A Look Back in Time: Ethereum
Crypto Basics

A Look Back in Time: Ethereum

2 months ago

With the Ethereum Merge set to be the most significant upgrade ever — we took a look back at the most notable events in Ethereum's colorful history.

A Look Back in Time: Ethereum

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This is a comprehensive overview of Ethereum’s history; from its whitepaper publication in 2014 to the present day. But before we dive in, here’s a quick overview of what Ethereum is and how it works for those of you who aren’t familiar.

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What Is Ethereum?

Ethereum is a decentralized blockchain network. It’s designed for building decentralized applications (DApps), decentralized autonomous organizations (DAOs), and digital assets like tokens, all without permission from any central authority. This permissionless quality makes Ethereum resistant to censorship from governments, regulators, and companies.
Ethereum takes its name from the since-abandoned theory of aether. The theory states that a space-filling and unobservable material, called aether, permeated throughout space to support the existence of light, gravity, and other natural phenomena. In essence, aether was believed to underlie everything and exist everywhere, which is exactly what Vitalik Buterin wants the Ethereum network to do.

Vitalik Buterin is a Russian-born programmer who emigrated to Canada as a child and later wrote Ethereum’s whitepaper and co-founded Ethereum. Ethereum’s other founders include Gavin Wood, who later founded Polkadot, Charles Hoskinson, the founder of Cardano, as well as Anthony Di Lorio and Joseph Lubin, who later launched Decentral and ConsenSys respectively.

What inspired Buterin to build Ethereum? If you can believe it, the programmer reportedly decided to launch Ethereum after the developers of World of Warcraft (a multiplayer online role-playing game) removed the damage component from his Warlock character’s spell. “I cried myself to sleep,” he said, “and on that day I realized what horrors centralized services can bring.”
After quitting the game, Buterin co-founded Bitcoin Magazine and traveled the world learning about up-and-coming crypto projects. He told Business Insider that, in his opinion, too many of the projects he saw on his travels focused on specific applications and none were “sufficiently general,” ergo the crypto space needed a base layer on which new applications could launch, which is what Ethereum has since become.

What’s Ether (ETH)?

Ether, or ETH, is the fuel and lifeblood of the Ethereum network. You’ve probably heard about Ether by now given it’s the second most popular cryptocurrency by market cap. Every time you transact or use a DApp hosted on Ethereum, you pay fees in Ether, a small percentage of which goes to the network’s miners as a fee. These miners ensure that nobody cheats the network by submitting fraudulent transactions and that nobody can block anyone else’s transactions, thereby keeping Ethereum free from censorship and centralized control.

Now that you know a little bit about Ethereum, let’s dive into Ethereum’s history, starting with the network’s most recent and anticipated event: The Merge.

2022 Ethereum Key Events

January 26th, 2022. Ether Price: $2,468.03

Cathie Woods’ Ark Investments releases a report claiming Ethereum has a trillion-dollar future ahead of it. The report predicted that Ethereum’s market cap could eclipse $20tn within the next ten years, which would give Ether a value of $170,000.

February 2nd, 2022. Ether Price: $2,682.45

An Ethereum to Solana bridge called Wormhole is hacked and loses $320m, roughly $250m of which was Ether. Early analysis from CertiK showed the hackers exploited a vulnerability on the Solana side of the bridge to create 120,000 wrapped Ether tokens which they used to claim true Ether stored on the other side of the bridge.
Vitalik Buterin had previously shared concerns about limits to any bridge’s security, even making the case that they won’t exist in the crypto space for much longer. Instead, he suggests the future will be “multi-chain, but it will not be cross-chain.”

February 24th, 2022. Ether Price: $2,508.97

Just moments after Russia announced a “special military operation” in Ukraine, Ethereum founder Vitalik Buterin criticized the invasion, calling it a “crime against the Ukrainian and Russian people.” Buterin, who was born in Kolomna, Russia, also said he was “very upset” by the Kremlin’s act of war, and that “Ethereum is neutral, but I am not.”

