What Is Ethereum (ETH)?

Ethereum is a decentralized open-source blockchain system that features its

own cryptocurrency, Ether. ETH works as a platform for numerous
other cryptocurrencies, as well as for the execution of decentralized smart
contracts.

Ethereum was first described in a 2013 whitepaper by Vitalik Buterin.

Buterin, along with other co-founders, secured funding for the project in an
online public crowd sale in the summer of 2014. The project team managed
to raise $18.3 million in Bitcoin, and Ethereum’s price in the Initial Coin
Offering (ICO) was $0.311, with over 60 million Ether sold. Taking Ethereum’s
price now, this puts the return on investment (ROI) at an annualized rate of
over 270%, essentially almost quadrupling your investment every year since
the summer of 2014.

The Ethereum Foundation officially launched the blockchain on July 30, 2015,
under the prototype codenamed “Frontier.” Since then, there has been
several network updates — “Constantinople” on Feb. 28, 2019, “Istanbul” on
Dec. 8, 2019, “Muir Glacier” on Jan. 2, 2020, “Berlin” on April 14, 2021, and
most recently on Aug. 5, 2021, the “London” hard fork.

Ethereum’s own purported goal is to become a global platform for

decentralized applications, allowing users from all over the world to write
and run software that is resistant to censorship, downtime and fraud.

Who Are the Founders of Ethereum?

Ethereum has a total of eight co-founders — an unusually large number for a

crypto project. They first met on June 7, 2014, in Zug, Switzerland.

 Russian-Canadian Vitalik Buterin is perhaps the best known of the bunch.

He authored the original white paper that first described Ethereum in
2013 and still works on improving the platform to this day. Prior to ETH,
Buterin co-founded and wrote for the Bitcoin Magazine news website.
 British programmer Gavin Wood is arguably the second most important
co-founder of ETH, as he coded the first technical implementation of
Ethereum in the C++ programming language, proposed Ethereum’s

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 native programming language Solidity and was the first chief technology
officer of the Ethereum Foundation. Before Ethereum, Wood was a
research scientist at Microsoft. Afterward, he moved on to establish the
Web3 Foundation.

Among the other co-founders of Ethereum are: - Anthony Di Iorio, who

underwrote the project during its early stage of development. - Charles
Hoskinson, who played the principal role in establishing the Swiss-based
Ethereum Foundation and its legal framework. - Mihai Alisie, who provided
assistance in establishing the Ethereum Foundation. - Joseph Lubin, a
Canadian entrepreneur, who, like Di Iorio, has helped fund Ethereum during
its early days, and later founded an incubator for startups based on ETH
called ConsenSys. - Amir Chetrit, who helped co-found Ethereum but stepped
away from it early into the development.

What Makes Ethereum Unique?

Ethereum has pioneered the concept of a blockchain smart contract

platform. Smart contracts are computer programs that automatically execute
the actions necessary to fulfill an agreement between several parties on the
internet. They were designed to reduce the need for trusted intermediates
between contractors, thus reducing transaction costs while also increasing
transaction reliability.

Ethereum’s principal innovation was designing a platform that allowed it to

execute smart contracts using the blockchain, which further reinforces the
already existing benefits of smart contract technology. Ethereum’s
blockchain was designed, according to co-founder Gavin Wood, as a sort of
“one computer for the entire planet,” theoretically able to make any program
more robust, censorship-resistant and less prone to fraud by running it on a
globally distributed network of public nodes.

In addition to smart contracts, Ethereum’s blockchain is able to host other

cryptocurrencies, called “tokens,” through the use of its ERC-20 compatibility
standard. In fact, this has been the most common use for the ETH platform
so far: to date, more than 280,000 ERC-20-compliant tokens have been
launched. Over 40 of these make the top-100 cryptocurrencies by market
capitalization, for example, USDT, LINK and BNB. Since the emergence

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 of Play2Earn games, there has been a substantial increase in interest in
the ETH to PHP price.

Ethereum London Hard Fork

The Ethereum network has been plagued with high transaction fees, often
buckling at seasons of high demand. In May 2021, the average transaction
fee of the network peaked at $71.72.

In addition to the high cost of transactions, the leading altcoin also suffers
from scalability issues.

As already mentioned, there are plans to transition to a proof-of-stake

algorithm in order to boost the platform’s scalability and add a number of
new features. The development team has already begun the transition
process to ETH 2.0, implementing some upgrades along the way, including
the London hard fork.

The London upgrade went live in August 2021. It included five Ethereum
Improvement Proposals (EIPs), namely EIP-3529, EIP-3198, EIP-3541, and
most notably EIP-1559 and EIP-3554.

EIP-1559 is arguably the most popular upgrade out of all the EIPs.

What Is EIP-1559?

The EIP-1559 upgrade introduces a mechanism that changes the way gas
fees are estimated on the Ethereum blockchain. Before the upgrade, users
had to participate in an open auction for their transactions to be picked up by
a miner. This process is known as a “first-price auction,” and as expected,
the highest bidder wins.

