Ethereum facts for kids
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| Original author(s) | Vitalik Buterin Gavin Wood |
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| Initial release | 30 July 2015 |
| Stable release | 1.12.2 / 13 August 2023 |
| Development status | Active |
| Software used | EVM 1 Bytecode |
| Written in | Go, Rust, C#, C++, Java, Python, Nim, TypeScript |
| Operating system | Cross-platform |
| Platform | x86-64, ARM |
| Available in | Multilingual, but primarily English |
| Type | Distributed computing |
| License | Open-source licenses |
| Active hosts | ~8,600 nodes (6 June 2023) |
Ethereum is like a giant, worldwide computer that anyone can use. It's a special kind of blockchain, which is a secure and public record of information. What makes Ethereum cool is its ability to run "smart contracts." These are like automatic agreements that carry out tasks when certain conditions are met, all without needing a middleman.
The digital money used on the Ethereum platform is called Ether (often shortened to ETH). It's the second-biggest cryptocurrency in the world, right after bitcoin. Ethereum is also open-source software, meaning its code is public and anyone can see and help improve it.
A programmer named Vitalik Buterin first thought of Ethereum in 2013. Other important people who helped start it include Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin. Work on Ethereum began in 2014, and people helped fund it through crowdfunding. The network officially started on July 30, 2015.
Ethereum lets people create and use special programs called decentralized applications (dApps). These apps are permanent and can't be changed once they're on the network. Users can interact with them directly. Ethereum also helps with Decentralized finance (DeFi). DeFi apps let people do financial things, like borrowing or lending digital money, without needing banks or other traditional companies.
Another popular use for Ethereum is creating and trading non-fungible tokens (NFTs). NFTs are like unique digital collectibles, such as digital art or special items in games. Many other cryptocurrencies also use Ethereum's technology (called the ERC-20 token standard) to exist and be traded.
On September 15, 2022, Ethereum made a big change called "the Merge." It switched how it secures its network from "proof-of-work" to "proof-of-stake." This change made Ethereum use 99% less energy, which is much better for the environment!
How Ethereum Started
The Big Idea (2013–2014)
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Vitalik Buterin, a programmer and co-founder of Bitcoin Magazine, first wrote about Ethereum in late 2013. He had an idea for building apps that weren't controlled by any single company or person. Buterin believed that blockchain technology could be used for more than just digital money. He wanted a stronger language for creating apps that could link real-world things, like stocks or property, to the blockchain.
Buterin shared his ideas at a conference in Miami in January 2014. There, he met Gavin Wood, Charles Hoskinson, and Anthony Di Iorio. They rented a house together to plan what Ethereum could become. Joseph Lubin also joined them.
Ethereum has many founders. Anthony Di Iorio said that Vitalik Buterin, himself, Charles Hoskinson, Mihai Alisie, and Amir Chetrit were the first five. Joseph Lubin, Gavin Wood, and Jeffrey Wilcke joined soon after. Buterin picked the name "Ethereum" from a list of science fiction elements. He liked that it sounded nice and reminded him of "ether," a made-up invisible substance that was once thought to fill the universe and allow light to travel. He wanted his platform to be the hidden, underlying system for all the apps built on it.
Building the Software (2014)
The actual work of building Ethereum's software began in early 2014. A Swiss company called Ethereum Switzerland GmbH (EthSuisse) started the project. Gavin Wood, who was the chief technology officer, wrote down the detailed plan for how Ethereum's "smart contracts" would work. This plan described the Ethereum Virtual Machine (EVM).
Later, a non-profit group called the Ethereum Foundation was created in Switzerland. To pay for the development, they held an online public sale in 2014. People could buy Ether, Ethereum's digital money, using bitcoin. Many people were excited about Ethereum's new ideas, but some also wondered about its security and how well it would handle many users.
First Launch and a Big Event (2014–2016)
Over 18 months, the Ethereum Foundation created several test versions of Ethereum. "Olympic" was the last test version before the official launch. Users who helped test the network and found bugs were rewarded with Ether.
