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Ethereum History
About Ethereum
Ethereum is a network of many communities and a collection of tools that allow people to transact and communicate without governance by a single entity. Users retain control over their data and the information that is shared. Ethereum’s native token, ether, is used for transactions in certain activities on the network.
Who are the founders of Ethereum?
Programmer Vitalik Buterin, a Russian-Canadian who continues to serve as the de facto leader of Ethereum, made the initial proposal for Ethereum. In 2014, Buterin published a whitepaper outlining a competing blockchain network to Bitcoin. It would go beyond its existing concepts, allowing users to design decentralized applications (dApps) using a new programming language. Because of the expansive goals outlined in the whitepaper of the creator of Ethereum, several early adopters of the technology expressed interest in working with Buterin to bring his ideas to life.
In addition to Buterin, Charles Hoskinson, an American entrepreneur, was a chief executive briefly until 2015, when he left due to misunderstandings on the project’s non-profit structure. Anthony Di Lorio contributed to the branding and marketing sides of Ethereum. Mihai Alisie, a Swiss tech and media entrepreneur who was Bitcoin Magazine’s Editor-in-Chief, was the Ethereum Foundation’s Vice President until 2015.
In 2014, Ethereum grew, and three key figures, often called the co-founders of Ethereum, joined. Joseph Lubin, a Princeton-educated computer scientist who previously worked for Goldman Sachs, co-founded the Ethereum Foundation and created ConsenSys, a startup in Brooklyn for seeding the Ethereum ecosystems’ applications and infrastructure.
An English computer scientist, Gavin Wood, created the network’s first testnet. He also created the Ethereum yellow paper detailing the network’s ledger and smart contracts. Jeffrey Wilcke, a programmer, transcribed Ethereum’s platform version in Google’s Go programming language that later became Go Ethereum (Geth).
Ethereum’s influence: Vitalik Buterin and his contributions
At 19, Vitalik Buterin wrote a white paper describing “a next-generation smart contract and decentralized application platform,” laying the groundwork for Ethereum. Before starting to travel widely, Buterin attended his first Bitcoin conference in San Jose, California, in 2012. By the time Buterin returned from his journey in 2014, he had won a $100,000, two-year Peter Thiel Fellowship to start developing the Ethereum platform.
Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joe Lubin were among the co-founders who withdrew to a house where they came out with the code to support Buterin’s concept. Later, co-founders Alisie, Amir Chetrit, and Jeffrey Wilcke were included on this list.
When Ethereum launched in July 2015, it became the first smart contract platform in the world. Buterin remains the public face of Ethereum and engages with the open-source community.
What makes Ethereum unique in the world of cryptocurrencies?
Ethereum is unique in the world of cryptocurrencies for several reasons. First, Ethereum introduced the concept of smart contracts. Smart contracts are self-executing agreements with predefined conditions and rules, allowing developers to create decentralized applications (dApps) on the Ethereum blockchain.
Smart contracts are executed on the Ethereum Virtual Machine (EVM), which ensures that the code is executed consistently and accurately across participating nodes in the Ethereum network. Furthermore, smart contracts can interact with each other and call functions from other contracts, such as sending and receiving ether and other tokens, and exchange data based on predefined conditions. These smart contracts allow developers to come up with a wide range of use cases, such as decentralized finance (DeFi), non-fungible tokens (NFTs), and decentralized exchange (DEXs).
Ethereum Name Service (ENS) and its benefits
Ethereum Name Service (ENS) is a decentralized and open-source technology on the Ethereum blockchain which provides a naming system allowing people to map human-readable names such as “myname. eth” to machine-readable identifiers such as Ethereum addresses. The domain owner has complete ownership over the subdomains it encompasses.
ENS consists of two key components called a registry and resolvers. A registry is a smart contract that keeps track of a mapping between domain names and Ethereum addresses. On the other hand, mapping domain names to their associated Ethereum addresses falls on the resolvers.
There are multiple benefits associated with ENS. Some of these are:
- Increased security: ENS avoids security risks from manually entering Ethereum addresses.
- Human-readable names: ENS allows users to have their addresses in a human-readable form, eliminating the need to remember complex and long Ethereum addresses.
