It\u2019s not just a currency, it\u2019s a backbone of distributed ledger technology. Though, Bitcoin isn\u2019t less but Ethereum is a pure revolution in the blockchain<\/a> world. It lets you create and run smart contracts. You won\u2019t just find ETH in trading, it\u2019s an integral element behind several decentralized finance (DeFi) applications, NFT marketplaces, and so much more, all thanks to the man, <\/strong>Vitalik Buterin<\/strong><\/a> for proposing the idea of this cryptocurrency<\/strong>.<\/p>\n\n\n\n Bitcoin did the crypto revolution but Vitalik\u2019s Ethereum is the next-gen upgrade in the blockchain world. Read this article till the end to find out how this cryptocurrency came into existence.<\/p>\n\n\n\n Before moving to the history, let\u2019s see what Ethereum is. Ethereum is decentralized, an open-source public technology that has smart contracts integrated to trade cryptocurrencies without any third-party\u2019s interference<\/strong>. It\u2019s also often known as the \u201cworld computer\u201d owing to the leverage of global-scale code execution it gives to the developers. Similar to Bitcoin, Ethereum also operates on a blockchain but its distributed ledger is more advanced due to smart contracts.<\/p>\n\n\n\n Ether (ETH) is its native cryptocurrency that acts as a fuel to run this ledger. Users have to pay the gas fee in ETH to execute the smart contracts, these coins later compensate the transaction validator.<\/strong> The conceptualization of smart contracts emerged as a significant innovation in ETH technology that helps run all the decentralized applications (DApps) autonomously. Ethereum uses a Proof-of-Work (PoW) mechanism where minors are supposed to solve cryptographic problems to add new blocks to the chain but now it\u2019s transitioning to a Proof-of-Stake (PoS) consensus mechanism through Ethereum 2.0.<\/strong><\/p>\n\n\n\n Vitalik Buterin<\/strong><\/p>\n\n\n\n Ethereum was never a sudden outcome. It goes from an idea to a white paper to a concept and then reality. All credit to Mr.Buterin, if he hadn\u2019t been disappointed with Bitcoin, we might not have seen this technology up till yet. Vitalik was a Russian born but his family later moved to Canada for a better future. He was always an intellectual kid and loved solving the complexities of mathematics. He also had a deep understanding of computer programming from an early age which later helped him upgrade blockchain technology.<\/p>\n\n\n\n His first encounter with cryptocurrency began in 2011 when Vitalik\u2019s father introduced him to Bitcoin. At that time, Boy Buterin was only 17 years old but the idea fascinated him a lot. He was quite surprised by the idea of decentralized currency. With this thought, Mr. Buterin started exploring more about the Bitcoin Community. Even BTC wasn\u2019t advanced this time, it was in an early stage of development, trading around <\/strong>$1 to $30 per coin<\/strong><\/a>.<\/p>\n\n\n\n Compulsion to his intriguing nature, Vitalik joined the Bitcoin community. He co-founded a blog site for writing articles about Bitcoin\u2019s financial landscape that gave him immense recognition. Vitalik Buterin used to deeply engage with the developers, co-founders, traders, and engineers to gain insights about BTC progress which made him dive deeper into this blockchain ecosystem.<\/p>\n\n\n\n However, with the information, Vitalik started noticing where Bitcoin was falling behind. Following are the issues he found the most disappointing:<\/p>\n\n\n\n Vitalik was convinced to provide a solution. He wanted to work on these factors and his idea was to propose a new blockchain platform that could overcome these constraints. Thus, in 2013, he proposed the idea for ETHEREUM \u2014 a solution programmed with much flexibility.<\/strong> The core idea was to include a smart contract to allow transactions with less complexity.<\/p>\n\n\n\n This was a turning campaign after the development of Ethereum. The presale was planned for February 2014 but it had to drop. Later, a crowdfunding campaign was decided to run from 20th July to 2nd September 2014. 