History of ETH: The rise of the Ethereum blockchain
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History of ETH: The rise of the Ethereum blockchain

History of ETH: The rise of the Ethereum blockchain

Introduction to Ethereum (ETH)

Ethereum is an open-source, public service that employs blockchain technology to enable smart contracts and cryptocurrency trading without the involvement of a middleman, but where did it come from? The cryptocurrency world is a young sector that essentially started with the inception of Bitcoin (BTC) in 2009. Bitcoin came into play as an experiment offering two components — an internet-based asset and the underlying blockchain technology on which that asset runs. From there, people used the online currency and blockchain concepts to come up with other projects and assets. 

Ethereum is a blockchain that hosts a notable amount of functionality for developers building solutions on Ethereum as a base. The Ethereum blockchain has a native coin that is known as Ether (ETH), which is used to pay for activity on the Ethereum blockchain. The coin also trades on crypto exchanges and fluctuates in value. Other assets built on the Ethereum blockchain such as ERC-20 tokens, for example, require ETH as payment for fees associated with any transactions of those assets. The Ethereum blockchain was written in the Solidity programming language. A nonprofit entity, the Ethereum Foundation, serves as one of the overseers of the Ethereum project. 

Unlike Bitcoin, with its mysterious creation and creator(s), Ethereum’s history is more straightforward. Vitalik Buterin and several others co-created Ethereum, but the details surrounding the massive blockchain’s backstory warrant further explanation.

Related: The history of Bitcoin: When did Bitcoin start?

Ethereum’s early days

Although the Ethereum blockchain has a number of founders, Vitalik Buterin was the one who initially published a white paper explaining the concept of Ethereum in November 2013. Following Buterin’s initial work, other brains jumped on board in various capacities to help bring the project to fruition. Vitalik Buterin, Gavin Wood, Charles Hoskinson, Amir Chetrit, Anthony Di Iorio, Jeffrey Wilcke, Joseph Lubin and Mihai Alisie are all considered co-founders of Ethereum. 

Ethereum gained awareness in early 2014 when Buterin brought the concept of the blockchain project into the public eye at a Bitcoin conference in Miami, Florida. The project raised capital via an initial coin offering (ICO) later the same year, selling millions of dollars worth of ETH in exchange for funds to use for the development of the project. Between July 22 and Sept. 2, 2014, the asset sale sold over $18 million worth of ETH, paid for in Bitcoin. 

Although ETH coins were purchasable in 2014, the Ethereum blockchain did not actually go live until July 30, 2015, meaning ETH buyers had to wait for the blockchain to launch before they could move or use their ETH. 

Why create the Ethereum blockchain in the first place? One reason would be that the Ethereum blockchain allows for more versatility in terms of building on the blockchain and the surrounding ecosystem. 

To learn more about Ethereum, check out Cointelegraph’s Ethereum guide for beginners.

Ethereum’s stages of progress

Although the July 2015 birth of the Ethereum blockchain brought the project to life, its development would be a lengthy process spanning years. Called Frontier, the first iteration of the Ethereum blockchain simply got the chain off the ground and running, hosting smart contracts and proof-of-work (PoW) mining. The initial launch gave folks the opportunity to set up their mining apparatuses and start building on the network. 

Since Ethereum’s initial launch, the blockchain has taken on many other updates as part of the blockchain’s progression, such as updates called Byzantium, Constantinople and the Beacon Chain. Each update has altered certain aspects of the blockchain. Beacon Chain, for example, launched the consensus layer (previously called Ethereum 2.0) — a shift from a proof-of-work to a proof-of-stake (PoS) consensus mechanism. Byzantium and Constantinople each brought a number of changes to the Ethereum blockchain, including a mining payout reduction down to three ETH from five (after Byzantium and preparation for the PoS transition during Constantinople). 

A significant change to the Ethereum blockchain is the shift over to PoS initiated to scale the blockchain. Numerous projects have built applications on the Ethereum blockchain over the years. Still, the network struggled when traffic notably increased, such as the days of CryptoKitties — digital collectible cats underpinned by the Ethereum blockchain — in 2017. 

