###############################
Introduction to Smart Contracts
###############################

.. _simple-smart-contract:

***********************
A Simple Smart Contract
***********************

Let us begin with a basic example that sets the value of a variable and exposes
it for other contracts to access. It is fine if you do not understand
everything right now, we will go into more detail later.

Storage Example
===============

::

    pragma solidity >=0.4.0 <0.7.0;

    contract SimpleStorage {
        uint storedData;

        function set(uint x) public {
            storedData = x;
        }

        function get() public view returns (uint) {
            return storedData;
        }
    }

The first line tells you that the source code is written for
Solidity version 0.4.0, or a newer version of the language up to, but not including version 0.7.0.
This is to ensure that the contract is not compilable with a new (breaking) compiler version, where it could behave differently.
:ref:`Pragmas<pragma>` are common instructions for compilers about how to treat the
source code (e.g. `pragma once <https://en.wikipedia.org/wiki/Pragma_once>`_).

A contract in the sense of Solidity is a collection of code (its *functions*) and
data (its *state*) that resides at a specific address on the Ethereum
blockchain. The line ``uint storedData;`` declares a state variable called ``storedData`` of
type ``uint`` (*u*\nsigned *int*\eger of *256* bits). You can think of it as a single slot
in a database that you can query and alter by calling functions of the
code that manages the database. In this example, the contract defines the
functions ``set`` and ``get`` that can be used to modify
or retrieve the value of the variable.

To access a state variable, you do not need the prefix ``this.`` as is common in
other languages.

This contract does not do much yet apart from (due to the infrastructure
built by Ethereum) allowing anyone to store a single number that is accessible by
anyone in the world without a (feasible) way to prevent you from publishing
this number. Anyone could call ``set`` again with a different value
and overwrite your number, but the number is still stored in the history
of the blockchain. Later, you will see how you can impose access restrictions
so that only you can alter the number.

.. warning::
    Be careful with using Unicode text, as similar looking (or even identical) characters can
    have different code points and as such are encoded as a different byte array.

.. note::
    All identifiers (contract names, function names and variable names) are restricted to
    the ASCII character set. It is possible to store UTF-8 encoded data in string variables.

.. index:: ! subcurrency

Subcurrency Example
===================

The following contract implements the simplest form of a
cryptocurrency. The contract allows only its creator to create new coins (different issuance scheme are possible).
Anyone can send coins to each other without a need for
registering with a username and password, all you need is an Ethereum keypair.

::

    pragma solidity >=0.5.0 <0.7.0;

    contract Coin {
        // The keyword "public" makes variables
        // accessible from other contracts
        address public minter;
        mapping (address => uint) public balances;

        // Events allow clients to react to specific
        // contract changes you declare
        event Sent(address from, address to, uint amount);

        // Constructor code is only run when the contract
        // is created
        constructor() public {
            minter = msg.sender;
        }

        // Sends an amount of newly created coins to an address
        // Can only be called by the contract creator
        function mint(address receiver, uint amount) public {
            require(msg.sender == minter);
            require(amount < 1e60);
            balances[receiver] += amount;
        }

        // Sends an amount of existing coins
        // from any caller to an address
        function send(address receiver, uint amount) public {
            require(amount <= balances[msg.sender], "Insufficient balance.");
            balances[msg.sender] -= amount;
            balances[receiver] += amount;
            emit Sent(msg.sender, receiver, amount);
        }
    }

This contract introduces some new concepts, let us go through them one by one.

The line ``address public minter;`` declares a state variable of type :ref:`address<address>`.
The ``address`` type is a 160-bit value that does not allow any arithmetic operations.
It is suitable for storing addresses of contracts, or a hash of the public half
of a keypair belonging to :ref:`external accounts<accounts>`.

The keyword ``public`` automatically generates a function that allows you to access the current value of the state
variable from outside of the contract. Without this keyword, other contracts have no way to access the variable.
The code of the function generated by the compiler is equivalent
to the following (ignore ``external`` and ``view`` for now)::

    function minter() external view returns (address) { return minter; }

You could add a function like the above yourself, but you would have a function and state variable with the same name.
You do not need to do this, the compiler figures it out for you.

.. index:: mapping

The next line, ``mapping (address => uint) public balances;`` also
creates a public state variable, but it is a more complex datatype.
The :ref:`mapping <mapping-types>` type maps addresses to :ref:`unsigned integers <integers>`.

Mappings can be seen as `hash tables <https://en.wikipedia.org/wiki/Hash_table>`_ which are
virtually initialised such that every possible key exists from the start and is mapped to a
value whose byte-representation is all zeros. However, it is neither possible to obtain a list of all keys of
a mapping, nor a list of all values. Record what you
added to the mapping, or use it in a context where this is not needed. Or
even better, keep a list, or use a more suitable data type.

