Ethereum (ETH)

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Ethereum logo.jpg
Founded 2013
Headquarters Zug, Switzerland
Key People Vitalik Buterin, creator; Joseph Lubin, co-creator; Gavin Wood, programmer; Patrick Storchenegger, Legal Advisor
Employees 50-100
Products Ethereum platform, Ether digital token
Twitter @ethereum
LinkedIn Profile
Facebook Ethereum
Blog Ethereum's official blog

Ethereum, or Ether (ETH), is both a cryptocurrency and a decentralized application platform (dApp).[1]


The white paper for Ethereum was created by Vitalik Buterin, a Canadian programmer and co-founder of Bitcoin Magazine, in 2013.[2][3][4] After its release, additional developers signed on to the project, including Gavin Wood. Together, they and other founders launched a crowdfunding campaign in July of 2014 in which investors purchased Ethereum digital tokens (Ether) to serve as shares in Ethereum. They raised $18 million from this campaign.[5]


Ethereum runs on a peer-to-peer network of computers. This network constantly runs applications designed to allow nodes, or individual computers in the network, to contribute to the network's total processing power by mining Ether, the cryptocurrency. While these computer programs can take many different forms, the network is designed to carry out rules that mechanically execute when certain conditions are met, like a contract that is automatically executed by a computer; these are called smart contracts. Ethereum also has its own distributed ledger, which is based on bitcoin's blockchain architecture, and uses cryptography to store, execute, and protect these contracts.[6]

Ethereum is also a Turing complete programming language, used to help developers and publishers build and publish dApps.[7]

The platform launched Frontier, the network's first live release, a year later, in July of 2015.[8] It was described by Ethereum's creators as "first in a series of releases that punctuate the roadmap for the development of Ethereum."[9]

In May 2020, data from Delphi Digital and Skew Analytics showed that user activity on the Ethereum blockchain was at an all-time high, and open interest for Ethereum options on Deribit was higher than ever, reaching $108 million in the last week of May, just before monthly contracts expired.[10][11]

Mainstream support for Ethereum

Support for Ethereum has been strong. Forbes called the Ethereum network "great for innovation."[12] A collection of Fortune 500 companies known as the Enterprise Ethereum Alliance have pledged to help each other develop the Ethereum platform and further "smart contract" technology. There are more than 180 member companies from more than 45 countries.[13] At one time the group included the National Bank of Canada, Cisco, American Family Insurance, CME Group, Toyota Research Institute, Mastercard, and Microsoft.[14][15] By December 2019, of these only Microsoft remained as a member.[16]

Ethereum "Whales"

In May 2019, a study by blockchain research firm Chainalysis found that one-third of the total circulating supply of Ether was held by just 376 people worldwide. These Ethereum whales were found to have infrequent trading behavior. Kim Grauer, a senior economist at Chainalysis, said in an interview with Bloomberg that the majority of these whales are not traders; "they're mostly holding." The study also found that, as with bitcoin, there is a small but statistically significant effect on the volatility of the price of Ether when these whales move their Ether from a wallet to an exchange, as these transactions tend to have large volume.[17]

Releases, Forks and Upgrades

Like bitcoin, Ethereum has undergone a number of updates through software releases which supersede earlier versions, thus creating hard forks in the Ethereum blockchain.


Frontier was the first public software release, allowing users to mine Ether as well as to upload contracts. It was launched on July 31, 2015.[18]


Homestead was launched on March 14, 2016.[19]


Metropolis is the name for a series of software releases that upgrade the Ethereum protocol. The first phase was called Byzantium, followed by the simultaneously launched Constantinople and St. Petersburg releases. The final release under the Metropolis upgrades is called Istanbul.


Byzantium was introduced on October 16, 2017. Byzantium included nine Ethereum improvement proposals (EIPs), including one that reduced the mining reward from five Ether to three Ether.

Constantinople and St. Petersburg

In October 2018, Ethereum announced the system-wide upgrade "Constantinople." The upgrade includes the integration of five separate "Ethereum improvement proposals" (EIPs), which are proposals for upgrades to the Ethereum protocol drafted by members of the Ethereum community. This upgrade took the form of a "hard fork," though it will not lead to a separate cryptocurrency, like the fork that created Ethereum Classic.[20] Originally planned for November, Ethereum core developers agreed on October 19 to delay Constantinople until January 2019.[21]

Constantinople included the integration of the following EIPs:[22]

EIP 145: The integration of "bitwise shifting," a type of information processing designed to improve upon Ethereum's existing information processing methods (authored by Ethereum developers Alex Beregszaszi and Pawel Bylica).

