During the cryptocurrency boom in late 2017, Bitcoin quickly became a household name, but for those who took a second look at crypto another name became equally prominent: Ethereum. In the race to be the largest cryptocurrency by market capitalization, Ethereum has been hot on the tail of Bitcoin for some time and may one day overtake it. In this article we take a look at Ethereum’s rise to notoriety, beginning with its earliest conception up to ether’s status as a multi-billion dollar currency.
This is not financial investment advice.
This article will touch on key aspects of the development of Ethereum. 🌟
In this article
- Dawn of Ethereum (2013 — Early 2015)
- Ethereum Is Born (2015)
- Growing Pains (2016)
- Ethereum Takes Off (2017 — Present)
Dawn of Ethereum (2013 — Early 2015)
Ethereum’s story starts in 2013 when the, now well known, Russian programmer Vitalik Buterin released a white paper describing an idea for building decentralized applications. Buterin had been following Bitcoin and writing articles for the blog Bitcoin Magazine when he began thinking about improvements that could be made to Bitcoin’s platform. Upon realizing his ideas would likely never be implemented into Bitcoin, Buterin understood his best option was to abandon Bitcoin and bestow his new ideas in an entirely new platform. Buterin gathered a team and got to work and in January 2014, shortly after the release of Buterin’s white paper, a public announcement was made: Ethereum: Now Going Public.
In this release, Buterin announced Ethereum to the World. It also marked the date of a presale for Ethereum’s internal currency — ether — for February 1st, at which point anybody could obtain ether at a rate of 1000–2000 ether per 1 Bitcoin. The plan was to plug any funds obtained from the presale directly back into the development of Ethereum’s new technologies. However, Buterin and the Ethereum team were immediately met with skepticism with regards to potential problems the Ethereum platform might face including scalability and security. In Buterin’s public announcement he states:
“Ethereum is not ‘just another altcoin’; it is a new way forward for cryptocurrency, and ultimately for peer-to-peer protocols as a whole. To that end, we would like to be able to invest a large quantity of funds into securing top-notch talent for improving the security and scalability of the Ethereum network itself, but also supporting a robust Ethereum ecosystem hopefully bringing other cryptocurrency and peer-to-peer projects into our fold.”
Thus, it was of the utmost importance that Buterin secured sufficient funds and that the ether presale was a success — fortunately, it was. The presale lasted for 42 days and at the end of it, Ethereum was left with 31,591 bitcoins worth about $18,439,000 at the time, in exchange for roughly 60,102,000 ether. As promised, the new funds were used to address the concerns of scalability and security. This presale not only ensured Ethereum’s early survival, but also laid the foundations for all that was to come.
Developer interest in Ethereum began to grow rapidly in 2014 and to finish the year, the Ethereum founders held the well remembered event, DEVCON-0, in Berlin. At DEVCON-0, Ethereum developers from around the world met and collaborated on various topics related to Ethereum technologies. Many ideas were introduced to those with the power to implement them, and several of the presentations that were made at DEVCON-0 are credited with some of the features of security and scalability that Ethereum boasts today. With such a strong turnout at DEVCON-0, Ethereum’s future looked promising in the hands of the many galvanized developers.
Throughout Ethereum’s rise, the large amount of support from the Ethereum community remained constant. Consistent blog posts from the Ethereum founders, including Buterin and a growing user base on the Ethereum forum coupled with the Ethereum subreddit, maintained a high level of interaction between Ethereum’s full time employees and users. In April 2015, the DEVgrants program was announced. The Ethereum team recognized the many contributions that independent developers were making in open source projects and decided to create this program that would offer funding for contributions to the Ethereum platform.
Later in 2015 Ethereum called on its vast community of developers again, this time in an Ethereum Bounty Program that is still going on today. The bounty program offers BTC rewards to anybody who can find vulnerabilities in any part of the Ethereum software stack. To further boost Ethereum’s strengths in security and reliability, several software security firms were also hired to conduct security audits. Today, it’s clear that Ethereum’s commitment to security is what contributed to its community’s confidence in the technology. With the new found confidence, Ethereum was ready to take the next step forward.
Ethereum Is Born (2015)
On July 30 of 2015, the Ethereum Frontier network launched. This was one of the first major milestones in the Ethereum project as developers immediately began writing smart contracts and decentralized apps to deploy on the live network. It was also the first time that people began to mine the Ethereum blockchain by mining blocks and earning ether for doing so.