- Expansion options: ENS allows users to have expansion options whereby users can add information such as content hashes, among other data, on their domain names.
- Better accessibility: ENS makes accessing dApps and other web3 apps easy since users don’t have to enter long wallet addresses to connect to apps manually. Instead, they can use their short domain or subdomains depending on their use.
Ethereum’s potential rivals: Ethereum killers
While Ethereum has unique capabilities, slow transaction speeds and high network fees have lowered Ethereum’s adoption over the years. As a result, other rivals have come up to solve its inadequacies, aka “Ethereum killers,” which are competing directly with Ethereum.
Many projects have emerged as Ethereum killers but have not gained traction as crypto market leaders. Polkadot, Cardano, Solana, Algorand, and Avalanche are some of the largest by market cap. These projects process transactions at a higher rate than Ethereum and have lower fees. However, Ethereum is still a more robust technology regarding decentralization and security.
Even though Ethereum killers have come up to compete with Ethereum, most crypto analysts don’t think the network will “die” soon. Ethereum has a major lead over its competitors as the world’s first smart contract blockchain. In addition, many of the cryptocurrencies in web3 are still working on Ethereum protocols, and many developers and validators are still working on the platform.
As of July 2023, Ethereum has a total of $28.785 billion locked in DeFi protocols, representing 57.51% of the total value locked (TVL) in all DeFi applications.
Ethereum network and upgrades
The Ethereum network has undergone several upgrades and improvements to enhance its scalability, functionality, and security.
Here is a list of the main Ethereum upgrades from its inception until 2023:
Frontier (July 30, 2015): The first live release of the Ethereum network. It allowed developers to start mining Ether and to begin building decentralized applications.
Homestead (March 14, 2016): The first production release of Ethereum, which included several protocol improvements and set the stage for future upgrades.
DAO Fork (July 20, 2016): A controversial hard fork in response to the DAO hack. It resulted in a split that created Ethereum (ETH) and Ethereum Classic (ETC).
Tangerine Whistle (October 18, 2016): This upgrade adjusted the pricing for certain operations to prevent spam attacks on the network.
Spurious Dragon (November 22, 2016): This upgrade included several changes to help with the denial-of-service attacks and added state clearing to reduce the size of the blockchain.
Byzantium (October 16, 2017): The first part of the Metropolis upgrade, which included improvements to privacy, security, and scalability.
Constantinople (February 28, 2019): The second part of the Metropolis upgrade, which improved efficiency and made future upgrades easier.
Istanbul (December 8, 2019): This upgrade improved interoperability with Zcash, added more flexibility to smart contracts, and adjusted gas costs for certain operations.
Muir Glacier (January 2, 2020): A network upgrade that delayed the “difficulty bomb,” a mechanism to encourage the network to transition to proof-of-stake.
Berlin (April 15, 2021): This upgrade included several EIPs that introduced gas cost adjustments for certain types of transactions, which aimed to mitigate against possible Denial of Service (DoS) attacks.
London (August 5, 2021): This upgrade included EIP-1559, which changed the way transaction fees were estimated on the Ethereum network and also introduced a mechanism to burn a portion of transaction fees, reducing the supply of Ether.
Arrow Glacier (December 9, 2021): The Arrow Glacier network upgrade pushed back the difficulty bomb by several months.
Altair (October 27, 2021): The Altair upgrade was the first scheduled upgrade for the Beacon Chain. It added support for “sync committees”—enabling light clients, and increased validator inactivity and slashing penalties as development progressed towards The Merge.
Gray Glacier (June 30, 2022): The Gray Glacier network upgrade pushed back the difficulty bomb by three months.
Bellatrix (September 6, 2022): The Bellatrix upgrade was the second scheduled upgrade for the Beacon Chain, preparing the chain for The Merge.
Paris (The Merge) (September 15, 2022): The Paris upgrade, also known as The Merge, marked the transition from the proof-of-work mining algorithm to the proof-of-stake consensus mechanism.
Shanghai (April 12, 2023): The Shanghai upgrade introduced staking withdrawals to the execution layer.
