How Ether guarantees the traceability of assets on the chain

One of the key features of Ether technology is traceability, which means that every transaction that occurs on the Ether blockchain can be traced back to its origin and flow path. How is this traceability guaranteed? In this article, we will explore how Ether guarantees the traceability of assets on the chain.

Transaction structure in Ether

In Ether, smart contracts are closely associated with transactions. The transaction contains information about the sender, receiver, amount and optional data, and the smart contract defines the rules and conditions of the transaction, enabling automated execution.

Ether transactions are recorded in the blockchain in a similar way to Bitcoin, but the structure can be more complex. In Ether, a transaction can contain multiple inputs and outputs, each of which references a previous output, much like the Bitcoin UTXO model. Each item in the output specifies the number of assets and the address of the recipient, while the inputs must provide a signature for the corresponding asset to be considered valid, meaning that each transaction can be traced back to where it came from and where it went.

Ether's state tree

Unlike Bitcoin, Ether is an account-based model. In Ether, each account has a state that can record information such as balance, code, and storage. These accounts and their states make up Ether's state tree.

Each block contains a snapshot of the current state tree, which means that it is possible to trace the state of each account at a given moment. And the execution of a transaction actually changes the state of one or more accounts in the state tree. Each account has a unique address in the state tree, and different transactions operate on different accounts, which can all be traced back to specific transactions.

Ethereum's data structure allows every transaction to be traced back to its origin and destination, ensuring that any transfer of assets can be tracked and traced. This provides a more transparent and controllable platform for financial institutions and regulators, and a broader space for the expansion of blockchain applications.