A second developer conference, DEVCON-1, also took place in London in November, 2015. Ethereum had been attracting an ever increasing amount of attention throughout 2015, which culminated with more than 400 participants traveling to DEVCON-1. Plus, the appearance of large companies at the conference, including UBS, IBM, and Microsoft, clearly indicated the high level of interest in Ethereum’s technologies. Moreover, Microsoft later announced that it would offer Ethereum on its new Blockchain as a service offering on the Microsoft Azure cloud platform. This was a big deal. Many remember Microsoft’s adoption of Ethereum as the moment when Ethereum entered the mainstream.
Growing Pains (2016)
Ethereum’s quick rise did not come without a few dips. In May of 2016, an organization called the Decentralized Autonomous Organization (DAO) was sitting on 7.9 million units of ether, or roughly $132.7 million at the time, when it was hit with a devastating attack. Unidentified hackers exploited vulnerabilities in Ethereum’s system and stole around $50 million worth of ether from the DOA. After news of the attack spread the value of ether plummeted. Many media outlets covered the story and Ethereum was under intense pressure to find a solution to the hacks. Passionate debate ensued splitting the Ethereum community down the middle. Eventually, two separate networks would emerge.
The new Ethereum (ETH) gained the most support, including the support of the founders, and would implement a fork that would make ETH essentially the same as what Ethereum was before the DAO hack. The second network would be the old Ethereum which would maintain the original blockchain that included the hack. Only a loyal few supported the original network, but today it is known as Ethereum Classic or ETC. The hard fork created a rivalry between the two networks that exist today. Nonetheless, by the end of 2016, ETH had implemented several more forks that would further protect from future hacks and it became clear that the new Ethereum would be the future.
The DAO attack and the Ethereum split was a series of dramatic events for Ethereum, but, as we will see in the proceeding section, the birth of the new Ethereum was the start of a meteoric rise.
Ethereum Takes Off (2017 — Present)
By the end of 2016, the price of one ether (ETH) was fluctuating around $7 or $8 and was worth $8.05 on January 1st. A typical day’s worth of volume around that time might be around 14 million ether and the total market cap of all ether hovered around $700 million. Ethereum had come a long way since Buterin’s white paper, but the best was yet to come. The cryptocurrency boom of 2017 was one of the most exciting bull markets in financial history and is linked to legendary events such as the Tulip mania and the more recent Dot-com bubble. Bitcoin will probably be remembered by most as the leader of the boom, but Ethereum always kept in close pursuit of Bitcoin’s rise, leading to one crazy ride.
By March 12th, one ether was worth $20, 8 days later an ether was $46, more than doubling in price. By mid June, the price for an ether had reached over $415 and by the end of December the price of $880 had been broken! Yet, only two weeks later in the new year of 2018, ETH would top its astronomical rise at a price of just over $1400 and a market cap of around $135 billion. If you owned any ether at the beginning of 2017 and were lucky enough to sell some of it at the crypto boom’s peak, then you could have made over a %13,000 return in a little over a year! Combined with a large rally in investment in the general cryptocurrency market, ether was helped to $1400 because over the course of 2017 a majority of ICOs and tokens issued by the numerous new cryptocurrencies were coded to run on the Ethereum network. Nonetheless, as all avid crypto followers know, with the end of January came the end of the crypto bull market.
Beginning February 2018 the crypto markets experienced a slow in the exponential growth that many currencies experienced in 2017, Ethereum was not immune. Most anticipated that the insane returns could not continue for much longer and although the cryptocurrency market did keep most of the value that was gained from the break out year of 2017, there was a significant correction. The price of an ether crept back down to around $1000 in early February, $600 in mid March, and in August is fluctuating between a bottom of $200 and a high slightly above $400.
It is important to remember Ethereum was a mere $8 dollars per ether at the beginning of 2017, after the crypto correction and more than a year and a half later, ether is still trading at many multiples above $8 and is certainly here to stay.
As the month of August, 2018 enters its later days we sit in the midst of the crypto winter. Will we ever see a crypto boom like the one in 2017 again? Of course nobody knows, but if the crypto winter has bottomed out then today’s prices offer a great buying opportunity. If there is another cryptocurrency rally in the near future then Ethereum will certainly be one of the major players. All this time ETH has maintained the second largest market capitalization of all cryptocurrencies, only behind BTC, and has established itself as a dominant name in crypto. Plus, it could be that Ethereum soon overtakes Bitcoin as the most valuable crypto as more people recognize the advantages over Bitcoin that Buterin has always intended to give Ethereum. Any signs of a crypto spring remain to be seen at this moment in time, but watch carefully, we all know how quickly seasons can change in the crypto world.
What was your favorite memory from Ethereum’s history?
Let us know why in the comments!