Capella (April 12, 2023): The Capella upgrade was the third major upgrade to the consensus layer (Beacon Chain), enabling staking withdrawals.
Deep dive into EIP-1559: Ethereum’s fee structure update
EIP-1559, proposed by Vitalik Buterin in 2019, was a significant step toward improving transaction efficiency on the Ethereum blockchain. This EIP, which can be published by anyone but must be approved by the core API developers, is primarily focused on changing the mechanism for transaction fees in the Ethereum network.
EIP-1559 introduced a new concept aimed at reforming the Ethereum fee market through two key changes. The first is the introduction of a variable block size mechanism, where the block size can vary from the current gas limit (referred to as the “target”) up to twice the current gas limit (referred to as the “hard per-block cap”). The second change is the introduction of a base fee, which is adjusted on a block-by-block basis and is mandatory for transactions to pay. Moreover, the base fee is burned, contributing to Ethereum’s deflationary nature.
The protocol replaces Ethereum’s auction-style fee mechanism with a market-based algorithm that adjusts the base fee up or down depending on network congestion. Coins are removed from circulation by burning the base fee, which is a departure from the previous system where miners earned it as a reward.
While the protocol does not necessarily reduce the gas fees paid, it makes them more predictable, such that fees can only go up or down by 1.125x per block. This protocol allows users to have a clearer understanding of what they will pay with each transaction.
EIP-1559 proposes variable block sizes that can expand up to twice the target gas limit of 15 million gas for each block. If the block size goes above the target, the base fee increases; if it goes below the target, the base fee decreases. This mechanism aims to prevent system overload by adjusting the base fee based on network congestion.
Exploring the Ethereum London Hard Fork and its impact
Ethereum London Hard Fork is one of the major improvements on the ethereum blockchain. A hard fork is a backward-incompatible (software update incompatible with the existing blockchain protocol) upgraded in a crypto network. A hard fork splits up a network into two different networks. Some of the hard forks that have come about in the past include EtherZero, metropolis, and Ethereum Classic.
The London Hard Fork brought about five new Ethereum Improvement Proposals (EIPs) on August 5, 2021, in preparation for Ethereum 2.0. The EIPs included EIP-1559, to improve the network’s transaction fee market, EIP-3541 to prevent deploying contracts beginning with OxEF, and EIP-3554, which delayed the Ice Age(increasing mining difficulty) until December 2021 to buy more time for Ethereum 2.0. The other two were EIP-3529 to reduce EVM gas refunds and EIP-3198 to return the base fee from a block.
The impact of the London hard fork has been significant for the Ethereum network and its users. EIP-1559 brought about a more predictable fee model hence improving user experience. It also allowed more time to transition to Ethereum 2.0 by postponing the Ice Age.
However, there was controversy over the miner’s rewards model change. Despite the tip option for miners, their profits would reduce drastically. In addition, the introduction of burning ETH from transaction fees could make ETH a deflationary asset over time.
Ethereum 2.0 and its advancements
Ethereum 2.0, Eth2, is an Ethereum blockchain upgrade aiming to increase the network’s speed, efficiency, and scalability to avoid bottlenecks and process more transactions. The upgrade is the largest yet in the network.
Eth2 has three phases. The first is the Beacon chain that came about in December 2020 to introduce native staking on the Ethereum blockchain. The second phase is “The Merge,” which happened in September 2022. During this phase, the Beacon Chain merged with Ethereum 1.0.
The final phase is the shard chains, whereby operations on a single blockchain are spread across 64 new chains. Through this, it becomes easier from a hardware perspective to run an Ethereum node as theory is; far less data is needed to get stored on a machine. This phase is yet to roll out but is expected to come in 2024.
Transitioning to Ethereum merge: Merging PoW and PoS
Ethereum 1.0 used proof-of-work as a consensus mechanism, while Ethereum 2.0 implements a proof-of-stake mechanism. In 2022, the network transitioned to PoS, whereby users could stake ETH and serve as validators, playing a role similar to miners in the PoW system.
