#CryptoExplained: A Brief History of Ethereum

The crypto space moves fast, and Ethereum has singlehandedly changed the crypto landscape over the last 10 years with significant innovations that have come to define the space. 

2013

Ethereum was conceptualized by Vitalik Buterin who has become one of the key figures in the crypto ecosystem. He published his concept in the form of a white paper, similar to the way Bitcoin was introduced to the world. This white paper included his ideas for a world computer called the Ethereum Virtual Machine, and smart contracts.

2014

The Ethereum Initial Coin offering launched in 2014 and successfully raised $18 Million USD. The sale had 2 parts: a pre-sale which allocated Ethereum to early contributors and supporters and a public sale with an initial exchange rate of 2000 Eth for 1 BTC. The funds raised were used for the development of the platform, and a portion of the Eth was set aside for use by the Ethereum foundation to grow the ecosystem. In addition to Vitalik, the founders of the Ethereum Network included Gavin Wood who went on to found Polkadot, and Joseph Lubin who founded Consensys. The Ethereum ICO became the template for ICO’s in the ICO boom of 2017.

2015

The first Live release of Ethereum launched and was called “Frontier”. It launched on July 30th. The creation of the Genesis block marked the exact start of the network.

From the official blog at the time of the launch:

“The Dev team joins me in thanking each and every one of you for your support during the past year and half. It’s incredible to see the progress that has taken place since that humble first commit on Christmas Eve 2013. The vision of a censorship-proof ‘world computer’ that anyone can program, paying exclusively for what they use and nothing more, is now a reality.”

2016

The DAO hack took place. The DAO was a decentralized autonomous organization that was designed to be a new way to allocate funds to projects. Due to a vulnerability in the code 3.6 million eth worth a total of over 70 Million USD was stolen. This led to a controversial move by the Ethereum community who decided to fork the code to version before the hack occurred and recovered the funds. This was controversial because it questioned the immutability of the Eth ledger. Eth purists continued the version with the hack, and this gave birth to the Ethereum Classic, a network that’s been running with the original Ethereum code since 2016.

2017

The ICO boom was one of the most exciting periods in Ethereum History. ICO stands for Initial Coin Offering, and ICOs paved the way for entirely new ways to fund new businesses. The boom also saw the advent of scam ICOs which relied on nefarious tactics like Pump and Dump to steal investor funds. Over $1B in funding was raised during the ICO boom. 

This year also saw the launching of Crypto Punks, which paved the way for the NFT craze. Crypto punks are rare collectible NFTs and their value has increased significantly over the years. Many crypto punks are owned anonymously.

2018

Uniswap launched as one of the first decentralized exchanges. It was a significant innovation in the crypto economy as it allowed anyone to exchange tokens built on the Ethereum ERC 20 standard and it popularized the use of Automated Market Makers or AMMs. Since its launch, Uniswap and other decentralized exchanges have grown to the point where they are likely to overtake centralized exchanges in volume. The FTX crisis in 2022 has made DEXs even more valuable as they are unlikely to be manipulated in the same way.

2020

The most significant event in 2020 was the decision by the Ethereum community to move to Proof of Stake which would reduce the energy consumption of the network by 99%. In December 2020 Ethereum launched the genesis chain to begin the process. As part of the process, ‘Validators’ locked in 32 ETH (approx. 20000 USD at the time) for an unspecified amount of time to help secure the network and help it make the transition. Many skeptics believed at the time that this would mean the end of Ethereum, as a transition from Proof of Work to Proof of Stake had never been attempted.

This year also saw the DeFi boom. DeFi stands for decentralized finance and most people agree that this has changed the way finance works around the world and will continue to usher in financial innovations that are accessible to more and more people. DeFi is expected to do to the financial industry what the internet did to the Print and Media industries. It will enable anyone to provide financial services just like the internet enabled anyone to become a content creator and publish to large audiences.

2021

This year had many major events in crypto all of which culminated in all-time highs for both Bitcoin and Ethereum. Transaction volumes were some of the highest ever seen and led to extremely high fees for applications running on Ethereum. All the while the Ethereum developers worked diligently to prepare for the merge which still did not have a date and would mark the complete transition to Proof of Stake.

Ethereum also implemented the London hard fork which turned Ethereum into a deflationary asset. By burning Ethereum with every transaction the amount of Ethereum being burned began to exceed the amount being minted, resulting in a reduction of supply. This means that over time the value of Ethereum is likely to increase as more apps utilize it and increase demand, while supply decreases.

2022

The year of crashes and the merge! Terra Luna and FTX tanked the crypto market, but Ethereum and the DeFi ecosystem kept working as designed and withstood an incredible stress test created by malicious centralized actors. In doing so Ethereum helped prove that DeFi was here to stay and was a far superior alternative to the centralized systems we are used to.

And then on September 15th, 2022, it happened. The Ethereum network performed an unprecedented feat and successfully transitioned to Proof of Stake. The network experienced no downtime, no errors, and no malicious activity. It defied the skeptics and ushered in a new era of innovation.

2023

And that brings us to the Shanghai upgrade completed just a week ago. The primary purpose of this upgrade was to allow stakers to withdraw the Ethereum they locked into the network in 2019 to help secure the transition. Skeptics expected significant withdrawals that would briefly reduce the price of Ethereum. But this has not happened yet, and instead the price of Ethereum has risen. Most people expect this price increase to continue as more institutions begin to add Ethereum to their balance sheets since now it can be withdrawn within a reasonable amount of time.