In the 24 hours after the invasion, more than $150bn was wiped from the cryptocurrency markets.

March 18th, 2022. Ether Price: $2,945.34

In an interview with Time Magazine, Vitalik Buterin shares his concerns about the future of crypto: “crypto itself has a lot of dystopian potential if implemented wrong.”

Buterin also warns of the danger to overeager investors, and of skyrocketing transaction fees and lavish displays of wealth that negatively influence the public’s perception of crypto: “The peril is you have these $3 million monkeys and it becomes a different kind of gambling,” in reference to the Bored Ape Yacht Club NFT collection.

In the same interview, Buterin voiced his support for real-world applications of blockchain technology, particularly projects related to voting systems and urban planning. He also claims too many crypto platforms focus on wealth creation: “If we don’t exercise our voice, the only things that get built are the things that are immediately profitable…and those are often far from what’s actually the best for the world.”

March 29th, 2022. Ether Price: $3,445.24

The largest hack in crypto history so far is confirmed as Ronin officials report that the network’s validator nodes for Sky Mavis – the company behind the P2E game Axie Infinity – had been exploited. Axie runs on Ethereum with help from Ronin, which is technically a sidechain or parallel network.

The hackers gained access to private keys and forged two fake withdrawals of 173,600 Ether and 25.5m USDC, jointly valued at the time at $625m. Over the month that followed, Ether’s value sank from $3,445.24 to $2,785.59, although the wider crypto market was enduring a bear run at the time so it’s not clear how much of this downturn was thanks to the Ronin hack.

The US government later identified the hackers as the Lazarus Group, who work on behalf of the North Korean state.

April 12th, 2022. Ether Price: $2,998.6

The former Ethereum developer Virgil Griffith is sentenced to 63 months behind bars in a US prison and fined $100,000 after pleading guilty for aiding the North Korean state.

Griffith was arrested in November 2019 after delivering a presentation at a cryptocurrency conference in which he explained how Kim Jong-un’s regime could circumvent US sanctions using crypto. The conference had dozens of North Korean officials in attendance.

April 21st, 2022. Ether Price: $3,146.45

Twitter founder Jack Dorsey unleashes scathing criticism of Ethereum, saying it has “many single points of failure,” and that many projects on Ethereum are “not interesting.” This criticism follows Dorsey’s earlier comments criticizing the Web3 space for being too reliant on venture capital funding and for not being owned by “the people.”

On the same day, Camila Russo (Chiefess at the Defiant) announces that the Hollywood film director Ridley Scott will produce a movie about Ethereum based on Russo’s book, the Infinite Machine. Scott has directed numerous Oscar-winning films, including Alien, Gladiator, and the Martian.

April 30th, 2022. Ether Price: $2,820.08

Yuga Labs, the crypto company behind the Bored Ape Yacht Club NFT collection, kicks off a huge sale of 200,000 plots of virtual land. 55,000 plots were sold for 305 ApeCoin – worth $8,500 at the time – during the first day via the Ethereum blockchain.

Yuga’s land sale drove Ethereum’s gas fees to heights rarely seen before, and OpenSea transactions reportedly exceeded $3,500 per transaction.  This led to people paying more than $3,000 in fees for NFTs worth just a few bucks.

These weren’t even the highest fees paid because on Ethereum, you can always pay a higher fee to bump your transaction to the front of the queue. However, if you don’t have enough in gas fees, your transaction doesn’t go through, but you still have to pay the gas fees, which led to some people paying thousands of dollars in gas fees for transactions that didn’t go through.

May 1st, 2022. Ether Price: $2,807.64

The Wikipedia foundation, which accepted Bitcoin and Ethereum donations via BitPay since 2014, announces it is discontinuing the crypto donations. The decision followed a three-month discussion that wrapped up at the end of April with a poll in which 70% of respondents said they wanted to discontinue all cryptocurrency donations. It was later revealed that just 0.08% of Wikipedia’s revenue comes from crypto, and the foundation had never held any crypto.