The :ref:`getter function<getter-functions>` created by the ``public`` keyword
is more complex in the case of a mapping. It looks like the
following::

    function balances(address _account) external view returns (uint) {
        return balances[_account];
    }

You can use this function to query the balance of a single account.

.. index:: event

The line ``event Sent(address from, address to, uint amount);`` declares
an :ref:`"event" <events>`, which is emitted in the last line of the function
``send``. Ethereum clients such as web applications can
listen for these events emitted on the blockchain without much
cost. As soon as it is emitted, the listener receives the
arguments ``from``, ``to`` and ``amount``, which makes it possible to track
transactions.

To listen for this event, you could use the following
JavaScript code, which uses `web3.js <https://github.com/ethereum/web3.js/>`_ to create the ``Coin`` contract object,
and any user interface calls the automatically generated ``balances`` function from above::

    Coin.Sent().watch({}, '', function(error, result) {
        if (!error) {
            console.log("Coin transfer: " + result.args.amount +
                " coins were sent from " + result.args.from +
                " to " + result.args.to + ".");
            console.log("Balances now:\n" +
                "Sender: " + Coin.balances.call(result.args.from) +
                "Receiver: " + Coin.balances.call(result.args.to));
        }
    })

.. index:: coin

The :ref:`constructor<constructor>` is a special function run during the creation of the contract and
cannot be called afterwards. In this case, it permanently stores the address of the person creating the
contract. The ``msg`` variable (together with ``tx`` and ``block``) is a
:ref:`special global variable <special-variables-functions>` that
contains properties which allow access to the blockchain. ``msg.sender`` is
always the address where the current (external) function call came from.

The functions that make up the contract, and that users and contracts can call are ``mint`` and ``send``.

The ``mint`` function sends an amount of newly created coins to another address.
The :ref:`require <assert-and-require>` function call defines conditions that reverts all changes if not met.
In this example, ``require(msg.sender == minter);`` ensures that only the creator of the contract can call ``mint``,
and ``require(amount < 1e60);`` ensures a maximum amount of tokens. This ensures that there are no overflow errors in the future.

The ``send`` function can be used by anyone (who already
has some of these coins) to send coins to anyone else. If the sender does not have
enough coins to send, the ``require`` call fails and provides the
sender with an appropriate error message string.

.. note::
    If you use
    this contract to send coins to an address, you will not see anything when you
    look at that address on a blockchain explorer, because the record that you sent
    coins and the changed balances are only stored in the data storage of this
    particular coin contract. By using events, you can create
    a "blockchain explorer" that tracks transactions and balances of your new coin,
    but you have to inspect the coin contract address and not the addresses of the
    coin owners.

.. _blockchain-basics:

*****************
Blockchain Basics
*****************

Blockchains as a concept are not too hard to understand for programmers. The reason is that
most of the complications (mining, `hashing <https://en.wikipedia.org/wiki/Cryptographic_hash_function>`_,
`elliptic-curve cryptography <https://en.wikipedia.org/wiki/Elliptic_curve_cryptography>`_,
`peer-to-peer networks <https://en.wikipedia.org/wiki/Peer-to-peer>`_, etc.)
are just there to provide a certain set of features and promises for the platform. Once you accept these
features as given, you do not have to worry about the underlying technology - or do you have
to know how Amazon's AWS works internally in order to use it?

.. index:: transaction

Transactions
============

A blockchain is a globally shared, transactional database.
This means that everyone can read entries in the database just by participating in the network.
If you want to change something in the database, you have to create a so-called transaction
which has to be accepted by all others.
The word transaction implies that the change you want to make (assume you want to change
two values at the same time) is either not done at all or completely applied. Furthermore,
while your transaction is being applied to the database, no other transaction can alter it.

As an example, imagine a table that lists the balances of all accounts in an
electronic currency. If a transfer from one account to another is requested,
the transactional nature of the database ensures that if the amount is
subtracted from one account, it is always added to the other account. If due
to whatever reason, adding the amount to the target account is not possible,
the source account is also not modified.

Furthermore, a transaction is always cryptographically signed by the sender (creator).
This makes it straightforward to guard access to specific modifications of the
database. In the example of the electronic currency, a simple check ensures that
only the person holding the keys to the account can transfer money from it.

.. index:: ! block

Blocks
======

One major obstacle to overcome is what (in Bitcoin terms) is called a "double-spend attack":
What happens if two transactions exist in the network that both want to empty an account?
Only one of the transactions can be valid, typically the one that is accepted first.
The problem is that "first" is not an objective term in a peer-to-peer network.

The abstract answer to this is that you do not have to care. A globally accepted order of the transactions
will be selected for you, solving the conflict. The transactions will be bundled into what is called a "block"
and then they will be executed and distributed among all participating nodes.
If two transactions contradict each other, the one that ends up being second will
be rejected and not become part of the block.

