Ethereum

Ethereum provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes. Ethereum also provides a cryptocurrency token called ether (ETH), which can be transferred between accounts and is used to compensate participant nodes for computations performed. Ethereum transactions require the payment of gas fees, which are calculated through an internal transaction fee mechanism. Gas fees help verify transactions and prevent the network from being overcome by spam. The Ethereum network runs on a blockchain secured by miners. These miners run a proof-of-work system consensus algorithm called Ethash.

Vitalik Buterin proposed the Ethereum protocol in his 2013 whitepaper with the goal of creating a general-purpose blockchain platform to support decentralized applications and smart contracts. Buterin had previously contributed within the Bitcoin developer community and found limitations to the Bitcoin scripting language, including lack of Turing-completeness, value-blindness, lack of state, and blockchain-blindness. Ethereum was formally announced at the January 2014 North American Bitcoin Conference in Miami, Florida.

Vitalik Buterin reveals Ethereum at Bitcoin Miami 2014.

In early 2014, additional developers joined Buterin, including Gavin Wood (Lead C++ Developer), Jeffrey Wilcke (Lead Go Developer), and Anthony Di Iorio, Mihai Alisie, Joseph Lubin, and Stephen Tual in primarily non-development roles. The Ethereum Foundation was founded in July 2014 in Switzerland. By April 2014, Gavin Wood published the Ethereum Yellow Paper describing the formal definition and technical specifications of the Ethereum Virtual Machine (EVM).

Ethereum was funded by an initial coin offering (ICO) launched in July 2014. According to the Ethereum Foundation, within the first two weeks, more than 50 million ether were sold. In total, the forty-two-day public ETH pre-sale raised 31,591 bitcoins worth approximately $18 million dollars at the time.

Prior to the official launch of Ethereum, a series of proof-of-concept versions were released, culminating in the beta release named Olympic on May 9, 2015. The purpose of Olympic was to reward those testing blockchain limits during the pre-release period. A total of 25,000 ETH were rewarded to community members for their contributions; prizes were distinguished by the four categories of transaction activity, virtual machine usage, mining prowess, and general punishment.

The initial public launch named Frontier was released on July 30, 2015. This release provided instructions for generating the first block in the Ethereum blockchain known as the Genesis block, which was created with a unique parameter from the hash of the Ethereum testnet block #1,028,201 and contained all transactions from the ether launch sale.

Homestead, the first planned hard fork of the network, went live on March 14, 2016, at block #1,150,000. The upgrade included protocol changes to the network that gave an increased ability for upgrades and improved security. Homestead underwent a series of Ethereum Improvement Proposal (EIP) updates between 2016 and 2017.

The Metropolis release was split into two phases, Byzantium and Constantinople. The former was introduced in October 2017 at block #4,370,000. Shortly before its release, Byzantium verified its first zk-SNARK proof. A total of nine EIPs followed Byzantium's release. Constantinople was released on February 28, 2019, at block 7,280,000.

Ethereum 2.0 is a major upgrade that will migrate the Ethereum network from proof-of-work to proof-of-stake, making the network more efficient and scalable. The proof-of-stake system is called Casper. It enables a new mining method in which network users lock up their ether coins to become network contributors, instead of having to use expensive and energy-intensive mining equipment. To contribute via this method, each staker is required to lock up a minimum of thirty-two ethers, or join a staking pool in which multiple people's ethers are combined. The system change is dubbed "the Merge."

Phase 0 of Ethereum 2.0 launched in December 2020 with the Beacon chain, which is responsible for creating new blocks, verifying transactions, staking rewards, and managing shard chains. The Merge is scheduled for September 19, 2022. The Merge is expected to change the valuation of Ethereum.