This week marks 7 years since the creation of one of the largest Cryptocurrencies, Ethereum. But the idea dates back to a 20-year-old young Vitalik Buterin and his introduction of the initial whitepaper draft in late 2013 at the annual North American Bitcoin Conference in Miami.It was there he was to meet his future Co-Founders, all of which are deeply integrated with the ecosystem today.Gavin Wood – Solidity Smart contract language creator & Polkadot Founder.Anthony di Lorio – DeCentral FounderJoseph Lubin – ConsenSys FounderCharles Hoskinson – Cardano Founder.1 year later, in 2014, Ethereum completed an $18m funding round, and after a period of successful testing, the Mainnet went live with its first block created on July 30th, 2015.A victim of its own success, Ethereum quickly started experiencing congestion and subsequent high gas fees. The problem is present to this day, and a transition from Proof-of-Work (POW) to Proof-of-Stake (POS) has been the buzzphrase for years as a way toward the promised land of a secure, decentralized, and composable network with endless potential in leading the way towards Web3. A new internet where the power is in the hands of individual users, where competition is overthrown by collaboration, and where creativity and collective governance will supersede institutional control.Except hopefully… with low transaction fees…But this transition exceeds far beyond a move from POW to POS. In fact, Buterin spoke about the long-term plans for Ethereum as recent as July 21st, 2022, at EthCC in Paris where he outlined the plan in detail. A long-term plan first mentioned in this tweet on December 2nd, 2021.
The first step is of course the much-anticipated merge of the Ethereum mainnet with the POS Beacon Chain. This move to POS would entail a fewer set of nodes offering up collateral to stay honest instead raw computing power as in the case of POW.An initial step scheduled for late September 2022 if everything goes as planned leading up to that. But Buterin argues that this transition only will account for roughly 55% completion of the Ethereum net.So what is left?
The Merge is but one small step and to fully realize the potential of Ethereum, we introduce the concept of sharding. This is essentially a solution to the immense amount of computing power required from each node in a network to sustain operations. To help with this bottleneck, sharding is a horizontal spread of processing power and data instead of continuously adding it to only one blockchain. This horizontal spread comes in the form of shards, or sub-chains, over the main blockchain, much like a branched tree. Every shard can be seen as a mini-blockchain with its own dedicated nodes, processing power, and data stored.Before scaling the blockchain in such a way, one must reduce the amount of computing power put into the network. As Proof-of-Work, unlike Proof-of-Stake, by nature is a system that incentivizes the contribution of a significant amount of computing power, the Merge is a needed first step before sharding can offer the scaling effects that are expected.The Ethereum founder expects this step to increase the Ethereum transactions per second (TPS) from 15-20 to 100.000 TPS.
The next step is the introduction of Verkle Trees with the same function as Merkle trees in that you can put a large amount of data into it and have it as a “proof” of any single data point, verifiable only by someone who has the root of the tree. Key difference is the efficiency in retrieving the proof from the blockchain. Where a traditional Merkle tree structure would require 1kb out of a billion data piece structure, a Verkle tree would require less than 150 bytes.In Buterin´s view, this verge will be “great for decentralization”.
After the Verge, we move into something that is less extreme than the sound of it. The Purge will essentially oblige all Ethereum clients to discard data over one year in age. This will reduce the hardware requirements of nodes, allow clients to remove code that only deals with legacy transactions, and reduce the network bandwidth as clients need to sync less data.
The last step, the Splurge, is essentially a bunch of miscellaneous smaller upgrades which will ensure that Ethereum runs smoothly as a result of the prior 4 stages.
As the 2nd largest cryptocurrency with the current highest number of active developers, market share, and public exposure, Ethereum 2.0 holds great promise as a network that has and may continue to lead the way for Layer 1 protocols. Only the future can tell the success of each of these implementations and its long-term implications, but there is a reason why Brickken alongside a multitude of other promising dApps is building on this very network.Regardless of the future, this week we want to celebrate Ethereum as a pioneering and instrumental part of the success we have seen in the blockchain ecosystem over the past 7 years.Happy Birthday, Ethereum!