These blocks form a linear sequence in time and that is where the word "blockchain"
derives from. Blocks are added to the chain in rather regular intervals - for
Ethereum this is roughly every 17 seconds.

As part of the "order selection mechanism" (which is called "mining") it may happen that
blocks are reverted from time to time, but only at the "tip" of the chain. The more
blocks are added on top of a particular block, the less likely this block will be reverted. So it might be that your transactions
are reverted and even removed from the blockchain, but the longer you wait, the less
likely it will be.

.. note::
    Transactions are not guaranteed to be included in the next block or any specific future block,
    since it is not up to the submitter of a transaction, but up to the miners to determine in which block the transaction is included.

    If you want to schedule future calls of your contract, you can use
    the `alarm clock <http://www.ethereum-alarm-clock.com/>`_ or a similar oracle service.

.. _the-ethereum-virtual-machine:

.. index:: !evm, ! ethereum virtual machine

****************************
The Ethereum Virtual Machine
****************************

Overview
========

The Ethereum Virtual Machine or EVM is the runtime environment
for smart contracts in Ethereum. It is not only sandboxed but
actually completely isolated, which means that code running
inside the EVM has no access to network, filesystem or other processes.
Smart contracts even have limited access to other smart contracts.

.. index:: ! account, address, storage, balance

.. _accounts:

Accounts
========

There are two kinds of accounts in Ethereum which share the same
address space: **External accounts** that are controlled by
public-private key pairs (i.e. humans) and **contract accounts** which are
controlled by the code stored together with the account.

The address of an external account is determined from
the public key while the address of a contract is
determined at the time the contract is created
(it is derived from the creator address and the number
of transactions sent from that address, the so-called "nonce").

Regardless of whether or not the account stores code, the two types are
treated equally by the EVM.

Every account has a persistent key-value store mapping 256-bit words to 256-bit
words called **storage**.

Furthermore, every account has a **balance** in
Ether (in "Wei" to be exact, `1 ether` is `10**18 wei`) which can be modified by sending transactions that
include Ether.

.. index:: ! transaction

Transactions
============

A transaction is a message that is sent from one account to another
account (which might be the same or empty, see below).
It can include binary data (which is called "payload") and Ether.

If the target account contains code, that code is executed and
the payload is provided as input data.

If the target account is not set (the transaction does not have
a recipient or the recipient is set to ``null``), the transaction
creates a **new contract**.
As already mentioned, the address of that contract is not
the zero address but an address derived from the sender and
its number of transactions sent (the "nonce"). The payload
of such a contract creation transaction is taken to be
EVM bytecode and executed. The output data of this execution is
permanently stored as the code of the contract.
This means that in order to create a contract, you do not
send the actual code of the contract, but in fact code that
returns that code when executed.

.. note::
  While a contract is being created, its code is still empty.
  Because of that, you should not call back into the
  contract under construction until its constructor has
  finished executing.

.. index:: ! gas, ! gas price

Gas
===

Upon creation, each transaction is charged with a certain amount of **gas**,
whose purpose is to limit the amount of work that is needed to execute
the transaction and to pay for this execution at the same time. While the EVM executes the
transaction, the gas is gradually depleted according to specific rules.

The **gas price** is a value set by the creator of the transaction, who
has to pay ``gas_price * gas`` up front from the sending account.
If some gas is left after the execution, it is refunded to the creator in the same way.

If the gas is used up at any point (i.e. it would be negative),
an out-of-gas exception is triggered, which reverts all modifications
made to the state in the current call frame.

.. index:: ! storage, ! memory, ! stack

Storage, Memory and the Stack
=============================

The Ethereum Virtual Machine has three areas where it can store data-
storage, memory and the stack, which are explained in the following
paragraphs.

Each account has a data area called **storage**, which is persistent between function calls
and transactions.
Storage is a key-value store that maps 256-bit words to 256-bit words.
It is not possible to enumerate storage from within a contract, it is
comparatively costly to read, and even more to initialise and modify storage. Because of this cost,
you should minimize what you store in persistent storage to what the contract needs to run.
Store data like derived calculations, caching, and aggregates outside of the contract.
A contract can neither read nor write to any storage apart from its own.

The second data area is called **memory**, of which a contract obtains
a freshly cleared instance for each message call. Memory is linear and can be
addressed at byte level, but reads are limited to a width of 256 bits, while writes
can be either 8 bits or 256 bits wide. Memory is expanded by a word (256-bit), when
accessing (either reading or writing) a previously untouched memory word (i.e. any offset
within a word). At the time of expansion, the cost in gas must be paid. Memory is more
costly the larger it grows (it scales quadratically).

