and
well-supported chain.

Need For GHOST Protocol

Here are the reasons why the GHOST Protocol is required:

1. Handling Orphaned Blocks: GHOST includes orphaned blocks in the consensus

process by considering them when determining the "heaviest" chain. This reduces
the waste of computational effort and helps ensure that more transactions are
processed and validated.

2. Reducing Forks and Latency: By focusing on the heaviest subtree (the branch
with the most accumulated work), GHOST helps the network converge more
quickly on the most valid chain. This reduces the impact of forks and speeds up
transaction processing.

3. Enhancing Network Security: GHOST improves security by incorporating

orphaned blocks into the consensus process, making it more difficult for
attackers to exploit temporary forks or gaps in the blockchain. This makes the
network more resilient to certain types of attacks.

4. Optimizing Resource Utilization: By taking orphaned blocks into account,

GHOST ensures that the computational work done by miners is not wasted. This
helps optimize the use of network resources and makes the system more efficient.
5. Improving Transaction Throughput: GHOST helps streamline the consensus
process by rapidly converging on the most supported chain, improving transaction
throughput, and reducing the time it takes to confirm transactions.

Here is an overview of how the GHOST protocol works:

1. Transaction Submission: Users submit transactions, which enter a pool of

pending transactions (mempool).

2. Block Creation and Forks: Miners create new blocks, which can lead to forks if
multiple blocks are produced around the same time. Some blocks may become
orphaned.

3. Inclusion of Orphaned Blocks: GHOST includes orphaned blocks (those not on

the main chain) in its consideration for consensus. This ensures transactions in
these blocks are still considered for final inclusion.

4. Heaviest Chain Calculation: GHOST prioritizes the chain with the most
accumulated work, including both the main chain and orphaned blocks, to
determine which transactions are valid.

5. Consensus and Finalization: Transactions from the blocks in the heaviest

subtree (the part of the blockchain with the most total work) are finalized.
Orphaned blocks and their transactions are included if they are part of this
subtree.

6. Efficient Processing: By incorporating orphaned blocks, GHOST reduces wasted

work and speeds up transaction processing, leading to faster confirmation times
and improved efficiency.
The Domain Name System (DNS) translates human-readable domain names (e.g.,
www.google.com) into machine-readable IP addresses (e.g., 142.250.190.14),
enabling internet communication

• It enables computers to locate and communicate with each other on the internet.

• Functions as a hierarchical, distributed database.

• Queries pass through multiple levels:

o Root server

o Top-Level Domain (TLD) server

o Authoritative server (stores the specific IP address).

• Ensures seamless website access using easy-to-remember names instead of

numerical IP addresses.
How Does DNS Work?

• When we type a website like https://www.geeksforgeeks.org in our browser, our

computer tries to find the IP address.

• First, it checks the local cache (our browser, operating system, or router) to see if
it already knows the IP address.

• If the local cache doesn’t have the IP, the query is sent to a DNS resolver to find
it.

• DNS resolver may check host files (used for specific manual mappings), but
usually, it moves on.
 • Resolver sends the query to a Root DNS server, which doesn’t know the exact IP
address but points to the TLD server (e.g., .org server for this example).

• TLD server then directs the resolver to the authoritative nameserver for
geeksforgeeks.org.

• Authoritative nameserver knows the exact IP address for geeksforgeeks.org and

sends it back to the resolver.

• Resolver passes the IP address to our computer.

• Our computer uses the IP address to connect to the real server where the
website is hosted.

• The website loads in our browser.

Structure of DNS

It is very difficult to find out the IP address associated with a website because there are
millions of websites and with all those websites we should be able to generate the IP
address immediately, there should not be a lot of delays for that to happen organization
of the database is very important.

DNS Record: Domain name, IP address what is the validity? what is the time to live?
and all the information related to that domain name. These records are stored in a tree-
like structure.

Namespace: Set of possible names, flat or hierarchical. The naming system maintains
a collection of bindings of names to values – given a name, a resolution mechanism
returns the corresponding value.

Name Server: It is an implementation of the resolution mechanism

Ethereum Name Service (ENS) is a decentralized domain name system built on the
Ethereum blockchain. It allows users to replace complex Ethereum addresses with
simple, human-readable names. For example, instead of using a long string of letters and
numbers like 0x1234abcd5678efgh, you can use a name like alice.eth. ENS not only
simplifies transactions by making addresses easier to remember and share but also
supports various types of information beyond just addresses. This includes storing data
like website URLs and social media handles. By integrating with the Ethereum network,
ENS enhances the usability and functionality of blockchain applications, making
decentralized technology more accessible to everyone.

