The Complete History of Ethereum (ETH)
Among all blockchain networks, Ethereum is currently the most popular for developing decentralized applications due to its large community and the number of companies around the world supporting it. Currently, there are more than 200,000 developers building applications on it, and the new One Million Devs initiative is supposed to raise that number even more. Why is it so popular, and how does it stay on top despite that many competitors? The secret lies in the approach of its creators and their goal. To understand it, we must look at the history of Ethereum.
The roots of the decentralized “world computer”
There’s a funny story behind the creation of Ethereum. Vitalik Buterin, a Canadian developer, loved playing World of Warcraft in his childhood. One day Blizzard drastically changed the warlock class in the game, altering his crucial spell, which made the game far less enjoyable for Buterin and made him quit. That’s when he started to hate centralized services. In 2011 Vitalik discovered crypto and started to write for Bitcoin Magazine and to participate in many blockchain projects. Soon he found out that all these projects were very narrow-minded, and there wasn’t any single platform that allowed to build decentralized applications easily. Buterin decided to build such a platform. That’s how Ethereum development started in 2014. He wasn’t alone: Ethereum had many founders, including Gavin Wood, Joseph Lubin, and Charles Hoskinson. In July 2014, they conducted a public crowdsale to finance the project. The same year they founded a non-profit organization, the Ethereum Foundation.
Initially, Ethereum was similar to Bitcoin, because all networks of that time were copying various traits of Bitcoin. It also incorporated a Proof-of-Work algorithm to produce blocks with the aid of miners who backed it up with hardware resources. The difference was in its own Solidity scripting language, which allowed to write applications and execute them in a decentralized way. Gavin Wood wrote the Yellow Paper with all specifications for this language before actual development started. This concept of decentralized execution of a program upon triggering some predetermined condition is called “smart contract.” Thus Ethereum became the first decentralized blockchain platform for smart contracts.
Over the years of its existence, Ethereum served as a testing field for many ideas. One of them was the DAO (the Decentralized Anonymous Organization), a self-ruling decentralized entity that was supposed to manage finances and resources of the Ethereum community like a venture fund and to help new Ethereum-based project emerge by providing funding to its developers from the common pool of ETH tokens raised from the initial crowdfunding campaign. The contribution of the community during this campaign was over $100 million.
This project turned out to be the biggest Ethereum failure. There was an exploit in one of its smart contracts that allowed hackers to steal almost all funds stored inside the DAO. After this hack, the public trust in Ethereum diminished, and it faced a serious internal crisis. As a result, the community agreed to fork the blockchain and return the stolen funds to their owners. This controversial move resulted in splitting the community and the creation of the new Ethereum Classic blockchain, which is basically the original Ethereum chain with unreversed effects of the hack. However, all main developers stayed on Ethereum.
The ICO craze
Initial Coin Offerings existed even before Ethereum, but its capabilities allowed this type of crowdfunding to become a huge thing that sparked the interest of the mainstream media to the whole crypto industry. The first Ethereum-based ICOs such as NEO (ex-Antshares), Lisk, or DigixDAO were conducted in 2015 and 2016, but it was the year 2017 that became the most definitive for all types of ICO crowdfunding. During 2017 ICOs raised $10 billion; the next 2018, they raised $11.4 billion. The problem with ICOs was their low success rate. Even though in some cases their investors received crazy returns, overall, most projects raising money ended up dead. Many governments around the world didn’t like the violation of retail investors’ rights, and many central banks issued regulations for conducting ICOs. It didn’t influence Ethereum development in general, but it ended the bull market of 2017-2018, and a harsh multi-year bear market started.
Where is Ethereum now?
Ethereum has many competitors for the title of the best smart contracts platform such as TRON, NEO, EOS, Cosmos, Polkadot, Zilliqa, or Cardano. But none of them achieved such popularity among developers so far, and all of them aren’t as decentralized as Ethereum is. The majority of smart contract platforms are based on DPoS algorithms meaning they sacrifice decentralization for scalability. Ethereum takes a different approach, and its team develops a new PoS version, Ethereum 2.0, to replace the current PoW-based network in 2021. The new version will solve all current Ethereum problems, such as network clogging, while being decentralized at the same time. All nodes having enough ETH tokens will be able to take part in producing new blocks. The new version will simplify the blockchain, implement sharding, and make Ethereum quantum secure. Also, it will lower the entry barrier, making it possible to run nodes on laptops.
Even without any upgrades, Ethereum is the most popular blockchain for developing decentralized applications, and many companies support it. The Enterprise Ethereum Alliance has on its board such giants as Microsoft, Intel, AMD, Baidu, JP Morgan, and many many others. They popularize blockchain technologies and apply them in their operations, pushing the industry forward.
Ethereum is the top blockchain network and cryptocurrency. Right now, it’s a pretty safe investment, and many crypto investors have some ETH tokens in their portfolio. If you’re one of them, you can use your crypto funds to make deposits and take fiat loans backed by any cryptocurrency, including ETH, on CoinLoan. No need to sell your funds during the bull market if you need any fiat money - just store them on CoinLoan and get fiat loans whenever you like. It’s especially great since we recently increased Ethereum interest rate, and now it’s equal to Bitcoin’s rate. The Ethereum team always delivers - that’s why everyone is waiting for Ethereum 2.0 and it’s probably going to be huge. It’s great to be a part of it.