A week later, Gucci announced that it would accept payments in crypto, including Ethereum, across five of its US stores by the end of May. The designer brand established itself early within the Web3 space, and launched multiple NFT collections in 2022.

May 8th, 2022. Ether Price: $2,549.94

Following some rumors that spread earlier in the year, Meta’s Instagram announces it will support NFTs from Ethereum, and that users won’t have to pay to display their NFT artworks as they initially did on Twitter. It was suggested at the time that NFTs could enjoy a second wind once the update goes live as a billion Instagrammers create and share their own NFTs.

May 9th, 2022. Ether Price: $2,509.45

The Terra Network, led by South Korean developer Do Kwon, officially collapses. Its algorithmic stablecoin, UST, slips from its $1 peg after someone swaps $85m UST for USDC, another stablecoin. Terra’s companion token Luna – designed to balance the UST stablecoin – crashed 96% in the following 24 hours.

Following Terra’s collapse, the crypto markets crashed, and Ether sank from $2,517 to $1,807 in 72 hours.

May 20th, 2022. Ether Price: $2,026.21

The crypto community dusts off its tiniest violin and plays a melancholy tune for Ethereum founder Vitalik Buterin who announces that following the recent crypto crash, he’s no longer a billionaire. He did however clarify that he and other people “deep in crypto” actually welcome a bear market and cheaper digital coins.

June 1st, 2022. Ether Price: $1,930.97

Ethereum continues leading the NFT revolution. As of June 1st, Ethereum had an NFT sales volume of $27.5bn. This was welcome news at the time as Ether had recently dipped below $2,000 for the first time in over a year.

June 8th, 2022. Ether Price: $1,801.60

Hollywood actor Anthony Hopkins reveals on Twitter he had recently bought an ENS domain name for a crypto wallet. This is a common move in the NFT and crypto community, but less so amongst the Hollywood elite.

The actor then Tweeted Snoop Dogg, Jimmy Fallon and Reese Witherspoon asking for recommendations for where to buy his first NFT: “I’m astonished by all the great NFT artists. Jumping in to acquire my first piece, any recommendations?” Fallon responded first: “I love your pondering photo. There [are] a bunch of great artists out there and it’s a fun community in general.”
Hopkins was one of the first major film stars to get into NFTs after playing a tech billionaire in the sci-fi film Zero Contact, which was released as an NFT. Since then Hopkins has launched an NFT collection – called The Eternal Collection – which features sci-fi style images of the actor himself as various characters, pictured below.

June 13th, 2022. Ether Price: $1,127.21

Goldman Sachs starts trading an Ethereum derivative called non-deliverable forwards, which pays out in cash based on Ether’s price movements. This new derivative gives institutional investors exposure to Ether without holding it directly.

Goldman's new foray into crypto marked another step toward crypto adoption in the institutional banking sector.

June 15th, 2022. Ether Price: $1,103.69

During a deep downswing for Ethereum, Mark Cuban – a long-time Ethereum fan – suggests the most innovative projects will rise to the top while those “sustained by cheap, easy money” and others who lack “valid business prospects” will disappear: “when the tide goes out, you get to see who is swimming naked.”

Cuban later told Fortune that “Disruptive applications and technology released during a bear market, whether stocks or crypto or any business, will always find a market and succeed.”

June 16th, 2022: Ether Price:

Bloomberg reports that according to new research, Ethereum miners spent $15bn on GPUs over the previous 18 months. When accounting for CPUs, PSUs, and other parts, the true cost could be considerably higher. At the time, it was estimated that Ethereum miners accounted for 10% of the world’s GPU usage during the preceding 18 months. It is widely expected that following a successful Merge, GPU prices will nosedive.

June 18th, 2022: Ether Price: $896.11

Ethereum drops to $896.11 – its lowest price in years.

