What Is Ethereum (ETH)?
Ethereum is a decentralized, open-source blockchain system featuring its own cryptocurrency, Ether (ETH). ETH serves as a platform for numerous other cryptocurrencies and the execution of decentralized smart contracts.
First conceptualized in a 2013 whitepaper by Vitalik Buterin and co-founders, Ethereum secured funding through a 2014 public crowdfunding campaign. The blockchain officially launched on July 30, 2015. Ethereum's mission is to become a global platform for decentralized applications (dApps), enabling censorship-resistant, fraud-proof software development.
👉 Discover how Ethereum powers decentralized finance (DeFi)
Who Are the Founders of Ethereum?
Ethereum was co-founded by:
- Vitalik Buterin: Primary author of the Ethereum whitepaper.
- Gavin Wood: Developer of the Solidity programming language.
- Joseph Lubin: Founder of ConsenSys, a blockchain software company.
- Charles Hoskinson and Anthony Di Iorio: Early contributors who later focused on other projects (Cardano and Decentral, respectively).
What Makes Ethereum Unique?
Key Innovations:
- Smart Contracts: Self-executing agreements with coded terms.
- dApp Ecosystem: Hosts 90% of decentralized applications.
- ERC-20 Tokens: Standard for creating interoperable tokens.
- Transition to Proof-of-Stake (PoS): Reduced energy consumption by 99.95%.
Ethereum Supply and Circulation
- Current circulating supply: ~120 million ETH (as of 2023).
- No fixed cap: Unlike Bitcoin, Ethereum’s issuance adjusts via network upgrades.
- Annual issuance: ~4.5% pre-Merge, now dynamically controlled by PoS.
Ethereum Network Security
Consensus Mechanisms:
- Ethereum 1.0: Secured by Proof-of-Work (PoW) miners.
- Ethereum 2.0: Secured by Proof-of-Stake (PoS) validators staking ETH.
Ethereum 2.0 Explained
Major Upgrades:
- The Merge (September 2022): Transitioned consensus to PoS.
- Sharding (2023–2024): Splits the network into 64 "shard chains" to improve scalability.
- Danksharding: Future upgrade to optimize data storage.
👉 Explore Ethereum staking opportunities
FAQs
Q: Will Ethereum 2.0 replace Ethereum 1.0?
A: No—the Merge combined both systems, retaining Ethereum’s history while upgrading its consensus mechanism.
Q: How does staking work in ETH 2.0?
A: Validators lock 32 ETH to participate in block validation, earning rewards (currently ~5% APR).
Q: Is Ethereum mining still profitable?
A: Mining ended post-Merge. GPU miners have largely shifted to other PoW blockchains.
Q: What happens to my existing ETH holdings?
A: No action required. ETH remains compatible across all upgrades.
Q: How does sharding improve Ethereum?
A: It increases throughput from ~30 to ~100,000 TPS by parallelizing transactions.
Pros and Cons of Ethereum 2.0
| Pros | Cons |
|---|---|
| 99%+ energy efficiency | Complex transition risks |
| Lower fees post-scaling | Centralization concerns (large stakers) |
| Enhanced scalability for DeFi | Requires 32 ETH to become a validator |
The Future of Ethereum
Vitalik Buterin envisions Ethereum as the foundation for a "decentralized internet" (Web3). Key focuses include:
- ZK-Rollups: Layer 2 scaling solutions.
- Account Abstraction: Simplifying wallet security.
- Quantum resistance: Preparing for future computational threats.