60 million ether (ETH) were created to sell. In the first two weeks of funding, 2,000 ETH was equal to 1 BTC but the demand increased and 1,399 ETH was sold for 1 BTC. It was a huge success. Ethereum’s founding team sold out almost 50 million tokens which equaled 31,500 Bitcoins. They raised a total of $18 million, making it one of the largest funding campaigns<\/strong>.<\/p>\n\n\n\n After proposing the idea, Vitalik introduced a white paper to define his vision for the new blockchain platform. The white paper basically includes the key innovations in Ethereum that would overcome the issues in Bitcoin.<\/p>\n\n\n\n Vitalik called this the groundbreaking idea to be deployed. Ethereum technology would be free from any intermediaries like banks or lawyers. There\u2019d be no thirty parties involved during operations. Smart Contracts<\/a> are self-executing agreements written into code. Once the predefined conditions are met, these contracts will automatically be implemented. This enables the new concept known as \u201cprogrammable blockchain technology<\/strong>.\u201d<\/p>\n\n\n\n Ethereum introduced Solidity, a turning complete language that overtook Bitcoin\u2019s scripting complexity. Solidity allows developers to write logic and code and create as many as applications they want.<\/strong> This was one of the benefits that resulted in Ethereum\u2019s huge success in the early stages.<\/p>\n\n\n\n This refers to decentralized autonomous organizations (DAOs). The idea was to run the Ethereum organization with the help of smart contracts instead of any traditional way. DAOs<\/strong><\/a> basically introduce autonomous decentralized management in Ethereum. <\/strong><\/p>\n\n\n\n So, we have seen above how Vitalik Buterin proposed the idea for Ethereum currency and later solidified his thoughts through the white paper that changed everything. However, this wasn\u2019t the end of the revolution Ethereum brought in blockchain technology. The currency has gone through four major phases of development that resulted in many innovations.<\/strong> Let\u2019s see each of them individually.<\/p>\n\n\n\n The frontier version was released after a testing phase, Olympic, on 9th May 2015. Vitalik Buterin proposed this idea to find errors in Ethereum technology. The co-founders set different winning prizes for bug fixings. Each round had a main prize of 2,500 ETH and many small prizes to engage the users. Once this testnet emerged as successful, Frontier was introduced finally.<\/p>\n\n\n\n This was the earliest stage of Ethereum development, starting with the launch of Ethereum Network. The developers aimed to do a thorough live test to see how this currency works for traders. Frontier<\/a> was nothing hard and fast. It was a very basic version of the Ethereum Network that had minimal functionalities including only the creation and deployment of self contracts. The gas fee introduction was necessary to prevent spam and smooth transaction operations, costing only $0.30 to $1 per ETH.<\/p>\n\n\n\n This was the first time when users had the leverage to mine ETH. These currencies were used as a gas fee to execute smart contracts and transactions. It didn\u2019t have a well-developed user interface. The traders had to interact with Ethereum\u2019s command-line interface (CLI) during the Frontier phase which was complex for non-technical users. <\/strong><\/p>\n\n\n\n It wasn\u2019t a stable release. The users were warned that they might encounter bugs or the network could lack somewhere. Other than that, Frontier also didn\u2019t have many advanced features that we see today in Ethereum. This version lacked a graphical interface alongside wallet integrations.<\/p>\n\n\n\n After the frontier’s successful introduction, Vitalik Buterin and his co-founders aimed for a more stable release of Ethereum. They were eager to work on the improvements and bugs to introduce a better-upgraded version. Homestead didn\u2019t have overall different versions, it followed the Frontier interface but with stability and some security protocols<\/strong>.<\/p>\n\n\n\n The enhancement included the simplified deployment of DApps. Homestead introduced solidity improvements and better functioning tools that made it easier for the developers to operate <\/strong>DApps<\/strong><\/a> in Ethereum<\/strong>. This version also helped form the underlying structure of decentralized autonomous organizations (DAOs).