Brief History of Ethereum

Brief History of Ethereum

Ethereum was conceived in 2013 by a programmer named Vitalik Butterin. After researching and writing multiple articles for the Bitcoin magazine, Vitalik saw Bitcoin as a great innovation for eliminating intermediaries..

Beginner
10 Jun, 2022
4 mins

Ethereum was conceived in 2013 by a programmer named Vitalik Butterin. After researching and writing multiple articles for the Bitcoin magazine, Vitalik saw Bitcoin as a great innovation for eliminating intermediaries, but it was limited to just peer-to-peer transactions. Vitalik realized that blockchain technology could be used to disrupt almost all centralized platforms. In 2013 at the age of 19, Vitalik published a proposal for the Ethereum network. After gathering several developers to help build his project, Vitalik went on to present Ethereum at the 2014 Bitcoin conference in Miami. With much success, Ethereum was later launched in 2015.

The DAO

The DAO was an organization formed in 2016 by investors with the idea of creating a pool of funds that would be used to invest and make a profit for the investors. Unfortunately, there was a bug in the code that allowed an “attacker” to endlessly extract funds from the pool. After much debate, the investors proposed to hard fork the chain that would roll back the chain. This caused huge controversy as such an act violated one of the fundamental laws of a blockchain network being immutable. On the other hand, the “attacker” did not consider himself a thief but rather a person who read the contract more carefully and used it for what it was. In the end, the hard-fork decision was put to the vote and passed by a majority of 85%. This hard fork led to the creation of Ethereum as we know it today, and those who disagreed with this decision continued the original Ethereum blockchain, now known as Ethereum classic.

London Hard Fork

The London hard fork launched in August 2021 implemented the Ethereum Improvement Proposal EIP-1559, which introduced a gas fee structure with a base fee and an option to add a tip on top of the base fee. The base fee is then burned to reduce the overall supply, creating deflationary pressure on ETH. Though, the base fee still fluctuates depending on demand; thus, it does not do much to reduce the high gas fees. Additionally, it implemented EIP-3238, which has delayed the difficulty time bomb. The time bomb is a concept that was introduced to the Ethereum blockchain to increase the difficulty of mining new blocks at a certain date in order to incentivize miners to shift to the PoS consensus mechanism when it is launched in 2022.

Ethereum 2.0

The Ethereum network has faced criticism for its low scalability and high gas fees as it tries to tackle the blockchain trilemma proposed by Vitalik. Vitalik explains the blockchain trilemma as having to achieve a delicate balance of providing security, scalability, and decentralization within a blockchain. By choosing to optimize 2 of these components, the third component will be lacking; thus, Ethereum has chosen to optimize security and decentralization, which comes at the cost of low scalability that causes high gas fees. Additionally, the Ethereum blockchain still relies on a PoW consensus mechanism that has been criticized for being energy-intensive. To address these issues, Ethereum 2.0 is set to go live in 2022, with one of the main upgrades being to introduce sharding; a mechanism that will increase scalability by sharing the transaction process into other small (shards) blockchains. Furthermore, Ethereum 2.0 will move from a PoW to a PoS consensus mechanism and merge the beacon chain with the PoW chain. 


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