blocks are valid. The solution to this is a challenge-response protocol: verification nodes
issue "challenges" in the form of target transaction indices, and upon receiving a node a
light node treats the block as untrusted until another node, whether the miner or another
verifier, provides a subset of Patricia nodes as a proof of validity.
Conclusion
The Ethereum protocol was originally conceived as an upgraded version of a
cryptocurrency, providing advanced features such as on-blockchain escrow, withdrawal
limits, financial contracts, gambling markets and the like via a highly generalized
programming language. The Ethereum protocol would not "support" any of the
applications directly, but the existence of a Turing-complete programming language
means that arbitrary contracts can theoretically be created for any transaction type or
application. What is more interesting about Ethereum, however, is that the Ethereum
protocol moves far beyond just currency. Protocols around decentralized file storage,
decentralized computation and decentralized prediction markets, among dozens of other
such concepts, have the potential to substantially increase the efficiency of the
computational industry, and provide a massive boost to other peer-to-peer protocols by
adding for the first time an economic layer. Finally, there is also a substantial array of
applications that have nothing to do with money at all.
The concept of an arbitrary state transition function as implemented by the Ethereum
protocol provides for a platform with unique potential; rather than being a closed-ended,
single-purpose protocol intended for a specific array of applications in data storage,
gambling or finance, Ethereum is open-ended by design, and we believe that it is
extremely well-suited to serving as a foundational layer for a very large number of both
financial and non-financial protocols in the years to come.
Notes and Further Reading
Notes
1. A sophisticated reader may notice that in fact a Bitcoin address is the hash of the