Under PoS, the staked ETH acts as collateral, which can be “slashed” if the validator acts dishonestly. These validators are responsible for validating new blocks on the network and occasionally proposing new blocks themselves. Users must deposit 32 ETH into the deposit contract to participate as validators. After making the deposit, they join an activation queue that regulates the rate of new validators joining the network. Once activated, validators receive new blocks from peers on the network.
In Ethereum, validator votes are managed using “checkpoint” blocks. A checkpoint is the initial block of each epoch, which consists of 32 slots during which blocks are proposed and verified by validators and lasts 6.4 minutes.
Validators then vote on the validity of entire checkpoints and the validity of individual blocks. If a pair of checkpoints receives votes from at least two-thirds of the total staked ETH, the more recent checkpoint becomes “justified,” and the prior checkpoint, which was the intended endpoint in the previous epoch, is “finalized.”
The PoS mechanism brought about better energy efficiency, reduced the risk of centralization, and introduced lower barriers of entry due to reduced hardware requirements. However, the requirement to stake 32 ETH could be a significant barrier for some users. Also, there are economic penalties for misbehavior, making attacks that would compromise the network’s integrity costly and risky.
Ensuring security: How does the Ethereum network operate?
The Ethereum network consists of a distributed network of nodes, which are computers participating in the Ethereum blockchain. These nodes validate transactions and maintain a consensus on the network’s state. Once a transaction is submitted to the Ethereum network, the nodes verify the transaction’s digital signature, which ensures the rightful owner receives the funds. In case the blocks are tampered with, other nodes will reject them.
The network also relies on cryptographic algorithms to protect wallets, secure transactions, and ensure data integrity. Public-key cryptography is applied in digital signatures that verify and authenticate transactions. Cryptographic hash functions link blocks together and secures the blockchain’s integrity.
Ethereum applications and functionality
A decentralized application (dApp) combines a smart contract and a frontend user interface built on a decentralized network. On Ethereum, smart contracts are transparent and accessible; hence your dApp can even be part of a smart contract written by another person. Due to its open-ended nature, Ethereum has experienced many innovations, such as decentralized finance, initial coin offerings, and stablecoins.
Exploring Ethereum token standards and their uses
The Ethereum Request for Comments (ERC) family of token standards, which includes ERC-20 and ERC-721, has given rise to other widely used token standards. These guidelines are interfaces that show that a token’s smart contract responds to a given set of commands. As a result, a token’s characteristics and network compatibility are determined by its token standards.
In the Ethereum ecosystem, here are some of the common token standards:
- ERC-20: ERC-20 tokens are fungible, which means they are interchangeable and identical to other tokens of the same kind. They are commonly used in currency and commodity use cases, with 94 of the top 100 cryptocurrencies based on the ERC-20 token standard at its peak.
- ERC-621: ERC-621 tokens are similar to ERC-20 tokens apart from allowing later modification, such as minting and burning, of the token’s supply compared to ERC-20, which has only one token issuance event.
- ERC-827: ERC-827 enables a token holder to authorize a third party to spend or transfer the holder’s tokens. This capability opens up new opportunities, such as the capacity to automate specific processes while maintaining ERC-20 compatibility.
- ERC-721: ERC-721 allows the creation of non-fungible tokens (NFTs), which are unique. These are used in original artworks and collectibles, among other contexts.
Where can you buy and trade ethereum (ETH)?
The concept of Ethereum might seem complex to beginners. However, investing in ether (ETH) is easier than you think. Here’s a step-by-step process to buy ether:
- Pick a cryptocurrency exchange: The first step is to set up an account at your crypto exchange of choice. Some of the common crypto exchanges are Coinbase, Binance, and Kraken. In addition, make sure you do your research on trading fees for each exchange.
- Deposit fiat money: Deposit cash, in your fiat of choice, on the exchange you choose. You can either link your bank or card to access the funds.
- Buy ether: Once your account is funded, depending on how much you want to spend on ETH, you can now purchase the ETH. Navigate the platform to the buy section and select the trading pair you want to buy. Select the pair and make the purchase and select the Buy option. The ETH is then credited to your account.