The EVM is not a register machine but a stack machine, so all
computations are performed on a data area called the **stack**. It has a maximum size of
1024 elements and contains words of 256 bits. Access to the stack is
limited to the top end in the following way:
It is possible to copy one of
the topmost 16 elements to the top of the stack or swap the
topmost element with one of the 16 elements below it.
All other operations take the topmost two (or one, or more, depending on
the operation) elements from the stack and push the result onto the stack.
Of course it is possible to move stack elements to storage or memory
in order to get deeper access to the stack,
but it is not possible to just access arbitrary elements deeper in the stack
without first removing the top of the stack.

.. index:: ! instruction

Instruction Set
===============

The instruction set of the EVM is kept minimal in order to avoid
incorrect or inconsistent implementations which could cause consensus problems.
All instructions operate on the basic data type, 256-bit words or on slices of memory
(or other byte arrays).
The usual arithmetic, bit, logical and comparison operations are present.
Conditional and unconditional jumps are possible. Furthermore,
contracts can access relevant properties of the current block
like its number and timestamp.

For a complete list, please see the :ref:`list of opcodes <opcodes>` as part of the inline
assembly documentation.

.. index:: ! message call, function;call

Message Calls
=============

Contracts can call other contracts or send Ether to non-contract
accounts by the means of message calls. Message calls are similar
to transactions, in that they have a source, a target, data payload,
Ether, gas and return data. In fact, every transaction consists of
a top-level message call which in turn can create further message calls.

A contract can decide how much of its remaining **gas** should be sent
with the inner message call and how much it wants to retain.
If an out-of-gas exception happens in the inner call (or any
other exception), this will be signaled by an error value put onto the stack.
In this case, only the gas sent together with the call is used up.
In Solidity, the calling contract causes a manual exception by default in
such situations, so that exceptions "bubble up" the call stack.

As already said, the called contract (which can be the same as the caller)
will receive a freshly cleared instance of memory and has access to the
call payload - which will be provided in a separate area called the **calldata**.
After it has finished execution, it can return data which will be stored at
a location in the caller's memory preallocated by the caller.
All such calls are fully synchronous.

Calls are **limited** to a depth of 1024, which means that for more complex
operations, loops should be preferred over recursive calls. Furthermore,
only 63/64th of the gas can be forwarded in a message call, which causes a
depth limit of a little less than 1000 in practice.

.. index:: delegatecall, callcode, library

Delegatecall / Callcode and Libraries
=====================================

There exists a special variant of a message call, named **delegatecall**
which is identical to a message call apart from the fact that
the code at the target address is executed in the context of the calling
contract and ``msg.sender`` and ``msg.value`` do not change their values.

This means that a contract can dynamically load code from a different
address at runtime. Storage, current address and balance still
refer to the calling contract, only the code is taken from the called address.

This makes it possible to implement the "library" feature in Solidity:
Reusable library code that can be applied to a contract's storage, e.g. in
order to implement a complex data structure.

.. index:: log

Logs
====

It is possible to store data in a specially indexed data structure
that maps all the way up to the block level. This feature called **logs**
is used by Solidity in order to implement :ref:`events <events>`.
Contracts cannot access log data after it has been created, but they
can be efficiently accessed from outside the blockchain.
Since some part of the log data is stored in `bloom filters <https://en.wikipedia.org/wiki/Bloom_filter>`_, it is
possible to search for this data in an efficient and cryptographically
secure way, so network peers that do not download the whole blockchain
(so-called "light clients") can still find these logs.

.. index:: contract creation

Create
======

Contracts can even create other contracts using a special opcode (i.e.
they do not simply call the zero address as a transaction would). The only difference between
these **create calls** and normal message calls is that the payload data is
executed and the result stored as code and the caller / creator
receives the address of the new contract on the stack.

.. index:: selfdestruct, self-destruct, deactivate

Deactivate and Self-destruct
============================

The only way to remove code from the blockchain is when a contract at that
address performs the ``selfdestruct`` operation. The remaining Ether stored
at that address is sent to a designated target and then the storage and code
is removed from the state. Removing the contract in theory sounds like a good
idea, but it is potentially dangerous, as if someone sends Ether to removed
contracts, the Ether is forever lost.

.. warning::
    Even if a contract is removed by "selfdestruct", it is still part of the
    history of the blockchain and probably retained by most Ethereum nodes.
    So using "selfdestruct" is not the same as deleting data from a hard disk.

.. note::
    Even if a contract's code does not contain a call to ``selfdestruct``,
    it can still perform that operation using ``delegatecall`` or ``callcode``.

If you want to deactivate your contracts, you should instead **disable** them
by changing some internal state which causes all functions to revert. This
makes it impossible to use the contract, as it returns Ether immediately.