On July 30, 2015, Ethereum officially launched with "Frontier." This was when the first block of transactions, called the "genesis block," was created. Since then, Ethereum has had many planned upgrades to improve how it works. These upgrades are done through a process called a "hard fork," which means making big changes to the network's rules.
In 2016, a special organization built on Ethereum called The DAO raised a huge amount of money, about $150 million. But in June 2016, someone hacked The DAO and stole about $50 million worth of its digital tokens. This caused a big discussion: should Ethereum change its history to get the stolen money back? This led to a "hard fork" that split the network into two different blockchains: Ethereum (where the theft was reversed) and Ethereum Classic (which continued on the original path).
Growing and Milestones (2017–Present)
In March 2017, many big companies and research groups formed the Enterprise Ethereum Alliance (EEA). They wanted to explore how Ethereum could be used by businesses. By July 2017, over 150 members had joined, including companies like Microsoft, Intel, J. P. Morgan, and MasterCard.
CryptoKitties and Digital Collectibles
In 2017, a game called CryptoKitties became very popular on Ethereum. It let users collect and trade unique digital cats as NFTs. This game brought a lot of attention to Ethereum. It also showed that Ethereum needed to improve how many transactions it could handle, as the game sometimes slowed down the network.
In January 2018, a new standard for NFTs on Ethereum was created, called ERC-721. This standard made it easier to create and trade unique digital items. It helped Ethereum become a central part of the huge market for digital collectibles.
Recent Developments
By January 2018, Ether was the second-largest cryptocurrency by value, and it has stayed that way.
In March 2021, Visa Inc. announced it would start using Ethereum for some of its transactions. In April 2021, big banks like JP Morgan Chase and UBS invested $65 million in a company that builds Ethereum tools.
Ethereum had two major upgrades in 2021: "Berlin" and "London." The "London" upgrade included a change (EIP 1559) that helps make transaction fees more stable. It also "burns" (destroys) a part of the fees, which can reduce the total amount of Ether over time.
Ethereum 2.0 and The Merge
Ethereum 2.0 (Eth2) was a plan for big upgrades to Ethereum. The main goal was to switch the network to "proof-of-stake" and make it much faster at handling transactions.
The biggest part of this plan, called "The Merge," happened on September 15, 2022. This was when Ethereum officially switched from "proof-of-work" to "proof-of-stake." This change reduced Ethereum's energy use by a massive 99%! This is a huge step for making the network more environmentally friendly.
On March 13, 2024, another important upgrade called "Dencun" went live. This upgrade helped lower the fees for transactions on many of the smaller networks that are built on top of Ethereum.
How Ethereum Works
Overview
Ethereum is a network where many computers, called "nodes," work together. They keep a shared record of all Ethereum accounts and transactions. About every 12 seconds, a group of new transactions, called a "block," is added to this record. Each block is linked to the one before it, forming a long chain of blocks – this is the blockchain.
Every computer (node) in the network connects to some other nodes. They share new blocks and transactions with each other, so the information quickly spreads across the whole network. Each node usually has its own unique set of connections.
Any Ethereum account can become a "validator" by depositing 32 ETH. Validators are like special helpers who secure the network. They are chosen randomly to either create a new block or confirm that a block is correct. If a validator does a good job, they get rewarded with Ether. If they try to cheat or are inactive, they lose some of their deposited ETH. This system encourages everyone to play fair and keep the network running smoothly.
Ether: The Digital Fuel
Ether (ETH) is the digital money that validators earn for adding new blocks to the blockchain. It's also the only currency used to pay for transaction fees on the network. These fees are made of two parts: a "base fee" that gets destroyed (burned), and a "tip" that goes to the validator who adds the block. The tip encourages validators to include your transaction quickly.
Ether is super important for the network to work. When you send Ether, the amount is simply moved from your account to someone else's. People sometimes mistakenly call the entire Ethereum platform "Ether," but Ether is just the currency.