June 21st, 2022: Ether Price: $1,129.72

Ethereum developers announce the Sepolia testnet (which will eventually replace the Ropsten testnet) will soon undergo a trial run of the Merge, setting the stage for the real thing.

Testnets like Sepolia are designed to imitate the operating conditions of mainnets – Ethereum in this case – without risking damage to the mainnet itself.

June 23rd, 2022. Ether Price: $1,115.98

Harmony, a layer-1 Ethereum blockchain, is hacked. The Harmony team reports that at 5:30pm PST, through a sequence of eleven transactions, hackers stole approximately $100m in Ether from their bridge, Horizon. The bridge was designed for fast, low-cost transactions between different blockchains like Ethereum, Binance, and Bitcoin.

Curiously, a blockchain developer called Ape Dev actually predicted the breach in April earlier the same year: “if two of the four multisig signers are compromised, we're going to see another 9 figure hack.”
In an attempt to retrieve the stolen funds, Harmony offered a $1m bounty for the return of the stolen assets. The following day, the hackers moved about a third of the stolen funds to Tornado Cash, the crypto mixer, signaling they had declined the offer.

June 30th, 2022. Ether Price: $1,087.91

Ethereum developers announce more delays to the Merge while they carry out further testing. They suggest September as the likeliest estimate for the long-awaited update.

In order to do this, the developers had to push back the difficulty bomb; an update which significantly increases the complexity of PoW calculations and therefore the time it takes for miners to process transactions.

The difficulty bomb was designed to incentivise the community to accelerate the transition to a more environmentally friendly model via the Merge. But if it goes off too long before the Merge, transactions on Ethereum would slow down considerably, hence why it was pushed back.

Whenever the developers push back the difficulty bomb, a network update must take place. This one was called Gray Glacier. This delay announcement was met with considerable huffing and puffing since this wasn’t the first time the devs had pushed back the difficulty bomb and delayed the Merge.

July 3&4th, 2022: Ether Price: $1,094.57

The Ethereum Name Service (ENS) enjoys a surge of registrations over the first weekend of July 2022. There were 64,000 .eth names generated on Sunday and Monday alone, and more than 108,000 over the previous week.

The ENS issues and renews .eth domain names on Ethereum. These domain names are sold as NFTs and link to individual cryptocurrency wallets. Once you own an ENS domain name, you can renew it forever or sell it to someone else. As such, some of the more interesting domain names have sold for considerable sums of money. For instance, 000.eth sold for 300 Ether, a sum worth $344,000 at the time.

July 12th, 2022. Ether Price: $1,056.99

A sophisticated phishing campaign allows hackers to steal 7,573.94 Ether – worth $8m at the time – from 74,000 Uniswap users. The hackers set up a fraudulent airdrop which they claimed would provide 400 free UNI tokens to users who connect their wallets to specific smart contracts.

But when the users connected their wallets to the smart contract, hackers gained access to their liquidity pool (LP) tokens, which represent their liquidity on Uniswap, and could spend them on the user’ behalf. The hackers withdrew the liquidity from Uniswap in Ether and moved the stolen funds through Tornado Cash – the crypto mixer.

It was later pointed out that the fraudulent smart contract wasn’t verified - a major red flag that many victims unfortunately failed to notice.

July 26th, 2022. Ether Price: $1,367.32

Ethereum sees its highest number of active wallet addresses in a single day: 1,066,898, up from 607,651 the previous day. Over the course of July, the total number of active Ethereum wallets increased by 72% while gas fees halved compared to the previous month. By the end of the following day, Ether’s price had surged by nearly 20%.

July 27th, 2022. Ether Price: $1,625.39

Michael Saylor, MicroStrategy CEO and famed Bitcoin maximalist, cautions investors against investing in Ethereum. He cited Ethereum’s technical development as the cause for concern, which Vitalik Buterin had recently suggested was about 40% complete. While speaking at the Blockchain Economy Istanbul event, Saylor said, “the protocol doesn’t look like it’s going to be completed or stable for another thirty-six months.”