EIP 1052: A technical upgrade designed to improve large-scale code execution on the Ethereum platform - in layman's terms, this means that Ethereum can execute a single type of command simultaneously across the platform with a lower risk of causing a system crash (authored by Nick Johnson and Pawel Bylica).

EIP 1283: Introduces a new pricing model for smart contract developers (authored by Nick Johnson).

EIP 1014: Integrates a new method of scaling for Ethereum (authored by Vitalik Buterin).

EIP 1234: Reduces rewards for block mining from three ETH to two ETH, in order to reduce the inflation of Ether.[23] It also delays the execution of Ethereum's "difficulty bomb," or an upgrade to Ethereum's mining protocols that makes Ether harder to mine (authored by Afri Schoedon).[24]

On January 14, 2019, the Constantinople upgrade was delayed after a major security vulnerability was discovered by ChainSecurity, a smart contract firm. ChainSecurity representatives warned Ethereum developers that if EIP 1283 was implemented, loopholes in the upgrade's code would allow hackers to steal funds from users. Developers including Vitalik Buterin, Hudson Jameson, Nick Johnson, and Evan Van Ness unanimously agreed to delay the upgrade and plan a new fork date on January 18, 2019.[25] Following news of the delay, several major clients of Ethereum, including Go-Ethereum (Geth) and Parity, released software updates giving users the ability to upgrade to new versions of their products that were planned to coincide with the release of Constantinople. They gave their clients the option to downgrade to pre-upgrade versions of their Ethereum-based platforms but firmly recommended against it.[26]

Core Ethereum developers including Buterin, Hudson Jameson, Lane Rettig, Afri Schoedon, Péter Szilágyi, Martin Holste Swende, Danny Ryan, Alexey Akhuno, and others participated in a conference call on January 18 to discuss the upgrade. The developers decided to postpone activating the Constantinople hard fork until sometime between February 26th and 28th in 2019.[27]

St. Petersburg which was launched along with Constantinople disables the part of Constantinople's code that unintentionally created major security issues, as well as reducing the reward for mining on the Ethereum blockchain from 3 ETH to 2, just as the previous hard fork (Byzantium) reduced the mining reward from 5 ETH to 3. The upgrade will implement four out of the five originally-planned upgrades based on the EIPs announced in October 2018.[28]

On February 28, 2019, the upgrades went live. Core Ethereum developers told Coindesk at the time that the process of developing and implementing the upgrade had "dragged on long enough," and that developers were eager to work on other projects related to Ethereum.[29] After the update, the price of Ether saw a small increase, from $135.14 to $136.99.[30]


Istanbul, launched at Ethereum block number 9,069,000 on Saturday, December 7, 2019 implements six EIPs, including ones to improve DOS attack resilience, enable interoperability with the Zcash network, and allow for more sophisticated smart contracts.[31] On December 23 the Ethereum Foundation scheduled the Muir Upgrade of January 1, 2020. The upgrade is designed to delay a looming difficulty bomb embedded in the Istanbul upgrade.[32]

Muir Glacier

On January 2, 2020, Ethereum completed the Muir Glacier hard fork upgrade. It was activated at Block number 9,200,000, implementing only the EIP 2384, an upgrade that delays Ethereum's "difficulty bomb." This delayed the difficulty bomb by 4 million blocks, or approximately 611 days. This was the third time the difficulty bomb was delayed.[33]


On January 12, 2020, Ethereum implemented Agharta, a hard fork that made Ethereum Classic more interoperable with Ethereum. Part of the fork enabled both Constantinople and St. Petersburg on Ethereum Classic under ECIP 1056.[34]


In June 2019, an Ethereum community member named James Hancock began leading a team at Ethereum startup ETHSignals to create a "friendly" fork, which Hancock's team hoped would act as a "sister chain" to Ethereum by vetting ideas and concepts before they could be added to Ethereum's main blockchain, serving as a sort of "test network" for speeding up Ethereum's mainnet, or primary functional coding algorithms. Hancock told Coindesk that "for Ethereum to be sound money, it needs to be very conservative in making changes...for Ethereum to keep pace with competition it needs to keep making changes." He said this dichotomy creates tension, which the Alternateth "sister chain" would be designed to help alleviate.[35][36]