With EIP-1559, this process is handled by an automated bidding system, and

there is a set “base fee” for transactions to be included in the next block.
This fee varies based on how congested the network is. Furthermore, users
who wish to speed up their transactions can pay a “priority fee” to a miner
for faster inclusion.

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 EIP-1559 also introduces a fee-burning mechanism. A part of every
transaction fee (the base fee) is burned and removed out of circulation. This
is intended to lower the circulating supply of Ether and potentially increase
the value of the token over time.

Interestingly, less than two months after the London upgrade was
implemented, the network had burned over $1 billion worth of Ether.

Related Pages:

New to crypto? Learn how to buy Bitcoin today.

Want to keep track of Ethereum price live? Download the CoinMarketCap

mobile app!

Want to look up a transaction? Visit our block explorer.

Curious about the crypto space? Read our educational section — Alexandria.

How Many Ethereum (ETH) Coins Are There In Circulation?

In September 2021, there were around 117.5 million ETH coins in circulation,
72 million of which were issued in the genesis block — the first ever block on
the Ethereum blockchain. Of these 72 million, 60 million were allocated to
the initial contributors to the 2014 crowd sale that funded the project, and 12
million were given to the development fund.

The remaining amount has been issued in the form of block rewards to the
miners on the Ethereum network. The original reward in 2015 was 5 ETH per
block, which later went down to 3 ETH in late 2017 and then to 2 ETH in early
2019. The average time it takes to mine an Ethereum block is around 13-15
seconds.

In the August 2021 Ethereum network upgrade, the London hard fork
contained the Ethereum Improvement Protocol, EIP-1559. Instead of the first-
price auction mechanism where the highest bidder wins, EIP-1559 introduces
a “base fee” for transactions to be included in the next block. Users that
want to have their transaction prioritized can pay a “tip” or “priority fee” to

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 miners. As the base fee adjusts dynamically with transaction activity, this
reduces the volatility of Ethereum gas fees, although it does not reduce the
price, which is notoriously high during peak congestion on the network.

One of the major differences between Bitcoin and Ethereum’s economics is

that the latter is not deflationary, i.e. its total supply is not limited.
Ethereum’s developers justify this by not wanting to have a “fixed security
budget” for the network. Being able to adjust ETH’s issuance rate
via consensus allows the network to maintain the minimum issuance needed
for adequate security.

With the introduction of EIP-1559 however, the base fees used in

transactions are burned, removing the ETH from circulation. This means
higher activity on the network would lead to more ETH burned, and the
decreasing supply should lead to appreciation of Ethereum price, all things
equal. This has the potential to make Ethereum deflationary, something ETH
holders are excited about — a potential appreciation in Ethereum price today.

How Is the Ethereum Network Secured?

As of August 2020, Ethereum is secured via the Ethash proof-of-work

algorithm, belonging to the Keccak family of hash functions.

There are plans, however, to transition the network to a proof-of-stake

algorithm tied to the major Ethereum 2.0 update, which launched in late
2020.

After the Ethereum 2.0 Beacon Chain (Phase 0) went live in the beginning of
December 2020, it became possible to begin staking on the Ethereum 2.0
network. An Ethereum stake is when you deposit ETH (32 ETH is required to
activate validator software) on Ethereum 2.0 by sending it to a deposit
contract, thus helping to secure the network by storing data, processing
transactions and adding new blocks to the blockchain. At the time of writing
in mid-September 2021, the Ethereum price now for 32 Ether is roughly
$116,029. The amount of money earned by Ethereum validators right now is
a return of 6% APR, which equates to around 1.91952 ETH, or $6960 in

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 Ethereum price today. This number will change as the network develops and
the amount of stakers (validators) increase.

Ethereum staking rewards are determined by a distribution curve (the

participation and average percent of stakers): some ETH 2.0 staking rewards
were at 20% for early stakers, but will be lowered to end up between 7% and
4.5% annually.

The minimum requirements for an Ethereum stake are 32 ETH. If you decide
to stake in Ethereum 2.0, it means that your Ethererum stake will be locked
up on the network for months, if not years, in the future until the Ethereum
2.0 upgrade is completed.

Where Can You Buy Ethereum (ETH)?

Given the fact that Ethereum is the second-largest cryptocurrency after

Bitcoin, it is possible to buy Ethereum, or use ETH trading pairs on nearly all
of the major crypto exchanges. Some of the largest markets include:

 Binance
 Coinbase Pro
 OKEx
 Kraken
 Huobi Global

To check Ethereum price live in the fiat currency of your choice, you can use
CoinMarketCap’s converter feature directly on the Ethereum currency page.
Alternatively, use the dedicated exchange rate converter page. Popular
Ethereum price pairs include: ETH/USD, ETH/GBP, ETH/AUD and ETH/JPY.

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