The History of Ethereum: The World’s First Programmable Blockchain
#TMBT or Take-Me-Back Tuesdays will be NFTing’s featured articles that will discuss the history of NFTs, cryptos, metaverses, blockchain, and everything that is about the web 3.0.
For our third #TMBT feature, we will discuss the history of the world’s first programmable blockchain — the Ethereum.
The cryptocurrency world is a young sector that essentially started with the inception of Bitcoin (BTC) in 2009. During this time, Bitcoin’s purpose is only as a mode of payment that is digital and does not require intermediaries or financial institutions to govern. Since then, people have used digital currencies together with blockchain concepts to come up with other projects and assets — and that’s how Ethereum was born.
What is Ethereum
Ethereum is described by the organization as “the world’s programmable blockchain,” positioning itself as an electronic, programmable network with many applications. In contrast, the Bitcoin blockchain was created only to support the bitcoin cryptocurrency. The Ethereum platform was founded with broad ambitions to leverage blockchain technology for many diverse applications both in the digital and real world.
Ethereum is an open-source public service that uses blockchain technology to facilitate smart contracts and cryptocurrency trading securely without a third party. It has its own native coin known as Ether (ETH) that is used to pay for activity on the Ethereum blockchain — and just like Bitcoin, Ether also fluctuates in value.
Notable assets built on the Ethereum blockchain are:
- ERC-20 tokens
Tether (USDT), Binance coin (BNB), USD coin (USDC), Dai (DAI)
A decentralized exchange facilitating trades from coin to coin.
- Axie Infinity
A play-to-earn NFT game that runs on the Ethereum blockchain where players collect in-game NFT creatures called Axies and put them against each other in battles.
A decentralized network that securely translates data from the real world to smart contracts on the blockchain and back via oracle software.
An open-sourced lending protocol on the Ethereum blockchain where lenders contribute various Ethereum-based assets into liquidity pools to earn rewards, while borrowers can place approved assets up for collateral to borrow against.
A marketplace for buying and selling NFTs, including Axies, unstoppable domains, digital art, and much more.
The Ethereum blockchain was written in the Solidity programming language. A non-profit entity, the Ethereum Foundation, serves as one of the overseers of the Ethereum project.
Ethereum’s history is straightforward unlike Bitcoin’s mysterious creation and creators. In 2013, a Canadian developer named Vitalik Buterin proposed a new platform which would allow for decentralized applications to usher in a new era of online transactions. Together with other co-founders, they developed Ethereum as a decentralized platform that would encourage the developer community to build upon, what was at the time, new technology with Smart Contracts and Dapps, which offer greater blockchain possibilities.
How is Ethereum different from Bitcoin?
While there are many similarities between Ethereum and Bitcoin, there are also significant differences. Here are a few:
- Bitcoin trades in cryptocurrency, while Ethereum offers several methods of exchange, including cryptocurrency (Ethereum’s native coin Ether), smart contracts and the Ethereum Virtual Machine (EVM).
- They are based on different security protocols: Ethereum uses a “proof-of-stake” system as opposed to the “proof-of-work” system used by Bitcoin.
- Bitcoin allows only public (permissionless or censor-proof) transactions to take place; Ethereum allows both permissioned and permissionless transactions.
- The average block time for Ethereum is significantly less than Bitcoin’s: 12 seconds versus 10 minutes. This translates into more block confirmations, which allows Ethereum’s miners to complete more blocks and receive more Ether.
- It is estimated that in 2021, only half of the Ether coins will be mined (a supply of more than 90 million tokens), but the majority of Bitcoins already have been mined (its supply is capped at 21 million).
- For Bitcoin, the computers (called miners) running the platform and verifying the transactions receive rewards. Basically, the first computer that solves each new block gets Bitcoins (or a fraction of one) as a reward. Ethereum does not offer block rewards and instead allows miners to take a transaction fee.
2013 — Whitepaper released
The introductory paper, published in 2013 by Vitalik Buterin, the founder of Ethereum, before the project’s launch in 2015.
2014 — Yellowpaper released & Ether sale
The Yellow Paper, authored by Dr. Gavin Wood, is a technical definition of the Ethereum protocol. Ether also officially went on sale for 42 days. During this time, you can own Ether using Bitcoin as payment method.
