Ethereum is the second largest crypto currency by market capitalization. Today the price of one Ethereum is 2,600$ with a market capitalization of 315 billion dollars. Vitalik Buterin at the age of 23 in 2015 along with other founders like Charles Hoskins, Anthony Di Iorio, Joseph Lubin and Gavin Wood launched Ethereum based on his 2013 paper.
Vitalik joined the bitcoin bandwagon at a very early stage writing for Bitcoin weekly. His first article paid him five bitcoins which were worth four dollars at that time. He then founded Bitcoin Magazine in 2011. Later he quit college and received funding from the Thiel Scholarship program for students who want to drop out from school and to go and build their dream.
Bitcoin had limitations. It was money and it could be sent across the world. It did this job perfectly well but Vitalik and many others had ideas to enhance the language bitcoin was written in so that bitcoin could do complex transactions. They wanted a sophisticated programmable money.
Vitalik proposed this to the core developers or guardians of the bitcoin code but they had a different vision. Hence, he wrote a paper based on his bold vision and circulated it. It gained traction in the crypto community and people across the world sent him funding in bitcoin to implement his vision in exchange for Ethereum when it is built. The Ethereum project raised 31,000 bitcoins in 2014, approximately equal to 18 million dollars.
Bitcoin’s scripting/programming language was intentionally kept simple by the founder and guardians to ensure the security. Ethereum’s programming language solidity was very similar to javascript, which was the most popular programming language among developers. The Ethereum foundation, which was crowd funded gave away grants to incentivize developers to build new projects on Ethereum. The open source community driven approach fostered a collaborative and innovative environment encouraging more developers to get involved.
Ethereum introduced the concept of smart contracts allowing developers to create decentralized applications. The goal was ambitious: to create a “world computer” that enabled anyone to run code without the need for centralized servers. The foundational idea was the Ethereum Virtual Machine (EVM), which allows smart contracts—self-executing contracts with coded terms—to be written in Solidity, a new programming language. These smart contracts could be used to build anything from games to financial instruments to governance protocols.
Smart Contracts
American computer scientist and cryptographer Nick Szabo first proposed the term “smart contract” in 1994. A traditional contract is a written or verbal agreement between two or more parties that is legally enforceable. It outlines the terms and conditions of the agreement, such as what each party agrees to do, the deadlines, and the payment details.
For example, if you hire a contractor to renovate your kitchen, you both might sign a contract that specifies the work to be done, the cost, the timeline, and what happens if something goes wrong. In a traditional contract, we need intermediaries like lawyers, notaries, or banks to draft, verify, and enforce the contract. The parties involved must manually follow through on their obligations. If disputes arise, they may need to be resolved in court, which can be time-consuming and costly.
A smart contract is a digital version of a traditional contract that is automatically executed by computer code. Vending machines are often used as an analogy for smart contracts because they both follow rules to automate actions based on user input. You put money in, select the item you want, and the machine automatically delivers the item if you’ve inserted enough money. There’s no need for a shopkeeper to take your money and not hand you the item – the whole transaction happens automatically based on pre-programmed rules.
Ethereum has grown into a massive ecosystem with applications spanning across finance, art, gaming, identity, and governance. Its core value proposition lies in decentralization and programmability. Smart contracts facilitated ICOs that allowed entrepreneurs anywhere to raise money from anyone in the world. Pre-ICO era you only could raise money for your grand idea within a locale or country due to friction of sending money across borders due to regulations and middleman issues.
Ethereum’s early architecture only allowed about 15 transactions per second, leading to congestion and high fees during periods of high demand. The surge in popularity of NFTs in 2018 and 2021 caused gas fees to spike, sometimes exceeding $100 per transaction. This undermined accessibility, especially for smaller users. The consensus mechanism for Ethereum, like bitcoin was Proof of Work or mining was involved to reward the folks who did work to secure the transactions.
Critics argued that such energy-intensive systems were unsustainable. In response to scalability and environmental concerns, Ethereum underwent “The Merge” in 2022, transitioning to proof-of-stake (PoS), a more energy-efficient consensus model. This marked the end of Ethereum mining and slashed its energy usage by over 99%. The transition was one of the most complex engineering feats in blockchain history. Changing or updating software code in a company is the decision of one person. But in public blockchains like bitcoin and Ethereum every miner and full node who are disturbed across the world has to be convinced to select to run this upgrade.
Ethereum faces fierce competition from newer blockchains like Solana, Avalanche, and Cardano, which claim faster speeds and lower costs. However, Ethereum’s first-mover advantage, active developer base, and continuous innovation keep it at the forefront. The greatest ideas like NFT, DAO, DeFi, DeX, StableCoins all originated in Ethereum, which were all innovations that could not be imagined in the traditional finance world. We will discuss each of them in future articles.
Ethereum has evolved from a white paper idea into a sprawling, multi-billion dollar ecosystem with the potential to redefine how we think about finance, ownership, governance, and the internet itself. It has empowered creators, challenged traditional systems, and sparked global conversations on decentralization and digital sovereignty. But its journey is far from over. With scalability improvements and broader adoption on the horizon, Ethereum remains a living experiment—testing the boundaries of what a decentralized future could look like.
Nithin Eapen is a technologist and entrepreneur with a deep passion for finance, cryptocurrencies, prediction markets and technology. You can write to him at neapen@gmail.com
Disclaimer – The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding italic n the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.