Essential Ethereum FAQ: Tools, Storage, Security, and Scaling Explained

What is Ethereum?

Ethereum is a decentralized smart‑contract platform powered by the cryptocurrency Ether.

Key Ethereum client tools

Geth : the Go implementation of an Ethereum node, the foundation for any interaction with the blockchain.

Mist : a GUI‑based web browser for Ethereum that lets users view accounts and contracts and create contracts without using the command line. It is suitable for non‑developers who only need to store Ether and interact with contracts.

Ethminer : a standalone miner compatible with eth, geth and pyethereum, used for mining or monitoring mining setups.

Mix : an integrated development environment for building DApps, enabling rapid prototyping and debugging on Ethereum.

Storing large files on the blockchain

Because storage on the Ethereum blockchain is expensive, large files should not be stored directly. Instead, third‑party solutions such as Swarm (an Ethereum‑specific distributed storage project) or IPFS (a separate but interoperable system) are recommended.

Is Ethereum based on Bitcoin?

Ethereum uses blockchain technology pioneered by Bitcoin but runs on its own separate blockchain with several technical differences.

Future direction of Ethereum

Developers plan to transition from Proof‑of‑Work to Proof‑of‑Stake consensus and are researching scalability solutions and methods for storing secrets on‑chain.

Accounts vs. wallet contracts

An account is a public‑key/private‑key pair that identifies a user on the blockchain. A “wallet contract” is a smart contract that can enforce additional rules such as multisignature or program‑controlled withdrawals, and can be created easily via the Mist wallet GUI.

Key management

Key files do not have to remain on the computer where the client was downloaded; users are advised to export or move them while keeping backups in a safe location.

Blockchain download time

The Ethereum blockchain continuously grows; as of March 2016 it approached 10 GB. Download time depends on the number of peers, network speed, and other factors.

Retrieving transaction history for an address

One must manually collect blockchain transactions or use third‑party explorer APIs such as EtherChain. For contract‑related transactions, filtering contract logs can provide the needed data.

Can a contract pay for its own execution?

No; the gas required for execution must be supplied by the address that initiates the transaction.

Can contracts call other contracts?

Yes; contracts can interact with each other, as described in the Ethereum documentation on contract‑to‑contract calls.

Offline signing of transactions

Transactions can be signed offline and later submitted from an online device; the Icebox solution ( https://github.com/ConsenSys/icebox) demonstrates this approach.

Obtaining testnet Ether

Instructions are available at the Ethereum test‑net documentation page:

http://ethdocs.org/en/latest/network/test-networks.html#test-networks

.

Outsourcing transaction broadcasting

Technically feasible, but Ethereum transactions include a nonce that increments with each transaction from an account, which differs from Bitcoin’s model and imposes constraints on third‑party broadcasting.

Can contracts fetch external data?

Contracts cannot directly pull data from external sources. Data can be pushed to contracts via transactions, often using oracle services that retrieve off‑chain information (e.g., weather, stock prices) and feed it into the blockchain for a fee.

Is data on Ethereum encrypted?

Data and contracts on the Ethereum network are encoded but not encrypted; anyone can inspect them. Users may encrypt data locally before broadcasting if confidentiality is required.

Storing secrets or passwords on Ethereum

All data on Ethereum is public, making it impossible to store secrets or passwords confidentially. Research into code obfuscation and other techniques is ongoing.

Mitigating mining centralization

Ethereum’s PoW consensus addresses centralization in two ways:

Reducing the penalty for orphaned blocks through the GHOST protocol, which rewards “uncle” blocks and lessens the advantage of large mining pools.

Using an ASIC‑resistant proof‑of‑work function, allowing commodity hardware such as GPUs to remain competitive.

Handling blockchain size growth

Scalability discussions are ongoing; relevant analyses can be found in Ethereum StackExchange posts and Vitalik Buterin’s blog on scalability and decentralization.

Achieving >10,000 transactions per second

Ethereum’s roadmap includes a transition to Proof‑of‑Stake and the Casper‑Friendly‑GHOST protocol, which aim to increase throughput. Further details are available in the Casper blog post (

https://blog.ethereum.org/2015/08/01/introducing-casper-friendly-ghost/

).