Account-based Model

Understanding the Account-based Model

One of the many terms you encounter when venturing into the vast world of cryptocurrencies and blockchain is the "Account-based Model". It is a term that originates from the foundational elements of blockchain technology. To comprehend it in its entirety, we need to dive into the depth of blockchain mechanism.

What is an Account-based Model?

An Account-based Model is a framework that is present in certain blockchain networks. This model, unlike the UTXO model used by Bitcoin, tracks the entire transaction history of each account and stores the transactions on the blockchain ledger. The existence of the account, along with its balance, is the resultant of transaction history.

Operation of the Account-based Model

Within the Account-based Model, every participant in the network possesses an account. This account consists of an account balance and a transaction counter. The balance represents the amount of cryptocurrency the account holds. The counter, or nonce, increases with every action carried out by the account, portraying the total number of transactions completed.

Differences Between UTXO and Account-based Models

Contrasting UTXO model where every transaction needs its own input and output, the Account-based Model records the cumulative balance and the transaction amount being sent or received. This makes it simpler by showing the overall result without displaying every transaction detail.

Benefits of the Account-based Model

The Account-based Model used in blockchains, such as Ethereum, has certain advantages. The model's simplicity can lead to less complex smart contracts - programmable transactions, saving time and energy. The direct knowledge of one's balance is also user-friendly feature for those dealing with cryptocurrencies.