Essentially, Ethereum is an open-source public software platform that focuses on blockchain technology. It features Smart Contract functionality, and enables the developers to build and deploy decentralized applications. To put it simply, the goal of Ethereum is to use a blockchain, which will replace internet third parties, including those that store data, transfer mortgages and keep a track of complex financial instruments.
On top of this, it provides a cryptocurrency known as ether. Much like other cryptocurrencies, it can be transferred between different accounts.
The concept was initially developed by Vitalik Buterin in late 2013; however, it has been disputed that it was actually much earlier, with dates as early as 2009. It came about as a result of his work and research into the Bitcoin community. He initially published the Ethereum White Paper, describing the technical design of Ethereum and the protocol.
So, now that we have highlighted a few of the differences between the two concepts, it is important to highlight the advantages of Ethereum. It’s predicted that Ethereum might even surpass the popularity of Bitcoin.
Thanks to the block time that is set in Ethereum, and the fact that it uses Ghost protocol, it means that the transaction time is much quicker than it is with Bitcoins. Additionally, there is more flexibility with Ethereum thanks to the Turing complete internal code, which means that anything can be calculated as long as there is enough power and time. This cannot be done with Bitcoins.
There are much more limitations with Bitcoins. They use a completely different method for costing transactions, which compete equally with each other. This is limited by the block size, whereas, Ethereum transactions depend on their computational complexity, bandwidth and storage needs.
It is important to note that although the two do have similarities, they are actually very different, so the advantages simply refer to the comparisons, not as individual concepts.
This was a very important year for Ethereum, as it was the time that the concept was first described by Vitalik Buterin, who was previously a programmer who was involved in Bitcoins. He wrote the first paper describing the concept.
Later on this year, Vitalik Buterin proposed a development for a new platform with a general scripting language.
In early 2014, the concept was then formally announced by Vitalik at the North American Bitcoin Conference held in Miami. Here, he announced that he would be collaborating with Dr. Gavin Wood and Jeffrey Wilcke, who are now considered principal core developers.
Vitalik published the ‘Yellow Paper,’ which is the formal specification of Ethereum Virtual Machine, and helped to code the first functional implementation into seven different programming languages. This officially marked the first prototype platform for Ethereum.
Early July saw the launch of the first Ether Sale. Ethereum distributed the initial allocation by exchanging 31,591 Bitcoins for 60,102,216 Ether. This sale was used to repay rapidly mounting legal debts.
The presale of Ether proved to be very successful, raising more than $14M; a great step forward for Ethereum.