At the age of 19, Vitalik Buterin published a white paper introducing Ethereum as “a next-generation smart contract and decentralized application platform”, putting Ethereum on the map.
Ethereum is currently the second-largest cryptocurrency in terms of market value, accounting for around 18% of the cryptocurrency market. Its success is tied to a creatively appealing idea, a well-executed development process, and the community’s constant support.
In this article, we will look back at the history of Ethereum’s development and provide an outlook for what is to come.
Vitalik Buterin left World of Warcraft in 2010 after the game’s creator, Blizzard, weakened his Warlock’s Siphon Life spell. This devastated the 16-year-old and made him realize the horrors of centralized systems.
Buterin got interested in bitcoin after leaving the game in 2011 and co-founded Bitcoin Magazine. As a result, he dropped out of the University of Waterloo to pursue his crypto aspirations. He then travelled around the world exploring various crypto projects, eventually concluding that they were all too focused on specialized applications. He thus created Ethereum, which was relatively general.
Ethereum was initially proposed in late 2013 and created in 2014. Buterin was only 21 years old when Ethereum was established in 2015 with the support of seven other founders.
Vitalik Buterin compares the eight Ethereum blockchain founders to JRR Tolkien’s close-knit “fellowship of the ring”. Feuds and competition have marked the group’s history. Two of its members branched off to form Ethereum’s competitors, Cardano and Polkadot. Buterin also mentioned in one of his interviews that his biggest regret was selecting seven other founders “indiscriminately” to establish the network.
Ethereum is described on its official website as “A community-run technology powering the cryptocurrency ether (ETH) and thousands of decentralised applications.” Its native currency is Ether (ETH). In terms of market capitalization, it is only second to Bitcoin. However, Ethereum’s rapid rise has many believing that it may soon outnumber Bitcoin in terms of use.
Ethereum is a platform for developing decentralized applications or apps (Dapps). That is, it supports the development of programs that are not controlled by a single individual (including the creator of the program).
Externally Owned Accounts and Contract Accounts are the two types of accounts available on Ethereum. In the case of an externally owned account, a private key controls an externally owned account, which has no associated code and can transmit transactions. While a contract account cannot begin transactions on its own, it does have a function that executes only when it gets a transaction from an EOA.
The primary purpose of Bitcoin was to replace existing currencies as a medium of exchange and a store of value. Ethereum, on the other hand, seeks to establish a system that gives people greater control over their data. It also enables the development and execution of blockchain-based applications. Ether is required to operate these apps and have this level of power on the Ethereum network.
Another difference would be that there would never be more than 21 million bitcoins and the last bitcoin is expected to be mined around the year 2140. The Ethereum platform technically has an unlimited supply. However, the maximum yearly supply of Ether is 18 million.
Lastly, bitcoin uses proof of work as its consensus mechanism. Ethereum started with a proof of work, but recently it is undergoing major reforms under Ethereum 2.0, where they will be switching to a Proof-of-Stake consensus method.
This is a timeline of all the major milestones, forks, and updates to the Ethereum blockchain
- 2013- Buterin presented his white paper explaining the Ethereum concept.
- January 2014 – Ethereum was initially launched during the North American Bitcoin Conference in Miami. Many developers were drawn to the concept.
- April 1, 2014- Gavin Wood published the “Yellow Paper” based on the technical implementation of the Ethereum protocol.
- July 22 – September 2, 2014, the Ethereum currency was officially available for purchase for 42 days. By the end of the year, Ethereum held its first crowdfunding, raising more than $18 million through the sale of its native token, ether.
- The Ethereum launch process was separated into four major stages to give its development some structure. Each level signifies a mandatory network-wide update, after which outdated versions are no longer supported.
- July 30, 2015–March 14, 2016: “Frontier” phase: Ethereum’s simplest network structure. Its primary features were to allow users to mine ether and operate smart contracts. The original stage’s goal was to get the network running so that the mining processes could be set up and developers could test their decentralised apps (DApps).
- March 14, 2016–October 16, 2017: “Homestead” phase: improved infrastructure to solve security concerns. The phase was made safe and stable.
- July 20, 2016- The DAO fork was created as a consequence of the 2016 DAO attack, in which an unsecured DAO contract was hacked and over 3.6 million ETH was stolen. The fork transferred cash from the defective contract to a new contract that only had one function: withdraw. Anyone who lost money could withdraw one ETH for every 100 DAO tokens they had in their wallets. The Ethereum community voted on this course of action. Some miners refused to fork since the DAO event was not a protocol flaw and formed Ethereum Classic.
- October 16, 2017–January 2, 2020: “Metropolis” phase: Aimed at addressing the issues that arise with expansion and growth. The interface was designed for novice users. This phase was devoted to enhancing Ethereum’s security, privacy, and scalability. Due to the complexities of the upgrade, it was issued in two stages: Byzantium and Constantinople.
- January 2, 2020–2022 – “Serenity” phase: The Serenity stage is currently under construction. Also known as Ethereum 2.0, it aims to address two major issues that Ethereum is currently facing: a congested network that can only handle a limited number of transactions per second, resulting in an increase in gas fees for faster transactions, and the high energy consumption associated with the proof-of-work consensus mechanism. As a result, it is predicted that the Ethereum network will be switched from PoW to PoS. (Proof of Stake).
- Ethereum’s native token, Ether, was created in August 2014 via an initial coin offering (ICO). Over $16 million was raised for the initiative by selling 50 million ETHs at $0.31 per coin.
- Throughout 2016, Ethereum’s price fluctuated between $1 and $7, peaking at $11 before the DAO breach.
- In January 2017, the price of Ethereum was around $7; by the end of the year, it had increased by 10,000%.
- In 2018, Ethereum’s price reached an all-time high of $1,448, owing partly to the ICO frenzy, and was tremendously profitable for early investors. But this high did not last long as it ended the year at $141.
- The decreasing trend was caused by increased regulatory monitoring, which alarmed investors. There had been considerable talk of a worldwide campaign to reign in cryptocurrencies, with governments in China and India contemplating severe crackdowns on exchanges, trade and authorities.
- In 2019 and 2020, prices leveled down for nearly two years, with ETH fluctuating between $150 and $730.
- 2021 was the year of NFTs. In 2021, the NFT market surged and despite the hefty gas fees, Ethereum remained the most popular coin for NFTs. ETH increased from roughly $730 in late 2020 to $4,000 by May 2021, with another all-time high of $4,800 in November.
- Since the beginning of 2022, the price of Ethereum has fallen below $3,000.
Even after the slump in 2021, some people support Ethereum and expect it to reach $12,000 in 2022.
Ethereum is currently working on an upgrade to Ethereum 2.0. The complete upgrade process is divided into three phases. The first phase began on December 1, 2020. There are two more phases to be completed before the final release, which is scheduled for later this year.
Analysts predict that the price of Ethereum will not be impacted by sentiment, but other variables may come into play. Ethereum is in a fierce rivalry with its opponents, who are all working to solve the blockchain trilemma. This year’s chart movement will be determined by Ethereum’s efforts to close these gaps.
- Ethereum is a decentralized, open-source blockchain with smart contract capability primarily used to support Ether, the world’s second-largest cryptocurrency.
- Vitalik Buterin, a programmer, created Ethereum in 2013.
- Unlike Bitcoin, Ethereum focuses on improving functionality, which helped the blockchain become extremely popular as the first of its type.
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