#Ethereum

Ethereum is a blockchain platform launched July 30, 2015 by Vitalik Buterin that enabled smart contracts and decentralized applications (dApps). It became the second-largest cryptocurrency by market cap and the foundation for NFTs, DeFi, and Web3.

Origins

Vitalik Buterin, a 19-year-old Bitcoin Magazine co-founder, proposed Ethereum in a 2013 whitepaper as a “world computer” with programmable smart contracts beyond Bitcoin’s simple transactions.

The Ethereum Foundation raised $18 million in a 2014 ICO at $0.30 per ETH. By 2021 peak, ETH hit $4,800.

The DAO Hack (2016)

The first major test: June 2016, hackers exploited a vulnerability in The DAO (decentralized autonomous organization), stealing $60 million in ETH.

The community voted to hard fork the blockchain, reversing the hack. This created:

• Ethereum (ETH) - The forked chain
• Ethereum Classic (ETC) - Original chain maintaining “code is law”

The decision remains controversial in crypto philosophy debates.

Key Innovations

Smart Contracts: Self-executing code on the blockchain enabling DeFi, NFTs, DAOs.

ERC-20 Tokens (2017): Standard for creating new tokens, enabled ICO boom.

ERC-721 NFTs (2018): Non-fungible token standard, enabled CryptoKitties, Bored Apes, NFT art explosion.

Decentralized Finance (DeFi) (2020+): Uniswap, Compound, MakerDAO - financial services without intermediaries. Total Value Locked peaked at $180 billion (Nov 2021).

The Merge (Sept 2022)

Ethereum transitioned from Proof of Work (mining) to Proof of Stake (validators), reducing energy consumption by 99.95%. The years-long upgrade was called “changing the engine of a plane mid-flight.”

Concerns about centralization (Lido controls 30%+ of staked ETH) and regulatory classification persist.

Gas Fee Crisis

High demand caused transaction fees (“gas”) to spike from cents to $50-200 per transaction (2021). This made small transactions uneconomical and drove users to Layer 2 solutions (Polygon, Arbitrum, Optimism) and competing chains (Solana, Avalanche).

By 2023, Ethereum processed 1.2 million transactions daily, hosted 200K+ smart contracts, and remained the dominant platform for DeFi and NFTs despite competitors.

Sources:

• Ethereum Foundation whitepapers
• The DAO hack postmortem (Vitalik Buterin blog)
• Merge documentation (ethereum.org)
• DeFi Llama TVL data