In 2020 and 2021, decentralized finance (DeFi) projects built on Ethereum received significant attention, bringing Ethereum’s scalability issues to the forefront as high network fees plagued participants. Ethereum’s transition to the consensus layer and PoS aims to bring scalability to the well-known blockchain, although the shift occurs in stages.

The DAO hack

Some of the Ethereum blockchain’s updates over time were a planned part of Ethereum’s progression, although others were adjustments based on events or factors that called for changes to the blockchain. The decentralized autonomous organization (DAO) fork, for example, served as an effort to circumvent a hack. DAOs are a general concept in the crypto industry, whereas The DAO was a specific DAO from the crypto industry’s earlier days. 

For a better understanding of DAOs in general, check out — What is a decentralized autonomous organization, and how does a DAO work?

A project that launched in 2016, the DAO served as an Ethereum-based decentralized autonomous organization fund that essentially democratized the fund’s asset allocation. Users don’t have to trust anyone else in the group with DAOs, they just need to trust a DAO’s code which is completely visible and verifiable by anyone. In short, interested parties sent ETH to a pool of funds within the DAO and received DAO tokens in return. These tokens could, at the time, be used to vote on where the DAO would allocate its pool of capital. The DAO attracted about $150 million worth of ETH in 2016, given ETH’s United States dollar price at the time. 

In 2016, however, the DAO suffered a hack that took over 3.6 million ETH from the DAO’s asset pool. The Ethereum community disagreed on how to handle the ordeal. Part of the community wanted to alter the Ethereum blockchain to essentially nullify the hack. Opposing community members disagreed, expressing that such a play would go against the overarching concept of blockchain technology’s immutability. 

A majority of the Ethereum community agreed with the play to alter the blockchain in response to the hack, leading to a hard fork of the network. The hard fork resulted in two separate blockchains and two separate native assets on those chains. The Ethereum blockchain forked off to regain the assets lost from the hack. The resulting forked asset and blockchain is the one that now holds the Ethereum name. What is now called Ethereum Classic (ETC) is the original version of the Ethereum blockchain. 

The Ethereum Merge upgrade: Transition from PoW to PoS consensus

Considering the environmental concerns associated with PoW mining, the long-awaited integration of the Beacon Chain’s consensus layer with the Ethereum mainnet execution layer was proposed and carried out by the Ethereum founders and developers. So, what happened to Eth2? Ethereum Foundation has rebranded Eth2 to the consensus layer to save users from scams like swapping ETH for ETH2 tokens. 

Also, it does not mean that two distinct Ethereum networks exist because Eth1 will handle transactions and their execution. At the same time, Eth2 will manage proof-of-stake consensus, but there will be only one network: Ethereum. So, is Ethereum mining dead after the Merge?

Despite the flawless implementation of the Merge, Chinese miner Chandler Guo favored miners and forked the Ethereum blockchain to preserve the PoW consensus method. This new fork is called ETHW or proof-of-work Ethereum, in which miners will continue to solve complex mathematical puzzles to receive ETH rewards (similar to Ethereum Classic). 

Related: What is PoW Ethereum (ETHW), and how does it work?

Ethereum price history

Ethereum’s price history reveals an eventful ride over the years. In ETH’s early days, the coin traded below $2.00 at times. The Ethereum price chart shows ETH’s price history on Cointelegraph’s Ethereum price index. ETH traded below $15.00 per coin in early 2017 and surged all the way up to around $1,400 per ETH in January of the following year. 

Following that high, ETH proceeded to fall all the way back down near and below $100 at times in the subsequent months and years. The asset eventually trended back upward, surpassing the $4,000 mark in 2021. However, the post-Merge Ethereum price dropped by 55% against BTC

Ethereum’s future after the Merge

Ethereum is a significant player in the crypto space, as evidenced by its market capitalization and the vast array of solutions that entities have built on the Ethereum blockchain. However, the network has faced difficulty in scaling. Its transition over to the consensus layer aims to solve its challenges. However, only time will tell regarding the results. 

Moreover, Vitalik Buterin claimed the Merge would follow another four developmental phases: The Surge, The Verge, The Purge and The Splurge. Nonetheless, it remains to be seen if upcoming updates would enable Ethereum to more effectively manage a wave of arising regulatory issues over digital assets and public blockchains.

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