<\/p>\n\n\n\n Vitalik and the team also introduced the Ethereum Improvement Protocol (EPI-2) that helped to improve the gas cost calculation in the Frontier version, improved transaction validation, and a better content creation procedure. During the Homestead phase, the ETH price saw a huge market leap, improving from $1 to $16 by the end of 2016. The network adaption also increased significantly. Homestead was able to garner some good attention from traders worldwide.<\/p>\n\n\n\n The same year Homestead was released, DAO also gained significant attention since its launch in April 2016. It was a decentralized venture capital fund operated on Ethereum. DAO involved the contribution of Ethereum tokens (ETH) to gain voting rights in a funding proposal. Consider it as an early introduction of decentralization where decisions weren\u2019t made by any central authority. It was one of the largest crowdfunding campaigns that became successful in raising $150 million ether in funding from 11,000 investors<\/strong>.<\/p>\n\n\n\n However, despite raising millions, this crowdfunding exposed Ethereum to some big security risks. On 7th June 2016, a hacker completely exploited the DAO system. He cracked the smart contract\u2019s code that let him continuously withdraw funds to a child DAO, marking the loss of almost 3.6 million ETH which equaled $70 million at that time. <\/strong>Can you imagine this hack’s sensitivity? It was a legitimate turning point for the Ethereum blockchain. The hacker was smart enough to not attack the Ethereum blockchain directly but instead on the particular smart contract that secures the decentralized autonomous organization (DAO). There was a recursive bug on the system that drained off the funds before the smart contract updated the transaction balance and he rightly took the advantage.<\/p>\n\n\n\n However, in response to the exploit, the Ethereum Foundation came forward with the reverse attack. Vitalik Buterin, a vital team member, proposed a Soft Fork strategy to freeze the funds in the child DAO so the hacker wouldn\u2019t move them.<\/strong> But only this strategy wasn\u2019t enough to recover all the stolen amount. The team planned a \u201cHard Fork\u201d solution that was more controversial than Soft Fork. It involved a \u201crollback\u201d strategy, meaning the funds would be returned to their original investors.<\/p>\n\n\n\n This strategy was successfully integrated into almost 1,920,000 blocks and returned stolen funds to the original DAO owners. This incident wasn\u2019t only exposure to risks associated with blockchain and smart contracts but also tested Ethereum\u2019s resilience against security protocols to save its investors\u2019 funds.<\/p>\n\n\n\n This is the 3rd development phase Ethereum went through before its launch of Ethereum 2.0. Ethereum Foundation decided to subdivide this development version; Byzantium and Constantinople<\/strong>. The main idea was to introduce enhanced security measures, better scalability, and of course, offering better adaptable features to make it a robust solution for both developers and non-technical users.<\/p>\n\n\n\n On 16th October 2017, Ethereum introduced phase-I of Metropolis i.e. Byzantium version. Following are the key features that this version brought into the Ethereum blockchain;<\/p>\n\n\n\n After Byzantium upgrades, Metropolis phase-II was introduced on 28th February 2019 as Costantipole. Let\u2019s see some of its prominent features;<\/p>\n\n\n\n Up till now, these subphases emerged very successfully in the development journey of the Ethereum blockchain, resulting in better upgrades, scalability, maintenance, better financial enhancements. Now, let\u2019s move forward to what Ethereum brought next.<\/p>\n\n\n\n This is the final development phase of the Ethereum blockchain that primarily revolves around transitioning its consensus mechanism from Proof-of-Work (PoW) to a more scalable and efficient Proof-of-Stake (PoS) model. Serenity (TBA) is also known as Ethereum 2.0.