2015 — Frontier & Frontier thawing
Frontier was a live, but barebone implementation of the Ethereum project. It followed the successful Olympic testing phase. It was intended for technical users, specifically developers. Blocks had a gas limit of 5,000. This ‘thawing’ period enabled miners to start their operations and for early adopters to install their clients without having to ‘rush’.
The frontier thawing fork lifted the 5,000 gas limit per block and set the default gas price to 51 gwei. This allowed for transactions — transactions require 21,000 gas. The difficulty bomb was introduced to ensure a future hard-fork to proof-of-stake.
2016 — Several protocol changes and network upgrades for security
The Homestead fork that looked to the future. It included several protocol changes and a networking change that gave Ethereum the ability to do further network upgrades.
The DAO fork was in response to the 2016 DAO attack where an insecure DAO contract was drained of over 3.6 million ETH in a hack. The fork moved the funds from the faulty contract to a new contract with a single function: withdraw. Anyone who lost funds could withdraw 1 ETH for every 100 DAO tokens in their wallets.
This course of action was voted on by the Ethereum community. Any ETH holder was able to vote via a transaction on a voting platform. The decision to fork reached over 85% of the votes.
The Tangerine Whistle fork was the first response to the denial of service (DoS) attacks on the network (September/October 2016) including addressing urgent network health issues concerning underpriced operation codes.
The Spurious Dragon fork was the second response to the denial of service (DoS) attacks on the network (September/October 2016) including; tuning opcode pricing to prevent future attacks on the network, enabling “debloat” of the blockchain state, adding replay attack protection.
2017 — The Byzantium fork
The Byzantium fork reduced block mining rewards from 5 to 3 ETH, delayed the difficulty bomb by a year, added ability to make non-state-changing calls to other contracts, and added certain cryptography methods to allow for layer 2 scaling.
2019 — The Constantinople & Istanbul fork
The Constantinople fork ensured the blockchain didn’t freeze before proof-of-stake was implemented, optimized the gas cost of certain actions in the EVM, and added the ability to interact with addresses that haven’t been created yet.
The Istanbul fork optimized the gas cost of certain actions in the EVM, improved denial-of-service attack resilience, made Layer 2 scaling solutions based on SNARKs and STARKs more performant, enabled Ethereum and Zcash to interoperate, and allowed contracts to introduce more creative functions.
2020 — The Muir Glacier fork, Staking was deployed & Beacon Chain genesis
The Muir Glacier fork introduced a delay to the difficulty bomb. Increases in block difficulty of the proof-of-work consensus mechanism threatened to degrade the usability of Ethereum by increasing wait times for sending transactions and using dapps.
Staking was introduced to the Ethereum ecosystem. Although a Mainnet contract, it had a direct impact on the timeline for launching the Beacon Chain, an important Ethereum upgrade.
The Beacon Chain needed 16384 deposits of 32 staked ETH to ship securely. This happened on November 27, meaning the Beacon Chain started producing blocks on December 1, 2020. This is an important first step in achieving the Ethereum vision.
2021 — Berlin, London, Altair, and Arrow Glacier network upgrades
The Berlin upgrade optimized gas cost for certain EVM actions, and increased support for multiple transaction types.
The London upgrade introduced EIP-1559, which reformed the transaction fee market, along with changes to how gas refunds are handled and the Ice Age schedule.
The Altair upgrade was the first scheduled upgrade for the Beacon Chain. It added support for “sync committees” — enabling light clients, and bringing validator inactivity and slashing penalties up to their full values.
The Arrow Glacier network upgrade pushed back the difficulty bomb by several months. This is the only change introduced in this upgrade, and is similar in nature to the Muir Glacier upgrade. Similar changes have been performed on the Byzantium, Constantinople and London network upgrades.
2022 — The Gray Glacier network upgrade
The Gray Glacier network upgrade pushed back the difficulty bomb by three months. This is the only change introduced in this upgrade, and is similar in nature to the Arrow Glacier and Muir Glacier upgrades. Similar changes have been performed on the Byzantium, Constantinople and London network upgrades.
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 Eth2 aims to solve its challenges. Only time will tell regarding the results, though, and the transition is expected to take some time to play out.
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