In late 2013, Vitalik Buterin was working on the Mastercoin project. Being an early Bitcoin enthusiast, he envisioned blockchain as more than just a payment system. In November 2013, Buterin wrote a white paper proposing Ethereum, and the idea garnered significant interest.
The concept began to become a reality, and the Ethereum core team consisted of Vitalik Buterin, Mihai Alisie, Anthony Di Iorio, and Charles Hoskinson. Buterin presented at a Bitcoin conference held in Miami between 25th-26th January, 2014. The participants gave him a standing ovation and a lengthy Q&A session followed.
A presale was planned on February 1st, 2014, but this was dropped. A crowdfunding campaign then went live from July 20th to September 2nd, 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. 31,500 Bitcoins were raised through the crowdsale, and 12 million ETH were created, which would be used as funding for the development and other activities.
History of the Ethereum Foundation
A non-profit organisation called the Ethereum Foundation was formed on July 6th, 2014 and registered in Zug, Switzerland. This organisation governs the Ethereum project.
The four phases of Ethereum
The Ethereum project consists of four major phases.
Frontier (July 30th, 2015):
Olympic, a test version of Frontier, was released on May 9th, 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 smaller prizes. After the Olympic testing, Frontier was released. With that release, the developers were able to build distributed applications and started mining Ether.
Homestead (March 14th, 2016):
The platform was then enhanced with Ethereum Improvement Proposals (EIP). The upgrade helped the future updates and improved the speed of transactions. The Ethereum Foundation also began to accept funding from various sources in Ether apart from the first treasury created in the beginning.
Metropolis (October 16th, 2017):
This phase includes two upgrades.
1. Byzantium (October 2017)
2. Constantinople (Scheduled for early 2019)
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 scheduled for release in early 2019.
In this phase, the Ethereum project 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 and being resistant to attacks, and also boosts transaction processing times.
The DAO attack
In 2016, a Decentralised Anonymous Organisation (DAO) was formed on the Ethereum platform. The DAO was similar to a board of directors of a company except the participants were anonymous, and they had to vest Ether to have voting rights.
On June 17th, 2016, an attacker exploited the DAO and stole Ether amounting to $50 million. This was, however, not a vulnerability of the Ethereum platform, but rather the developers of the 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, a 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 in the Ethereum community was not happy with the hard fork and decided to continue following 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, but none of those gave rise to the birth of projects like that of Ethereum Classic.
The Ethereum Foundation Grant
A fund has been allocated to back projects that focus on improving the Ethereum platform. On March 7th, 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 (ICO).
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.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.