<\/strong> Vitalik Buterin has proposed big plans for this version of the Ethereum blockchain. This final journey is divided into multiple phases;<\/p>\n\n\n\n You might think Ethereum already has a great market reputation in the industry with a total valuation of $338.96 billion. It\u2019s performing more than good in the mining industry with a Proof-of-Work (PoW) mechanism so why do we even need the PoS? If you\u2019re thinking this, see these factors below to understand why Vitalik Buterin and his team are eager about the PoS transition.<\/p>\n\n\n\n Ethereum 2.0 aims to solve the scalability trilemma in blockchain<\/strong>. There is a long-ago debate that a system can\u2019t have better scalability, robust security, and a proper decentralized network all at once. It\u2019s difficult to achieve all three in one blockchain technology. However, the Serenity phase of Ethereum is designed to achieve these factors simultaneously through its PoS and Shrading methodologies.<\/p>\n\n\n\n Ethereum 2.0 will have a great impact on the blockchain ecosystem. It\u2019s bringing a new wave of revolution in decentralized Finance (DeFi), Non-Fungible Tokens (NFTs) marketplaces, and many other decentralized applications (DApps)<\/strong>.<\/p>\n\n\n\n Vitalik Buterin’s revolution in the Ethereum blockchain includes many long-term plans for the future. He wants Ethereum to become a foundational layer of the decentralized internet to bring the whole world together. This vision is also called Web 3.0<\/strong>. By solving the scalability trilemma and enhancing the financial protocols, Ethereum aims to be the go-to platform in the coming decades, most likely to surpass Bitcoin\u2019s market reputation. The transformation to PoS will mark a new era of Ethereum that will make it a leader in the blockchain space.<\/p>\n\n\n\n We have seen how Vitalik had an initial idea in 2013 that later turned into a white paper and finally, Ethereum was launched in the blockchain market. But the revolution didn\u2019t end there. Vitalik had many plans with this currency. He proposed four development phases that were quite successful in strengthening the decentralized network of Ethereum technology and this now led to Ethereum 2.0, which we\u2019re witnessing today. The journey brought many challenges to the Ethereum Foundation but a strong understanding of how blockchain works didn\u2019t let the team give up on their dreams. Now, let\u2019s see how Ethereum is progressing against Bitcoin. Let\u2019s compare these two.<\/p>\n\n\n\n This comparison table will tell you why Vitalik Buterin was eager to launch the Ethereum currency against Bitcoin. These were the potential factors he worked on to improve in Ethereum blockchain.<\/p>\n\n\n\n<\/a>What is Ethereum?<\/h2>\n\n\n\n
![\"Ethereum](\"https:\/\/criptonizando.com\/en\/wp-content\/uploads\/2024\/09\/word-image-1335-2.png\")
<\/figure>\n\n\n\n<\/a>Ethereum\u2019s Origin: The Birth of an Idea<\/h2>\n\n\n\n
![\"Vitalik](\"https:\/\/criptonizando.com\/en\/wp-content\/uploads\/2024\/09\/word-image-1335-3.png\")
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<\/a>Crowdfunding Campaign<\/h3>\n\n\n\n
<\/a>Vitalik\u2019s Whitepaper: Key Innovation in Blockchain Technology<\/h2>\n\n\n\n
<\/a>Smart Contracts<\/h3>\n\n\n\n
<\/a>Turing-Complete Language<\/h3>\n\n\n\n
<\/a>DAOs<\/h3>\n\n\n\n
<\/a>The Four Development Phases of Ethereum<\/h2>\n\n\n\n
![\"Ethereum](\"https:\/\/criptonizando.com\/en\/wp-content\/uploads\/2024\/09\/word-image-1335-4.png\")
<\/figure>\n\n\n\n<\/a>2015 \u2013 Frontier<\/h3>\n\n\n\n
<\/a>2016 \u2013 Homestead & DAO Hack<\/h3>\n\n\n\n
<\/a>The DAO Hack<\/h4>\n\n\n\n
<\/a>2017 – 2019 \u2014 Metropolis<\/h3>\n\n\n\n
<\/a>BYZANTIUM<\/strong><\/h4>\n\n\n\n
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<\/a>COSTANTIPOLE<\/strong><\/h4>\n\n\n\n
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<\/a>Serenity \u2014 The Final Phase (Ethereum 2.0)<\/h3>\n\n\n\n
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<\/a>The Importance of Ethereum 2.0<\/strong><\/h4>\n\n\n\n
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<\/a>Ethereum Vs Bitcoin \u2013 Which\u2019s best?<\/h2>\n\n\n\n
![\"Ethereum](\"https:\/\/criptonizando.com\/en\/wp-content\/uploads\/2024\/09\/word-image-1335-5.png\")
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