The Ethereum Name Service (ENS) is a decentralized naming system built on the
Ethereum blockchain. It functions similarly to the traditional Domain Name System
(DNS) but is designed for the decentralized web. ENS provides a way to map human-
readable names to Ethereum addresses, smart contracts, and other types of data.

1. Human-Readable Names: ENS allows users to replace long, complex Ethereum

addresses with simple, memorable names like alice.eth, making transactions and
interactions easier.

2. Decentralized and Secure: Built on Ethereum's blockchain, ENS is decentralized

and leverages blockchain security to prevent censorship and tampering.

3. Versatility: Beyond just addresses, ENS can store various types of data. For
example, it can link to website URLs, social media profiles, and more, all within a
single ENS name.

The ENS serves several important purposes:

1. Simplifying Addresses: ENS translates complex Ethereum addresses, which are

long strings of hexadecimal characters, into human-readable names. This makes
it easier for users to send transactions, interact with smart contracts, and share
their blockchain identity.

2. Enhancing Usability: By providing a straightforward way to handle Ethereum

addresses, ENS improves the overall usability of decentralized applications
(dApps) and blockchain technology.

3. Providing a Decentralized Naming System: ENS operates on the Ethereum

blockchain, making it a decentralized system. This decentralization ensures that
the management of names and associated data is resistant to censorship, fraud,
and central control.

4. Supporting Multiple Data Types: In addition to mapping names to Ethereum

addresses, ENS can store various types of information such as Text records,
Content records, and other metadata.
 5. Facilitating Interactions in the Decentralized Web: ENS plays a crucial role in
the decentralized web by linking human-readable names to decentralized
resources. This enhances the experience of using dApps and other blockchain-
based services.

Features of ENS

1. Human-Readable Names: ENS allows users to create and use simple,

memorable names instead of lengthy Ethereum addresses. For example, you can
use alice.eth instead of a complex address like 0x1234abcd5678efgh....

2. Decentralized Management: ENS is built on the Ethereum blockchain, ensuring

that it operates in a decentralized manner. This decentralization provides
resistance to censorship and manipulation.

3. User Ownership and Control: Users have ownership and control over their ENS
names through Ethereum's smart contracts. This means that users can manage
their names, set or update associated records, and transfer ownership securely
on the blockchain.

4. Hierarchical Naming System: ENS supports a hierarchical naming system, like

traditional DNS. This allows users to create subdomains and manage domain
structures, enabling more complex and organized naming conventions.

5. Message Customization: The ENS platform offers flexibility to customize the

message, be it email, push notification, or text message. It also allows any
organization to create pre-set templates.

6. Reporting and Analysis: To make ENS reliable and reach its intended audience,
the ENS provider informs about message delivery, read recipients, and another
matrix

7. Censorship Resistant and Immutable: The whole system has a specific major
selling point due to its immutability. Once written, they cannot be modified,
erased, or updated in the blockchain. This immutability provides them resistance
to censorship.

8. User-Friendly Interfaces: ENS is supported by various user-friendly interfaces

and tools, such as the ENS Manager and third-party applications. These tools
simplify the processes of registering, managing, and interacting with ENS names.

ENS vs DNS

Both are designed to find the correct website using the names and not the IP address or
numbers. DNS works complementary to ENS and is not meant to replace it. Also, the hierarchy
of ENS works similarly to DNS in that domain control to its owner who possesses all rights to
create subdomains. Both work similarly to phonebook and convert the address into a human-
readable string. DNS names can be imported and utilized in ENS.

Below are the differences between ENS and DNS:

Parameters ENS DNS

Address Ethereum name system Domain name system points to IP

Reference refers to the wallet address. address.

Purchase Require a bid along with a

Can be bought instantly.
process deposit and transaction fee.

ENS is utilized by service DNS is utilized by service providers only

Users
providers and users both. for their websites.

more than 1500 top-level domains exist

TLD Only 1 TLD (.eth).
(TLD) ex .com .org .net.

ENS services are

Service type DNS is centralized.
decentralized.

Has multiple computers Has very limited resources, ex:

Resources
verifying ENS. godaddy.com.

More secure since it uses Can be easily hacked due to the lack of
Security
smart contracts. such technology.

Resistant to censorship due

Censorship Non-resistant.
to smart contracts.

Community Ethereum community. ICANN.

Can be easily transferred This can only be done if the TXT record
Ownership
from one account to name of DNS is changed to a new
Transfer
another by NFT. Ethereum address.

Whosoever owns the name in DNS can

Naming No admin power exists to
claim on ENS as well so admin power
transfer power take away users.ETH name
does exist for DNS name on ENS.