What is an Ethereum Transaction?

An Ethereum transaction is a digital contract that enables a user to send digital currency or other related assets like tokens, digital certificates, etc. over a distributed, decentralized, public ledger called the Ethereum blockchain. A transaction is the result of an action taken by a user, such as sending a service request or transferring a payment to another user.

An Ethereum transaction is composed of three main components:

1. The address of the sender and recipient

2. The amount of Ether (ETH) or tokens being transferred

3. A signature from the sender that authorizes the transfer

An Ethereum transaction is structured as a JSON-RPC Request and consists of multiple fields, including:

1. Nonce: A unique number used to identify a transaction

2. GasPrice: The amount of Ether needed to complete the transaction

3. GasLimit: The maximum amount of computational resources that can be used

4. To: The address of the recipient

5. Value: The amount of Ether being transferred

6. Data: Any data or instructions associated with the transaction

7. v, r, s: Three parameters used to generate the signature

When a transaction is broadcast to the Ethereum blockchain, it is verified by the network, and if it passes the validation process, it is added to the blockchain as part of a block. Once the transaction is added to the blockchain, it is immutable, meaning it cannot be changed or reversed.

An Ethereum transaction can be used to send payments, deploy smart contracts, or interact with existing smart contracts. It is an essential part of the Ethereum ecosystem and is used to facilitate the transfer of value over the decentralized network.

Simplified Example

Ethereum transactions are like sending a letter to a friend. When you want to send a letter to a friend, you write a message on a piece of paper, put it in an envelope, and send it to your friend's address. Similarly, when you want to make a transaction on the Ethereum blockchain, you send a message that says "I want to send this much ether to this address." The message is then packaged into a special envelope called a "transaction," which is sent to the Ethereum network. Just like how the post office makes sure your letter gets to your friend's house, the Ethereum network makes sure your transaction gets to the right place and that everything is in order. Finally, just like how your friend can open the envelope and read the message you sent, the recipient of the Ethereum transaction can use their private key to access the ether you sent them.

Who Invented the Ethereum Transaction?

As Ethereum platform development advanced, the necessity for a succinct term denoting the fundamental unit of interaction on the network became evident. In the early stages, discussions and documentation likely employed informal expressions such as "transfer" or "state change" to describe the modification of Ethereum's state through a transaction. The widespread adoption of the term "Ethereum transaction" was influenced by various factors. Official Ethereum documentation, including the Ethereum Yellow Paper, consistently used "transaction" to articulate the process of transferring value and data within the network. Developer tools and libraries, such as Web3.js, incorporated the term in their APIs and documentation, reinforcing its acceptance among developers. Community discussions, forums, and media coverage also contributed to the term's broad understanding and adoption within the Ethereum ecosystem.


Token Transfer: This type of transaction is used to transfer tokens that are built on the Ethereum network, such as ERC-20 tokens. This type of transaction requires the sender to have the tokens they want to transfer in their wallet and to specify the recipient's Ethereum address.

Smart Contract Deployment: This type of transaction is used to deploy a new smart contract on the Ethereum network. A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into code. This type of transaction requires the user to pay a fee in Ether to the Ethereum network to cover the computational resources needed to execute the contract.

Ether Transfer: This type of transaction is used to transfer Ether from one wallet to another. This type of transaction is the most basic type of transaction on the Ethereum network and is used to pay for gas fees for other transactions and to transfer value between wallets. The user needs to specify the recipient's Ethereum address and the amount of Ether they want to transfer.

  • Ethereum Virtual Machine (EVM): A decentralized virtual computing environment running on the Ethereum blockchain.

  • Blockchain: A decentralized, digital ledger that records transactions across a network of computers.