One night, a boy wept himself to sleep in Moscow Oblast, Russia. The boy who would later come to be known as the founder of the second largest blockchain was devastated as his favourite game’s character was deprived of an important element by the game developers. He immediately quit the fantastical game World of Warcraft (WoW) and called centralization his enemy.
Fast forward to a few years. When Vitalik learned about Bitcoin in 2011, he didn’t pay much attention to it. However, as Bitcoin’s popularity increased, Vitalik’s curiosity made him want to learn more about Bitcoin. He studied the political, economic, and technological sides of cryptocurrency. He co-founded Bitcoin Magazine and began blog writing to dwell on innovation.
Vitalik, at this point, had married his thoughts to cryptocurrencies, blockchain, and Bitcoin. He left college and went worldwide to get deeper insights into the Bitcoin projects.
In his expedition, he found that Bitcoin programming was lacking in some respects, and blockchain, as a tech, could be used to decentralize other fields than just digital payments. He wanted to adopt a Turing complete programming language that allows developers to write programs and applications rather than Bitcoin’s Turing incomplete language. Vitalik shared his ideas with like-minded people, and soon there was a team working on the concept of a generalized blockchain that could be used to host various projects.
How Did It All Start?
In 2013, Vitalik Buterin publicized his idea of cryptocurrency entirely different from Bitcoin and other cryptocurrency projects that had limited capabilities. He idealized a blockchain whose core job was not just to digitize payments but also that could help solve real-world use cases. Buterin dropped in a new term, previously unknown and unheard of, decentralized applications. He wanted to integrate open source software applications with blockchain technology to make them available through a P2P (peer-to-peer) mechanism such that they can be used everywhere rather than in a single system.
Now that the idea of ‘what to be’ was almost ready, the idea of ‘how to be’ was to be worked on. And what better place than Miami with Pina Coladas and Cafecitos to discuss the next step in Ethereum’s journey?
In January 2014, at the North American Bitcoin Conference in Miami, Buterin announced the project Ethereum. Next, the founders, namely Vitalik Buterin, Gavin Wood, Charles Hoskinson, and Anthony Di Lorio, who was the financier of the project, leased a beach house in Miami to mull over the Ethereum project.
It was not just a fancy of a programmer and crypto enthusiast published in a white paper – Ethereum was coming into being, and it became clearer that it needed time and investments.
A reporter for Wired, an American magazine on emerging technologies, was present at the beach house to witness the unravelling of geniuses in the crypto world. In his report, he said, “Buterin, it turned out, was the reason everyone was there in the first place. Two months earlier, he had published a whitepaper describing an impossibly ambitious technology, one that looked beyond Bitcoin’s mission of enabling unstoppable, unmediated digital payments, and envisioned a platform for autonomous software of all kinds.“
Why did Buterin, the walking computer, choose ‘Ethereum’?
Buterin wrote in the Bitcoin Magazine, “I thought [those in the Bitcoin community] weren’t approaching the problem in the right way. I thought they were going after individual applications; they were trying to kind of explicitly support each [use case] in a sort of Swiss Army knife protocol.”
Buterin, as we all have learnt so far, was engrossed deeply in conceiving Ethereum and revolutionizing the crypto world. Hence, his creation’s name also required to be intangible like the digital asset itself but not entirely out of grasp. Buterin said, as published in ‘The Prophets of Cryptocurrency Survey the Boom and Bust,’ that he had taken the name “Ethereum” from a list of elements under science fiction on Wikipedia. He said, “I immediately realised that I liked it better than all of the other alternatives that I had seen; I suppose it was the fact that [it] sounded nice and it had the word ‘ether‘, referring to the hypothetical invisible medium that permeates the universe and allows light to travel.”
In Early 2014, Ethereum was on the Get-go
A few boxes had been checked from the list, the name was decided, and the programmers decided to make it a not-for-profit organisation. The funding was secured, and the next thing was to start development.
A Swiss company, Ethereum Switzerland GmbH (EthSuisse), officially began programming the software needed to build Ethereum. The technology incorporated smart contracts as an integral part. Smart contracts are self-executing contracts that execute themselves automatically once the set of predetermined conditions is met.
The project was funded by an online public sale of Ethereum bought using Bitcoin in the months of July and August.
Ethereum is born
In 2016, Ethereum hit a major bull run by adopting DAO on its network and raised $150 million in a crowd sale to fund the development. DAO, or decentralised autonomous organization, is a bunch of smart contracts built on the network that promise transparency and government control free operations.
However, everything didn’t go as planned. Later in the same year, DAO was attacked by a hacker who exploited $50 million raising a question about the stability and security of the platform. The Ethereum’s founders decided to split the network to work on its shortcomings. Hence, Ethereum and Ethereum Classic were born due to the DAO fork. Ethereum took a new path, and Ethereum Classic continued the legacy.
From 2014 to 2017, Ether’s price remained fluctuating in the range of $0.71 to $21. In 2017 when the crypto market experienced bullish momentum, the price of ETH gunned up to $100. After that, the price kept increasing until it peaked in June at $414. After facing several peaks and troughs in the market, Ether’s price rose to $1418 in 2018, and then it started to fall. In 2021, Ether’s price settled at a high of $4,379 in the months between February and May. Ethereum is the second-largest blockchain in the world today.
Recently, Ethereum’s scalability and its exorbitant gas prices have been attracting the attention of critics. Not to forget the carbon footprint left behind by the mining of the coin, raising the concerns of the crypto community. Another downside is the congestion on the network, which raises the inefficiency in a time of high computational demand.
A new project of Ethereum 2.0 is being introduced to reduce all the above-stated problems. It will shift to Proof of Stake from Proof of Work consensus to reduce the carbon emissions by 99.96%. Ethereum 1.0 will serve as the execution layer, while Ethereum 2.0 will be the consensus layer. Instead of transitioning from ETH 1.0 to ETH 2.0, Vitalik is aiming to merge the two.
The journey to conceive Ethereum is full of twists and turns. It started with a fancy shattering of a rather odd boy who developed a groundbreaking open source software network using decentralization.
If we could only watch the unravelling of 8 genius heads behind the second largest cryptocurrency!
Ridley Scott heard that. The legendary filmmaker who directed movies like “Blade Runner” is bringing the history behind Ethereum to the big screen. The movie “The Infinite Machine” is based on its namesake book, “The Infinite Machine: How an Army of Crypto Hackers is Building the Next Internet with Ethereum.”
The Swiss knife of all things crypto – Ethereum – has had quite an interesting journey, and the future seems equally exciting!