What is the difference between an Externally Owned Account (EOA) and a Contract Account?

Understanding Externally Owned Accounts (EOA)

1. An Externally Owned Account is controlled directly by a private key, which means only the holder of that key can initiate transactions from the account.

2. EOAs do not have any associated code; they are simple addresses used to send and receive transactions on the blockchain.
3. These accounts are typically created when a user generates a wallet using tools like MetaMask or Ledger, resulting in a public address and a corresponding private key.
4. Transactions from EOAs require a digital signature generated using the private key to be valid on the network.
5. They can deploy smart contracts and interact with existing ones but cannot hold executable logic within themselves.

Differences in Transaction Initiation

1. Only EOAs can initiate transactions on their own because they possess private keys that allow for cryptographic signing.

2. Contract Accounts cannot start transactions independently; they can only respond to incoming messages triggered by EOAs or other contracts.
3. When an EOA sends a transaction, it pays gas fees using its native token balance, usually ETH on Ethereum.
4. A Contract Account may hold tokens and ETH, but it relies on external triggers to execute functions or transfer assets.
5. This distinction creates a clear hierarchy where human-controlled wallets act as entry points into decentralized applications.

Structure and Capabilities of Contract Accounts

1. A Contract Account contains executable code stored on the blockchain, written in languages like Solidity or Vyper.

2. Once deployed, the contract’s code cannot be altered unless explicitly designed with upgradeability features.
3. These accounts have a state—meaning they can store data such as balances, ownership records, or game scores.
4. Every Contract Account has an address, just like an EOA, but interactions with it involve executing predefined functions rather than simple fund transfers.
5. They can call functions in other contracts, create new contracts, and manage complex logic such as token distribution or automated market making.

Security and Control Implications

1. Since EOAs depend entirely on private key security, losing access to the key results in permanent loss of funds and control.

2. Multi-signature wallets are often built as Contract Accounts to add layers of authorization before executing transactions.
3. Smart contract bugs or vulnerabilities can lead to irreversible exploits, especially if large amounts of value are locked in the contract.
4. Unlike EOAs, Contract Accounts can enforce rules—for example, restricting withdrawals during certain periods or requiring approvals.
5. Phishing attacks often target EOAs by tricking users into signing malicious transactions, while contract-level risks stem more from coding errors.

Frequently Asked Questions

Can a Contract Account own another Contract Account?Yes, a Contract Account can deploy and control another contract. The deploying contract becomes the owner if programmed to claim ownership, allowing it to invoke administrative functions in the newly created contract.

Is it possible for an EOA to have no balance?Yes, an EOA can exist with zero balance. The account still exists on the blockchain as long as it has been used to send or receive at least one transaction. It can receive funds later even after being inactive.

Do Contract Accounts pay gas fees?Contract Accounts do not pay gas fees directly. Instead, the entity initiating the interaction—usually an EOA—bears the cost of execution. The sender covers all computational expenses when triggering a function in a contract.

How can you tell if an address is an EOA or a Contract Account?By checking the address on a block explorer like Etherscan, you can determine its type. If the address has verified contract code, it's a Contract Account. If not, and it shows only transaction history, it's likely an EOA.