Ether (ETH)

Background

Ethereum is an open-source blockchain platform conceived in 2013 by programmer Vitalik Buterin, along with co-founders Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin. Buterin proposed Ethereum in a white paper as a way to extend blockchain technology beyond Bitcoin’s digital currency focus, aiming to create a platform that supports decentralized applications (dApps) and smart contracts with a Turing-complete programming language.

Development and Launch

Development began in 2014, funded by a crowdsale that raised approximately $18 million in Bitcoin. The Ethereum network officially launched on July 30, 2015, marking the start of a new era in blockchain technology focused on programmability and decentralized computing.

Technology and Functionality

Ethereum introduced the Ethereum Virtual Machine (EVM), enabling developers to create and deploy smart contracts—self-executing code that enforces agreements without intermediaries. This innovation expanded blockchain use cases beyond simple financial transactions.

Consensus Mechanism

Ethereum’s consensus mechanism evolved significantly with its transition from proof-of-work (PoW) to proof-of-stake (PoS), completed in September 2022 during an upgrade known as “The Merge.” Under PoW, miners competed to solve complex puzzles to validate transactions, which required immense computational power and energy. This method, while secure, was energy-intensive and led to centralization tendencies due to the need for specialized mining hardware

Supply

Ethereum does not have a fixed maximum supply like Bitcoin, allowing its total supply to grow over time. New ETH is primarily issued as rewards to validators under its proof-of-stake consensus mechanism. However, since the introduction of EIP-1559, a portion of transaction fees is burned, which can reduce the overall supply and even make Ethereum deflationary during periods of high network activity. This dynamic supply model balances issuance with fee burning to help manage inflation and promote scarcity.

Governance

Ethereum governance is a decentralized, community-driven process where protocol changes are proposed through Ethereum Improvement Proposals (EIPs) and discussed openly by developers, users, and stakeholders. Decisions are made offchain through social consensus rather than formal onchain voting, with core developers playing a key role in reviewing and implementing updates. Major changes are activated via coordinated network upgrades (hard forks), ensuring the protocol evolves while maintaining decentralization and security.

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