What is Ethereum
Ethereum is an open-source, blockchain-based platform that enables developers to build and deploy decentralized applications (DApps) and smart contracts. Unlike Bitcoin, which primarily functions as a digital currency, Ethereum’s versatility has made it a cornerstone of the decentralized finance (DeFi) ecosystem and a host for numerous innovations in the blockchain space.
2013
Vitalik Buterin, a programmer and co-founder of Bitcoin Magazine, proposed Ethereum in a whitepaper, envisioning a platform that extends blockchain’s capabilities beyond financial transactions to support decentralized applications.
Vitalik Proposes
Ethereum in White Paper
By 2014, the development of Ethereum had begun under Ethereum Switzerland GmbH (EthSuisse).
Other founders include Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin.[5]
The Ethereum Foundation, a Swiss non-profit organization, was established to oversee its progress. To fund the project, a public crowd sale was launched, where participants purchased Ether (ETH) using Bitcoin. This effort raised over $18 million, laying the groundwork for Ethereum’s future.
Development
2014
Launch
2015
On July 30, 2015, Ethereum’s “Frontier” release went live, initiating the network’s blockchain operations. This launch enabled developers to deploy and test smart contracts for the first time and included the Go client developed by Jeffrey Wilcke.
The DAO Incident and Network Fork
2016
In May 2016, The Decentralized Autonomous Organization (DAO), a venture capital fund built on Ethereum, raised a record $150 million through a crowdsale.
However, in June 2016, a vulnerability in the DAO’s code was exploited, leading to the loss of 3.6 million ETH. To address the situation, Ethereum underwent a contentious hard fork on July 20, 2016, splitting into two blockchains: Ethereum (ETH) and Ethereum Classic (ETC).
Enterprise Adoption and
Emergence of NFTs
2017
In February 2017, the Enterprise Ethereum Alliance (EEA) was formed, bringing together startups, research groups, and Fortune 500 companies to explore Ethereum’s enterprise applications. Major members included Microsoft, Intel, and J.P. Morgan.
That same year, Ethereum became the foundation for the burgeoning Initial Coin Offering (ICO) movement, facilitating the launch of numerous blockchain projects and tokens.
Additionally, Ethereum saw the emergence of Non-Fungible Tokens (NFTs), with projects like CryptoPunks and CryptoKitties gaining immense popularity and showcasing Ethereum’s versatility beyond financial applications.
Transition to Ethereum 2.0
2020
On December 1, 2020, Ethereum launched the Beacon Chain as Phase 0 of Ethereum 2.0.
This marked the beginning of Ethereum’s transition from a proof-of-work to a proof-of-stake consensus mechanism, aimed at improving scalability and reducing energy consumption.
ICO Boom and Regulatory Scrutiny
2018
Ethereum played a pivotal role in the ICO boom of 2018, enabling many projects to raise funds by issuing their own tokens.
While this brought significant attention and growth to Ethereum, it also attracted regulatory scrutiny due to the prevalence of fraudulent activities and unregulated fundraising efforts.
Network Upgrades and DeFi Expansion
2021
On April 14, 2021, Ethereum implemented the “Berlin” upgrade, followed by the “London” upgrade on August 5, 2021.
The London upgrade introduced EIP-1559, which restructured Ethereum’s transaction fee system by burning a portion of fees, reducing ETH supply growth and adding a deflationary aspect to the network.
In 2021, Ethereum also experienced explosive growth in decentralized finance (DeFi) applications, further solidifying its position as a dominant force in the blockchain ecosystem.
The Merge
2022
On September 15, 2022, Ethereum successfully completed “The Merge,” transitioning fully from a proof-of-work to a proof-of-stake consensus mechanism.
This monumental shift reduced Ethereum’s energy consumption by approximately 99%, reinforcing its commitment to sustainability and scalability.
Shanghai Upgrade and Layer 2 Scaling
2023
In April 2023, Ethereum implemented the Shanghai upgrade, enabling validators to withdraw staked ETH for the first time.
This increased liquidity and flexibility for network participants. In parallel, Layer 2 scaling solutions like Arbitrum and Optimism gained traction, significantly improving Ethereum’s scalability and transaction throughput.
Dencun Upgrade and
Institutional Adoption
2024
On March 13, 2024, Ethereum implemented the “Dencun” upgrade, which included the Deneb and Cancun updates.
This upgrade introduced Proto-Danksharding (EIP-4844), reducing storage costs and improving scalability for Layer 2 rollups.
Later in 2024, Ethereum reached a major milestone when the U.S. Securities and Exchange Commission approved the first spot Ether ETFs. Institutions like BlackRock, Fidelity, and Invesco launched these products, further integrating Ethereum into mainstream finance.
