The concept began to become a reality and the Ethereum core team consisted of Mihai Alisie, Anthony Di Iorio, Charles Hoskinson along with Vitalik Buterin. Buterin presented at a Bitcoin conference held in Miami between 25th-26th January 2014. The participants gave him a standing applause and a lengthy Q&A session followed.
A presale was planned on 1st February 2014. However, this was dropped. A crowdfunding campaign went live from 20th July to 2nd September 2014. A total of 60 million Ether (the primary cryptocurrency of the Ethereum platform) were created to sell; this is also known as the Genesis issuance as these are the first ever Ether tokens created.
The price was 2,000 Ether (ETH) = one Bitcoin (BTC) for the first 14 days of the sale. The price then changed to 1,339 ETH per BTC for the remainder of the campaign.
The first two weeks of the campaign sold over 50 million tokens. 31.5k Bitcoins were raised through the crowdsale. Also, 12 million ETH were created which would be used as the funding for the development and other activities.
A non-profit organisation was formed on 6th July 2014 and registered in Zug, Switzerland. The organisation governs the Ethereum project.
Four phases of Ethereum
The Ethereum project consists of four major phases.
Frontier (30th July 2015):
Olympic, a test version of Frontier, was released on 9th May 2015. The purpose was to test the project and reward those who found issues. The testing was done in four areas.
- Transaction activity
- Virtual machine usage – responsible for executing smart contracts
- Mining prowess
- General punishment – stress testing the platform with smart contracts
Each category had a main prize of 2,500 ETH and many small prizes. After the Olympic testing, the Frontier was released. With that release, the developers were able to build distributed applications and started mining Ether.
Homestead (14th March 2016):
The platform was enhanced with Ethereum Improvement Proposals (EIP). The upgrade helped the future updates and improved the speed of the transactions. The Ethereum Foundation gets funded from various sources in Ether apart from the first treasury created in the beginning.
Metropolis (16th October 2017):
This phase includes two upgrades.
1. Byzantium (Oct 2017)
2. Constantinople (TBA)
The platform improved furthermore in terms of scalability, transaction processing and security through the Byzantium upgrade, which was also a hard fork. Moreover, the mining reward was decreased to 3 ETH from 5 ETH. The Constantinople upgrade is not yet finalised.
In this phase, the Ethereum will move from proof of work (PoW) to proof of stake (PoS) which uses the Casper consensus algorithm. PoS has significant benefits over PoW in terms of security, being resistant to attacks, and boosts transaction processing times.
The DAO attack
In 2016, a Decentralised Anonymous Organisation (DAO) was formed on the Ethereum platform. It is similar to a board of directors of a company. But the participants are anonymous, and they should vest Ether to have voting rights.
An attacker exploited the DAO and stole Ether amounting to $50 million. This was, however, not a vulnerability of the Ethereum platform. The developers of DAO deployed it without careful auditing.
The Ethereum Foundation came forward to reverse the attack. A soft fork attempt, which doesn’t alter anything on the blockchain permanently, was futile. Then, a hard fork was performed, and the lost funds were recovered.
Generally, a hard fork means deviating from the blockchain from a certain point in an attempt to upgrade it and orphaning the old chain. In some cases, the hard fork is performed by somebody who wishes to create a new platform or a new cryptocurrency with different rules from the existing one.
A faction of Ethereum community was not happy with the hard fork. And they continued to follow the old blockchain, which is now known as Ethereum Classic. In the history of Ethereum, several hard forks were deployed to improve and upgrade the protocol. None of those gave rise to the birth of projects like that of Ethereum Classic.
Ethereum Foundation Grant
A fund has been allocated to back projects that focus on improving the Ethereum platform. On 7th March 2018, the first series of beneficiaries were announced with a grant of $2.5 million. None of these projects had ever conducted an Initial Coin Offering.
To be eligible for the next series of funding, the areas of focus must be scalability, usefulness and security. And any individual can get Hackternships, which fund the pet projects of individuals that are related to the Ethereum platform.