What is the history of Ethereum and how does it work? This is a question that a lot of us have right now as we are trying to navigate this exciting world of cryptocurrency. Even those of us who know the story behind Ethereum’s rise probably couldn’t tell it to someone who is unfamiliar with cryptocurrency. It can be a confusing topic for those not already familiar, and there are a lot of false ideas out there about what exactly Ethereum is. Many people are unaware of the history of Ethereum, how it came to be, who started it, and why. This is aimed to be the ‘missing manual’ for Ethereum. The goal here is to give you a thorough understanding of Ethereum’s beginnings so that you can better understand where it is going.
This article will cover the history of Ethereum as well as explain why it was created and who started it. I will also explain some of the issues with other cryptocurrencies, such as Bitcoin, that led to the creation of Ethereum. Lastly, I’ll give a short bio of Vitalik Buterin, the founder of Ethereum and the face of cryptocurrency.
Let’s get started!
The History of Ethereum
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. These apps run on a custom-built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property. This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract), and many other things that have not been invented yet, all without a middleman or counterparty risk.
I often tell people: Ethereum is the world computer, and it allows you to run programs (called Dapps) on it. You can build games, financial applications, or anything you want with Ethereum.
Understanding Ethereum
The best way to understand the history of Ethereum would be to think of a gross oversimplification of a web browser like Chrome. If we were living in 1995 and someone asked us why they should use this mystical ‘internet thing’ that was going to change the world, we might hesitate before answering them. It’s not that we wouldn’t have an answer; more likely than not, we would start explaining how there is information without bounds out there waiting for them, but our explanation would seem impossible at the time just as much as explaining the cryptocurrency does today. The truth is, it’s difficult to explain the ‘true value’ of Ethereum without using confusing technical terms. However, I will attempt to do so by explaining what Ethereum is in general terms below.
It would be an oversimplification to say that Ethereum is merely a cryptocurrency like Bitcoin or Litecoin. It is much more than that, and there are many other cryptocurrencies around today for people who are only interested in pure transactional currencies. We should think of Ethereum as an ‘open-source decentralized programmable blockchain protocol’ with a cryptocurrency attached to it (called Ether) rather than just a simple cryptocurrency like Bitcoin. The best way I can describe the history of Ethereum without using too much technical jargon is by thinking about what email would have been like in 1995 if people could attach documents or programs to their emails when they sent them across the internet.
Imagine if when you wrote someone an email, you could put some code in the email that would automatically send to your friend’s email address a few minutes after they received it. Perhaps you could attach something along the lines of a ‘get well soon card’ or ‘flower delivery’ code to your email that would be activated when they opened the email containing the attached code. This is what Ethereum currently allows us to do, except with many more uses and possibilities for how we can use this technology in our daily lives. Additionally, instead of sending someone digital flowers, we are sending them digital cash/titles/contracts.
You can think of Ethereum as a decentralized mechanism for executing smart contracts on a public blockchain that you can trust because it’s transparent and immutable. There is no single person who controls all of this information, and no single entity that can go down for any reason. It truly is the first decentralized peer-to-peer network where everyone involved is accountable and responsible for their own actions without having to trust or depend on someone else and whether they will do the right thing. This makes Ethereum incredibly powerful and gives smart contracts an important role in shaping our society’s future.
Dapps
Ethereum allows you to build decentralized applications (Dapps) with its platform, so it’s easy to see why many people use Ethereum as a blanket term for blockchain technology today. Dapps are programs that run on the Ethereum network instead of directly on one computer like traditional applications. Technically speaking, these apps could be web-based services such as social media sites because they don’t need to be installed on one specific computer or device to run. You can think of them as being more like a website than an actual program though, so it would probably be better to think of Dapps as decentralized applications instead of web-based services. This is because you have the ability to create Dapps that work in a peer-to-peer fashion and do not need centralized servers or data centers. For example, you could create a P2P ride-sharing app without Uber. It would be fully automated, and the smart contract protocol built into Ethereum would make sure that all transactions were executed fairly without any tampering.
Bitcoin vs Ethereum
When looking at the history of Ethereum a lot of people ask what makes it different from Bitcoin. The two are vastly different for a number of reasons. To put it simply, Ethereum is to Bitcoin what Email is to the Post Office. They both do very different things even though they are both in the ‘transfer of information’ business in some way or another.
Someone recently asked if I would rather build a decentralized application using Bitcoin or Ethereum? These were my thoughts on the matter shortly after explaining why I preferred building Dapps on Ethereum instead of Bitcoin…
“Ethereum has no transaction limits and costs about $0.025 per transaction which you cannot beat with any new cryptocurrencies out there, plus the added benefit of programmability and security through decentralization makes it an obvious choice for me. Bitcoin has very high transaction fees ($1-$3 per transaction), less than ideal speed, and costs $20 to register a single domain name on the Bitcoin blockchain”.
Ethereum is also based on its own language called Solidity which you can use to write smart contracts that facilitate different things thanks to Ethereum’s fixed protocol rules. This means that developers must learn this new language in order to program decentralized applications (Dapps) for the Ethereum network.
Bio of Vitalik Buterin, the Founder of Ethereum :
The history of Ethereum begins with Vitalik Buterin. Vitalik was born in 1994 and grew up in Kolomna, Moscow region. He came across Bitcoin in 2011 and was immediately excited by the idea of a decentralized cryptocurrency. However, he noticed that cryptocurrencies were lacking several key components (smart contracts, Turing completeness) and set out to fill in the gaps. Eventually, this led to Vitalik proposing what eventually became Ethereum at the North American Bitcoin Conference in January 2014, when he was only 19 years old. He initially released Ethereum as an upgraded version of bitcoin but decided that naming it ‘Ether’ would focus people on its similarity to bitcoin instead of its difference. Thus, the switch from Ether -> Ethereum.
Hopefully, this guide provided some insight into the history of Ethereum. It is a blockchain that has the ability to run smart contracts and Dapps. In order to create decentralized applications for this platform, you need to learn its programming language called Solidity as well as use their ‘gas’ currency which works similarly to Bitcoin’s mining system in some ways. The largest difference between these two currencies is that Ethereum can be used as a ‘fuel’ for any decentralized application created on its network while Bitcoin was only created as a cryptocurrency.
We hope you’ve enjoyed this article about the history of Ethereum. If you are interested in learning more, check out some of our other articles on cryptocurrencies!