Accounts on Ethereum
There are two main types of accounts on Ethereum:
- User accounts: These are controlled by people. You use them to send and receive Ether, and to interact with smart contracts.
- Contract accounts: These accounts hold the code for smart contracts. When a transaction is sent to a contract account, its code runs automatically.
Both types of accounts have an Ether balance and a unique address, like a digital mailing address.
Ethereum Addresses
Ethereum addresses are like long, unique codes that identify accounts. They start with "0x" and are followed by 40 numbers and letters. For example, 0xb794f5ea0ba39494ce839613fffba74279579268. These addresses are created using a special mathematical process.
The Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) is like the engine of the Ethereum network. It's a special computer program that runs all the smart contracts and transactions. The EVM is designed to work the same way on any computer, no matter what hardware or operating system it uses. This means that if you send a transaction, every computer running the EVM will process it in the exact same way, which helps the network agree on everything.
The EVM has its own set of instructions for doing tasks. Many different programming languages can be used to create programs that the EVM can understand.
Gas: Powering Transactions
"Gas" is a special unit used on Ethereum to measure the amount of effort needed to do something on the network. Think of it like the fuel for your car. Every action on Ethereum, like sending Ether or running a smart contract, costs a certain amount of gas.
When you send a transaction, you set a "gas limit" (the maximum gas you're willing to use) and a "gas price" (how much Ether you'll pay per unit of gas). The higher the gas price you offer, the faster your transaction is likely to be processed by validators. You pay for the gas upfront. If your transaction uses less gas than you paid for, you get the extra back. If it runs out of gas before finishing, it stops, but you still pay for the gas used. Gas prices are often shown in "Gwei," which is a tiny part of an Ether.
What Ethereum is Used For
The Ethereum Virtual Machine is very powerful and can run many different kinds of programs. Here are some popular uses for Ethereum:
Digital Tokens (ERC-20)
The ERC-20 standard is like a blueprint for creating digital tokens on Ethereum. These tokens are "fungible," meaning each one is exactly like another, just like regular money. Many cryptocurrencies have been launched as ERC-20 tokens. This standard makes it easy to transfer tokens, check balances, and see the total supply of a token.
Unique Digital Collectibles (NFTs)
Ethereum also allows for "non-fungible tokens" (NFTs). Unlike ERC-20 tokens, each NFT is unique and cannot be replaced by another. This makes them perfect for representing one-of-a-kind digital items like art, music, sports collectibles, or virtual land in games.
The first NFT project, Etheria, was launched in 2015. In 2021, a digital image with an NFT by an artist named Beeple sold for an amazing $69.3 million!
Decentralized Finance (DeFi)
DeFi means financial services that run on the blockchain, without needing traditional banks or companies. You can use DeFi apps to do things like:
- Borrow money using your crypto as collateral.
- Lend out your crypto to earn interest.
- Trade different cryptocurrencies directly with other people.
Many DeFi apps can connect and work together, creating complex financial services. You usually access these apps through special web browsers or extensions like MetaMask.
Business Uses
Many big companies are exploring how to use Ethereum-based software for their own needs. Companies like Microsoft, IBM, JPMorgan Chase, and Deloitte have experimented with using Ethereum's technology for various projects, including secure payments and managing supply chains. Some companies even use private versions of Ethereum for their specific business needs, where only certain people are allowed to participate.
How Fast is Ethereum?
As of 2016, Ethereum could handle about 25 transactions per second. This speed hasn't changed much even after the move to proof-of-stake. For comparison, a company like Visa can process about 45,000 payments per second. This difference in speed has led to discussions about how Ethereum can handle more users and transactions as it grows.
One idea to make Ethereum faster is called "sharding." This would involve splitting the network into smaller parts, so each computer would only need to store and check a small piece of the network's information. This could help Ethereum handle many more transactions at once.
Images for kids
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The number of daily confirmed Ethereum transactions as of February 2024
See also
In Spanish: Ethereum para niños