Serenity - AKA Ethereum 2.0

Ethereum 2.0 - also called "Serenity" - is the next planned upgrade for the Ethereum protocol. The biggest differences between it and previous Ethereum upgrades is that Serenity will work off of a proof of stake mechanism and what Ethereum developers call "shard chains." Shard chains are essentially offshoot blockchains from a single, core blockchain (the Ethereum 2.0 protocol) that theoretically allow for greater security, interoperability with other protocols, faster transaction times, and improved scalability. After the 2.0 upgrade is implemented, Ethereum's original blockchain will become Serenity's first "shard chain," according to Consensys' FAQ on Ethereum 2.0.

ETH 2.0 was originally slated to launch in January 2020, but was delayed. Part of the reason for this is that creating a systemwide upgrade that uses shard chains - a "multi-client approach" - takes much longer than Ethereum developers anticipated, according to Serenity project lead Danny Ryan.[37][38] In an interview, Vitalik Buterin mistakenly said that Serenity would launch in July 2020; he later said that he misheard the question, and did not mean to announce July 2020 as a concrete launch date.[39]

As late as June 2020 "Phase 0," the first step in the Ethereum 2.0 overhaul, was still forecasted to launch in summer 2020.[40] On July 10 an Ethereum 2.0 lead developer, Justin Drake, said in a Reddit "Ask Me Anything" that he was " . . . inclined to say that the earliest practical date for genesis is something like January 3, 2921 (Bitcoins 12th anniversary)." Buterin responded quickly, "FWIW I personally quite disagree with this and I would favor launching phase 0 significantly before that date regardless of level of readiness :D ."[41]


On July 17, 2017, the U.S. Securities and Exchange Commission (SEC) published an investigative report about the collapse of the Ether-funded DAO without bringing enforcement action against any involved parties. The report provides a thorough description of the establishment and organization of the DAO and notes that by doing business with U.S. residents the DAO likely violated the federal securities laws. It found that the DAO tokens would be securities under the Howey test and that they should have been registered and offered pursuant to the Commission's regulations unless they were eligible for exemption. In addition, the Commission indicated that platforms where the DAO tokens were traded probably should have been registered as securities exchanges or other regulated facilities unless there were relevant exemptions available.[42]

The SEC began in May 2018 to look into whether Ether should fall under its authority as a security. Unlike bitcoin, which was determined to be a commodity because it held no pre-launch ICO, Ethereum's blockchain network was funded through a presale of Ether. Also, following the sale, there was no single, central enterprise being invested in, which complicates the question of how to classify Ether.[43]

In June 2018 William Hinman, the SEC's director of the division of corporation finance, stated, “Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.”[44]

In December, the CFTC published a Request for Information (RFI) to the public, whose purpose was to "seek public comment and feedback in order to better inform the Commission's understanding of the technology, mechanics, and markets for virtual currencies beyond bitcoin, namely Ether and its use in the Ethereum Network." The RFI specified that information gathered through the RFI would be considered in future efforts to provide oversight and regulation to the digital asset markets. It also gave three methods members of the public could use to deliver their comments to the Commission, including a mailing address and a link to its public comments website.[45][46]

In an interview on October 10, 2019, during Yahoo Finance's All Markets Summit, CFTC Chairman Heath Tarbert said, “It is my view as chairman of the CFTC that ether is a commodity.”[47] A few weeks later Tarbert told the Invest: NYC conference that his agency as well as the SEC were "thinking carefully" about whether Ethereum's planned shift to a Proof of Stake protocol will affect its status as a commodity.[48] At the time of Tarbert's comments, neither agency had formally addressed Ethereum's regulatory status.

ErisX, a designated contract market (futures exchange), certified to the CFTC that its Ether futures contract complied with the CFTC's regulations.[49] In its letter to the CFTC the exchange said that it would begin trading futures shortly and launched trading on May 11, 2020.[50] Neither the CFTC nor the SEC commented on the launch publicly and their acquiescence seemed to securie Ether's status as a commodity.

