The introduction of Bitcoin in 2009 heralded the emergence of an utterly new asset class that has disrupted the financial sector. By leveraging the power of blockchain technology, Bitcoin became the first cryptocurrency to operate outside the confines of any government or corporation.
The apparent success of Bitcoin led to further innovation. In time, people realized that the blockchain could have more use cases beyond being a means to record payment transactions. This led to the development of the Ethereum network.
What is Ethereum?
Ethereum is a decentralized, open-source software that allows the deployment of smart contracts and the development of decentralized applications(dApps). Smart contracts are blockchain-based programs that execute when preset conditions are met. Meanwhile, dApps are applications that run on the blockchain and use smart contracts.
Since launching in July 2015, Ethereum has become the largest smart contract platform with over 1.45 million smart contracts and 2700 dApps deployed. The entire network and its wide range of applications are powered by the native ether (ETH) token. ETH is currently the second largest digital asset by market capitalization behind Bitcoin.
The Ethereum blockchain is scalable, programmable, and decentralized, making it possible for anyone to build on its secured network. Hence, it has become the top choice for developers and businesses looking to build life-changing technologies.
The Future Of Ethereum
In its eight years, Ethereum has developed from an idea to a blockchain supported by a vast army of developers. The need for the network to evolve to meet the ever-changing demands and growth has been constant. However, it still has a long way to go before achieving its vision.
Ethereum hopes to be a scalable, secure, and energy-efficient network, hence the need to transition into a PoS network. Previous upgrades like the beacon chain have laid the necessary groundwork for its transitioning. However, several other updates are earmarked to bring its full vision to fruition.
- 2022: The merge, a highly anticipated update that will see Ethereum fully transition into the PoS mechanism, is expected to go live soon. This phase will see the Beacon chain combine with the Ethereum mainnet and end the PoW consensus. This would set the stage for future scaling upgrades while reducing the network’s energy consumption by 99.95%
The Merge is expected to occur in Q3 or Q4 of 2022. However, following the success of several public testnets, developers have set a tentative date of September 15 for the merge. Once completed, there would be no ETH 1 or ETH 2; with validators instead of miners assigned to secure the network.
- 2023-2024: After the Merge, Sharding, a multi-phase upgrade to improve Ethereum’s scalability is slated to follow. Sharding offers a safe way to distribute the need for data storage, making roll-ups even more affordable and nodes simpler to manage. They make it possible for layer 2 solutions to provide minimal transaction fees while utilizing Ethereum’s security. The upgrades are expected to ship sometime in 2023 once the merge is completed.
Ethereum has come in leaps and bounds throughout its existence, and the efforts of its founders and developers must be commended. Despite these impressive milestones, it still requires more effort before realizing its true vision. Nonetheless, with its strong developer community and first mover advantage, it is safe to say that it will eventually reach its intended goal.
History Of Ethereum
Ethereum was in development for a long time before its eventual launch in 2015. The blockchain has several co-founders, but the 19-year-old Vitalik Buterin published its whitepaper in November 2013.
Following this initial work, several others, including Gavin Wood, Charles Hoskinson, Amir Chetrit, Anthony Di Iorio, Jeffrey Wilcke, Joseph Lubin, and Mihai Alisie, all joined in various capacities to help launch the project. Together with Buterin, they are all considered co-founders of Ethereum.
To attain its current level of success, the Ethereum blockchain has undertaken several changes, which provides it with a rich historical background. It has experienced a hack, several forks, and upgrades to tackle challenges in using the network. The development of Decentralized Finance (DeFi) and Non-fungible tokens (NFTs) also played a pivotal role in Ethereum’s history.
- 2013: This period saw the initial development period of Ethereum, with Buterin publishing the whitepaper in late 2013. He argued that the blockchain and Bitcoin could benefit other applications aside from money while requiring a more robust language for its development. This eventually led to the proposal to create a new platform with a more sophisticated scripting language.
- 2014: Early 2014 saw Ethereum gain public awareness as its concept was explained to attendants of the Bitcoin conference in Miami, Florida. Formal developmental works on the underlying software also started with the idea of smart contracts described in a yellow paper. By the end of this year, Ethereum had its first crowdfunding through an Initial coin offering (ICO) and raised about $18 million.
- 2015: Despite already selling ETH tokens, the Ethereum blockchain did not launch until July 30, 2015. The development of the new network was divided into phases, with the kick-off phase called the Frontier, starting the blockchain. This initial phase allowed miners to set up their mining process while allowing developers to build on the network.
- 2016: In the second phase of the network’s implementation, the Homestead was implemented to address security issues on the network. This year saw a decentralized autonomous organization (DAO) hack that drew attention to Ethereum’s security vulnerabilities. A hard fork of the network occurred to recover the stolen funds. However, not everyone agreed to the hard fork leading to the creation of a parallel blockchain named Ethereum Classic.
- 2017: This year saw the first dApp on Ethereum to gain traction. CryptoKitties, first Ethereum NFTs, launched in November and proved to be massively popular among enthusiasts causing an influx of users and increased transaction volume on the network. This caused the entire blockchain to become clogged with users waiting days to process their transactions.
The year 2017 also saw ETH experience a significant price run-up. In the early part of the year, the token price surged to $400 before plummeting slightly above $100. However, the price eventually spiked above the $1,000 mark to become the second most valuable digital asset behind Bitcoin. It has since continued to hold that position.
- 2018-2019: During this period, there were several modifications under the metropolis phase of the Ethereum blockchain development. These upgrades—Byzantium, Constantinople, and Istanbul—were designed to help scale the network due to the emergence of DeFi and ICOs.
- 2020-2021: The final phase of the Ethereum network upgrade commenced in this period. This phase, referred to as Ethereum 2.0, will see the blockchain tackle network congestion, high gas fees, and energy-intensive mining challenges. The serenity upgrade had several sub-updates, all designed to transition the network from its initial proof-of-work (PoW) consensus to a proof-of-stake (PoS) mechanism.
This stage commenced with the launch of the staking contract, with users expected to stake at least 32 ETH to become validators. Ethereum enthusiasts have staked over 12.98 million ETH in anticipation of this transition. Subsequently, the Beacon chain, the spine for the new ETH 2, went live in December 2020.
Furthermore, several upgrades—Berlin, London, Altair, Arrow Glacier— were launched in this period. Notably, the London update or EIP-1559 introduced a burning mechanism into the network. So far, over 2.5 million ETH has been burned since the update went live in August 2021.
Finally, the growing adoption of digital assets saw Ethereum’s value reach its all-time high of $4,891 in November 2021. This means the smart contract native token has recorded over 57,000% increase since its launch.
- What was Ethereum’s starting price?
ETH tokens were sold at a price of $0.31 during the ICO.
- When was Ethereum started?
The Ethereum blockchain officially started in 2015.
- When will the Ethereum merge be?
In the third or fourth quarter of 2022.
- What came first, Ethereum or Bitcoin?
Bitcoin was the first cryptocurrency.