July 28th, 2022. Ether Price: $1,613.80

After years of testnet merges and shadow forks, Ethereum developers begin the final dress rehearsal for the Merge. Lead developer Tim Beiko announced the details on Twitter: that the Goreli testnet will merge with its Beacon Chain (called Prater) as one final test to ensure the real Merge goes through without a hiccup. Following the announcement, Ethereum’s price temporarily surges.

July 29th, 2022. Ether Price: $1,737.72

The city of Miami announces plans to launch 5,000 Ethereum NFTs later in 2022. Miami’s Mayor Francis X Suarez is a famed crypto fanatic, and this latest foray is another stage in his roadmap to turn Miami into a hub of crypto innovation.

July 31st, 2022: Ether Price: $1,700.16

Vitalik Buterin suggests the tech giants will have a hard time “purposely” constructing the metaverse, and that Facebook’s (now Meta) attempt to get in early will fail because “it’s way too early to determine what people want,” and that “anything Facebook creates now will misfire.”
Some believe the metaverse will be realized through new venture capital funded enterprises and that centralized metaverses like those proposed by Meta and Microsoft will centralize the ownership of digital goods and services, which flies in the face of current Web3 thinking.

August 7th, 2022: Ether Price: $1705.72

Israeli researchers publish a research paper claiming to have discovered a consensus-level, “risk-less” attack on Ethereum subsequently named “Uncle Maker”.

Each Uncle Maker attack involved changing timestamps for mined blocks to avoid increased difficulty on the network. The exploit allowed malicious miners to create new “Uncle” blocks which are removed from the blockchain but are nevertheless valid and still receive rewards. And each time an Uncle Maker attack occurred; another miner lost all their transaction fees.

One of the authors, Aviv Yaish, suggested in a Tweet that F2Pool – a crypto mining pool – had used this exploit for more than two years, and that the evidence had been “hiding in plain sight” the whole time. He said, “For each successful instance of the attack, F2Pool earned 14% more from block rewards, and in addition earned all the transaction fees contained within.” Other on-chain data reportedly supports the claims made in the paper.

August 8th, 2022. Ether Price: $1,795.22

In a highly controversial move, the US Treasury Department puts the Tornado Cash mixing service on the Specially Designated Nationals list, which bans American citizens from using it or transacting with any of its associated crypto addresses.

Tornado, which sits on the Ethereum blockchain, pools together cryptocurrency deposited by different users which lets users swap their cryptocurrency privately and without leaving a trail. When a user deposits currency into the protocol, they can withdraw it to multiple wallets over several days or weeks in different currencies to hide their identity.

Tornado is, like most other mixers, mostly used by privacy advocates. However, hackers and thieves have also used it to hide their ill-gotten gains, including the North Korean Lazarus group. You might remember this bunch from their recent attack on Axie Infinity during which they stole $600m in Ether and stablecoins. The money Lazarus stole was laundered through Tornado shortly after the breach was discovered and will likely contribute to Kim Jung-Un’s nuclear weapon program, hence why the Treasury was so keen to shut Tornado down.

According to the Treasury, Tornado has laundered more than $7bn in crypto since launching in 2019, although what percentage of this sum was illegally obtained isn’t clear; estimates suggest about $1.5bn.

Following the Treasury’s announcement, privacy advocates pointed out that Tornado isn’t so much a company or group as it is a collection of smart contracts running on the Ethereum blockchain. As such, sanctioning Tornado is akin to sanctioning a road or tunnel used by gun smugglers rather than the smugglers themselves. Additionally, UN data shows that between $800bn-$2trn in fiat currency (cash) is laundered every year, so questions were raised about why the treasury had prioritized banning just one crypto mixer when many bigger fish remain unfried.
A few crypto platforms then moved to blacklist wallet addresses that had interacted with Tornado’s smart contracts, including Circle, which issues the USDC stablecoin. This, and the subsequent arrest of one of Tornado’s developers, caused panic in the crypto community, with some people suggesting this was the beginning of the end for private cryptocurrency transactions.