In 2020 the DAO, renamed the LAO (Limited Liability Autonomous Organization), re-launched with a new set of rules. Although it unlike the DAO, the LAO restricts the number of people who can participate in it, as well as limiting how much money (in Ether) they can contribute.[51]

Key People


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  2. Who Created Ethereum?. Coindesk.
  3. A Next-Generation Smart Contract and Decentralized Application Platform. Github.
  4. Ethereum whitepaper from Dec 2013. Twitter.
  5. Who Created Ethereum?. Coindesk.
  6. Ethereum: The Ultimate Smart Contract and Decentralized Application Platform. Web Archive.
  7. Who Will Pay for Turing-Complete Smart Contracts?. Coindesk.
  8. Welcome to Frontier!. Ethereum Foundation via Gitbooks.
  9. Ethereum Frontier release: Introduction. Ethereum Foundation via Gitbooks.
  10. Ethereum options open interest reach new heights. Decrypt.
  11. Ethereum Network Use Hits a New All-Time High — Will ETH Price Follow?. Cointelegraph.
  12. How Is Ethereum Different From Bitcoin?. Forbes.
  13. The Numbers. Enterprise Ethereum Alliance.
  14. EEA Members. Enterprise Ethereum Alliance.
  15. How Is Ethereum Different From Bitcoin?. Forbes.
  16. EEA Members. Enterprise Ethereum Alliance.
  17. Just 376 People Found to Own a Third of All Ether Cryptocurrency. Bloomberg.
  18. BitBeat: Ethereum Opens Its ‘Frontier’ for Business. Wall Street Journal.
  19. Homestead Release.
  20. Constantinople Nears: Ethereum's Next Hard Fork Is On Track for 2018. Coindesk.
  21. Ethereum Devs Reach Consensus to Delay Constantinople Hard Fork Until January 2019. Coin Telegraph.
  22. Constantinople Ahead: What You Need to Know About Ethereum's Big Upgrade. Coindesk.
  23. Ethereum's Difficulty Bomb: All Smoke, No Fire?. Bloomberg.
  24. Ethereum's Difficulty Bomb: All Smoke, No Fire?. Coindesk.
  25. Ethereum’s Constantinople Upgrade Faces Delay Due to Security Vulnerability. Coindesk.
  26. Ethereum Clients Release New Software In Wake of Hard Fork Delay. Coindesk.
  27. Ethereum Devs Propose Activating Constantinople Hard Fork in Late February. Coindesk.
  28. Constantinople Incoming: Tomorrow’s Two Ethereum Hard Forks Explained. Coindfesk.
  29. Constantinople Incoming: Tomorrow’s Two Ethereum Hard Forks Explained. Coindfesk.
  30. Ethereum Upgrades as Hard Forks Activate on Blockchain. Coindfesk.
  31. Istanbul upgrade goes live on Ethereum. The Block Crypto.
  32. Ethereum Network Draws Developer Ire After Scheduling New Year’s Day Upgrade. CoinDesk.
  33. Ethereum completes Muir Glacier hard fork update. The Block.
  34. Ethereum Classic Successfully Completes ‘Agharta’ Hard Fork. Coindesk.
  35. What Is a Mainnet, And What Happens When It Launches?. OKEx via Medium.
  36. Meet Alternateth: A ‘Friendly Fork’ of the Ethereum Blockchain. Coindesk.
  37. Ethereum 2.0 FAQ. Cosensys.
  38. ETH 2.0's 'multi-client' approach is contributing to delays, says project lead. The Block.
  39. Vitalik Buterin Clarifies Remarks on Expected Launch Date of Eth 2.0. Coindesk.
  40. Ethereum 2.0: Is the Interest Real or Hype About Nothing?. CoinCentral.
  41. [AMA We are the EF's Eth 2.0 Research Team (Pt. 4 - 10 July, 2020)]. Reddit.
  42. Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO. Securities and Exchange Commission.
  43. SEC decision on Ethereum cryptocurrency could affect others funded by ICOs. Computerworld.
  44. U.S. SEC official says ether not a security, price surges. Reuters.
  45. CFTC Seeks Public Comments on Crypto-asset Mechanics and Markets. CFTC.
  46. Request for Input on Crypto-asset Mechanics and Markets. CFTC.
  47. CFTC says cryptocurrency ether is a commodity, and ether futures are next. Yahoo Finance.
  48. What the CFTC Chairman Actually Said About Ether Futures and Ethereum 2.0. CoinDesk.
  49. Re: CFTC Regulation 40.2(a) Certification. U.S. Commodity Futures Trading Commission.
  50. ErisX Pioneers First U.S. Based Ether Futures Contract. Business Wire.
  51. Ethereum Users Giving the DAO Another Try After Digital Stickup. Bloomberg.