- Store your ETH: You can store your ether in the exchange’s digital wallet, but it can be a security risk since hackers can access your crypto if they hack the exchange. Instead, you can transfer the ETH to another digital wallet or a cold wallet not connected to the internet for safety.
How many Ethereum (ETH) coins are there in circulation?
There is currently $120,319,073 ETH in circulation. While bitcoin has a maximum circulating supply of 21 million BTC, Ethereum’s supply is unlimited. When Buterin created the crypto, he set the network so there would be unlimited coins; hence, ETH cannot have a fixed security budget.
Ethereum price history
Ethereum was valued at under $1 throughout 2015 and did not experience much volatility throughout the year. In 2016, investors started noticing ether (ETH), and the price reached $2. After much back and forth, the Ethereum (ETH) price closed at around $8 that year.
ETH experienced its first breakthrough in 2017, massively benefiting from the social media hype. The price enjoyed massive volatility and closed the year around $772. In 2018, calls for regulation by central banks soared its reputation and was selling at $1,396 by January 12. The ETH price, however, dipped throughout the year. It finished the year selling at $141.
In 2020, the covid-19 pandemic affected the world economy, stifling the USD to the benefit of ETH. The price hovered around $600 and experienced little volatility throughout the year.
The NFT market gained global attention in 2021, and ETH being the most used coin in minting, buying, and trading NFTs, also experienced a massive leap. As per the latest ETH news, the coin soared to $4000 around May 2021 and reached an all-time high (ATH) of $4,800 in November.
The crypto winter of 2022 caused by the war in Ukraine and the global economic downturn also affected the price of ETH adversely. The ETH price is currently hovering around $2,284.85. Follow crypto.news for the latest information on Ethereum’s market performance.
FAQs
Is ETH a risky investment?
Yes, ETH may be considered a risky investment. While cryptocurrency has many potential benefits that include enabling greater innovation, efficiency, and transparency in various sectors and industries, it is still susceptible to certain risks that affect pretty much every crypto asset in the market today: price volatility, susceptibility to hacks, competition from alternative blockchains, and regulatory uncertainty.
Such risks mean that the value of your ETH investment could dip suddenly, steeply, and with little warning. Therefore, before investing in ETH, you’ll need to conduct your own research to see if the asset fits your vision and level of risk tolerance. Additionally, it is advisable to seek professional financial advice and only invest what you can afford to lose.
What is the all-time high ETH price?
The all-time high price of ETH is $4,878.26, achieved on November 10, 2021.
What was the initial Ethereum’s price?
Ethereum’s native token was initially priced at $0.31. That is how much it sold for when it was introduced to the market in an initial coin offering (ICO) in August 2014.
Can I use Ethereum (ETH) for everyday transactions?
Yes, you can use Ethereum for day-to-day transactions. There is a growing list of online and brick-and-mortar merchants that now support ETH payments for goods and services, including peer-to-peer marketplace Crypto Emporium, ecommerce platform Shopify, online travel agency Cheap Air, and American fast food restaurant chain Chipotle.
Is Ethereum’s price correlated with other cryptocurrencies?
In the past, certain studies indicated that ETH had the highest correlation to the rest of the crypto market, especially bitcoin. They mostly tended to move in the same direction and by similar percentages in response to certain market stimuli. However, with more cryptocurrencies gaining prominence and having different characteristics and use cases and a more diverse array of forces shaping the crypto market, this correlation has become more difficult to maintain.
ETH Price Statistics
Ethereum Price | $2,284.85 |
---|---|
Price Change 24h | -3.5% |
Price Change 7d | -9.36% |
Trading Volume 24h | $22,250,664,944 |
24H Low | $2,165.43 |
24H High | $2,409.07 |
Ethereum Market Cap
Market Cap Rank | #2 |
---|---|
Market Cap | $274,935,565,486 -3.49% |
Fully Diluted Valuation | $274,935,565,486 |
Ethereum Price History
All-Time High November 10, 2021 | $4,878.26 -53.17% |
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All-Time Low October 20, 2015 | $0.432979 527545.52% |
Ethereum Supply
Circulating Supply | $120,319,073 |
---|---|
Max Supply | -- |
Total Supply | $120,319,073 |
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