Ethereum is an open-source, decentralised computing infrastructure. It uses a global network of computers that are connected via a publicly distributed network called a blockchain.
Ethereum is best known for supporting smart contracts—something that greatly differentiates itself from Bitcoin. Ethereum lets developers create decentralised applications (apps) available to anyone with a web wallet anywhere in the world.
For example, to create financial applications (i.e. DeFi), games, store value, NFTs or important digital assets. Think of Ethereum as the network or app store on which any developer can deploy an app.
History of Ethereum
Ethereum’s whitepaper was published in Nov. 2013 by computer programmer Vitalik Buterin. After being built by Buterin and other developers, the first Ethereum block was mined in July 2015. Ethereum went through a contentious hard fork in 2016, resulting in Ethereum Classic (the original, unaltered history of the Ethereum network).
The founding team raised roughly $18 million in a presale, where investors received ETH in return.
Upgrading Ethereum
Ethereum is undergoing a major redesign and upgrades. This is to evolve Ethereum to solve scalability and congestion issues that have been plaguing the network to meet demand.
Previously touted as ‘Ethereum 2.0’, it is an ongoing series of core implementations to increase network capacity, cater to more transactions and improve environmental efficiency. This is a continual process that will happen over the next couple of years, changes include:
- Moving from proof of work (PoW) to proof of stake (PoS). [✅Occured in September 2022]
- Embracing scaling solutions such as roll-ups to house the bulk of transactions—with the Ethereum base layer to become the settlement layer. [➖Ongoing]
- Implement danksharding—this essentially splits the ledger into smaller bits to spread the load of validating transactions [➖Ongoing].
Ethereum is pursuing a “layered’ approach to scalability. Simply, Ethereum is creating software that allows blockchains and networks to build on top of it, inheriting its security. The idea is to move the bulk of activity away from Ethereum’s main chain (known as the L1) to alternative networks that inherent its security (known as L2s, such as Arbitrum) so it can achieve sufficient scale and reduce gas fees.