August 9th, 2022. Ether Price: $1,687.61

Following the Tornado Cash sanctions the previous day, an anonymous crypto user who owned a sanctioned wallet begins transferring small quantities of Ether to prominent crypto figures, influencers, and celebrities.

The sender’s true motive isn’t known, but they probably wanted to implicate innocents in the Tornado mess as a way of protesting against the sanctions and frustrating the regulators.

The recipients include Coinbase CEO Brian Fuller, TV host Jimmy Fallon, digital artist Beeple, comedian Dave Chappelle, as well as a wallet for donating to the Ukrainian war effort. Each of the recipients received about 0.1 Ether, worth about $170 on the day.

August 18th, 2022. Ether Price: $1,873.41

Ether’s price recovers to more than double its low of $896.11 in June, just two months previously, massively outperforming Bitcoin and most other cryptocurrencies.

This recovery is largely ascribed to the upcoming Merge by the crypto news sites and commentators. However, some analysts warn that should any bugs impede the Merge, Ether’s price could nosedive ever further than it sank in June; although the years of preparation and million-dollar bug bounty program mean the chances of any network-breaking bugs are slim.

August 24th, 2022. Ether Price: $1,641.49

The Ethereum Foundation announces firm and final dates for the long-awaited Merge; an update which will move Ethereum from a PoW to a PoS consensus mechanism and end Ethereum’s energy intensive mining era.

Once the Merge completes, the network’s energy expenditure will shrink by approximately 99.95%, and miners will be replaced by validators who, rather than mine new Ethereum using expensive equipment, will stake Ether to the blockchain and validate new blocks in exchange for a cut of the fees. These validators’ staked Ether is held as a bond to guarantee they validate transactions honestly.

Besides improving the network’s energy efficiency, the Merge is expected to bring a host of additional benefits to Ethereum by laying the groundwork for further updates. These include update EIP-4844, which is planned for some time in 2023 and which will improve Ethereum’s scalability by facilitating the deployment of sharding – a technical feature that splits the blockchain horizontally to spread out its workload. It is also expected to boost Ethereum’s Layer 2 rollups’ scalability by up to 100 times and thereby lower the network’s fees considerably.

Another expected change to Ethereum following a successful merge is less Ether entering the market over time. Some estimates suggest annual Ether issuance will drop from 5.5m to 0.6m Ether, or by about 90%. Some estimates even suggest Ether could eventually become a deflationary cryptocurrency.

September 6th, 2022. Ether Price: $1,665.

The Bellatrix upgrade goes live on epoch 144896 following years of painstaking work carried out by Ethereum developers. The upgrade signifies the first stage of the Merge, which represents the joining of Ethereum’s Mainnet with the new PoS consensus layer: the Beacon Chain.

Once the Merge completes, the Beacon Chain will be responsible for creating new blocks and rewarding validators with Ether in exchange for ensuring those blocks are valid. This means Ethereum will no longer rely on miners to validate transactions on the network.

The Merge is near-universally considered a positive step given how energy intensive PoW mining is, and how much criticism Ethereum’s developers have faced for delaying the Merge half a dozen times or so. According to the Ethereum.org site, the Merge will reduce Ethereum’s energy consumption by 99.95%.
The Merge’s second stage – Paris - will transition Ethereum’s execution layer, and is expected to trigger once the Terminal Total Difficulty (TTD) reaches 58750000000000000000000. This is predicted to occur sometime between September 10th-20th, 2022 (Buterin suggests September 15th) although he points out the exact date and time depends on Ethereum’s hash rate during the ten-day window.

As soon as the TTD is reached, a Beacon Chain validator will produce a block for the first time. Once Beacon finalizes that block, which will take about 13 minutes, the Merge will be considered complete.

The image below (shared on Twitter by @trent_vanepps) shows Ethereum’s progression toward the Bellatrix and Paris upgrades.
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