Ethereum's Launch (2015): How Smart Contracts Went Live
Ethereum went live on 30 July 2015 after a 2014 crowdsale. Here is the story of its creation, what smart contracts are, and how the network first worked.
Bitcoin showed that a network of strangers could keep a shared ledger of payments. Ethereum, which went live on 30 July 2015, asked a bigger question: could the same kind of network run general-purpose programs? The answer was the smart contract, and it changed what people built on blockchains.
The idea
Vitalik Buterin, a programmer who had written about Bitcoin since 2011, published the Ethereum whitepaper in late 2013. He argued that Bitcoin's scripting language was deliberately limited, and that a blockchain with a more flexible programming environment could support applications beyond payments, such as tokens, registries and escrow agreements.
The proposal attracted a group of co-founders in 2014, including Gavin Wood, who wrote the technical specification known as the Yellow Paper and first proposed the Solidity programming language, and Joseph Lubin, who later founded the software company ConsenSys. An organisation based in Switzerland, the Ethereum Foundation, was set up to support development.
The 2014 crowdsale
To fund development, Ethereum ran a public sale of ether, its native currency, between July and September 2014. Buyers paid with Bitcoin and received ether when the network launched. The sale raised the equivalent of roughly 18 million US dollars at the time of the raise, and it is regarded as one of the earliest large token sales.
What smart contracts are
A smart contract is a program stored on the blockchain that runs exactly as written when someone calls it. It can hold funds, keep records and respond to transactions according to its code. Ethereum nodes all execute the same instructions in the Ethereum Virtual Machine, so every participant reaches the same result.
The name is slightly misleading. A smart contract is not a legal contract by default and it is not intelligent. It is code, and it does what the code says, including when the code contains mistakes.
Gas
Because programs consume network resources, Ethereum charges for computation in a unit called gas. Each operation has a gas cost, and the user pays for the gas their transaction uses, in ether. Gas prevents infinite loops from crashing the network, and it makes people pay for the load they place on it.
Launch: the Frontier release
The first live version, called Frontier, started on 30 July 2015. It was intended for developers and came with warnings that it was early and unfinished. Early users needed command-line tools to run a node or deploy a contract, and block size was restricted by a low gas limit as a precaution until a later step lifted it. Mining was done with proof of work, and later upgrades were planned in stages, with names including Homestead (2016) and Metropolis (2017 and 2019).
| Date | Milestone |
|---|---|
| Late 2013 | Whitepaper published |
| 2014 | Yellow Paper written; public ether sale July to September |
| 30 Jul 2015 | Frontier network launched |
| Mar 2016 | Homestead upgrade, the first stable release |
What people built
- Tokens. Standards such as ERC-20 made it easy to create fungible tokens that worked with wallets and exchanges.
- Decentralised organisations and applications. Early experiments included The DAO in 2016, which ended badly and is covered in a separate article.
- Collectibles and games. Later, ERC-721 enabled unique tokens used for collectibles.
- Financial services. Lending, trading and stablecoin systems appeared, often grouped under the label decentralised finance.
Accounts, contracts and the virtual machine
Ethereum has two kinds of accounts. Externally owned accounts are controlled by a private key, like a Bitcoin address. Contract accounts are controlled by their code, and they act only when a transaction calls them. Both can hold ether and have a balance recorded in the shared state of the network.
Every full node runs the Ethereum Virtual Machine, which executes contract code the same way everywhere. Developers typically write contracts in a high-level language such as Solidity and compile them to bytecode before deploying them. Once deployed, a contract's code cannot normally be changed, which is why mistakes are costly, and why developers test heavily on public test networks before using real funds.
A simple example is a token contract. It keeps a table of balances, and a transfer function that subtracts from one balance and adds to another if the sender is authorised. Many thousands of such contracts followed. If you want to experiment with your own tools, our knowledge base covers the basics of running a server.
Trade-offs
Ethereum's flexibility has costs. More complexity means more places for bugs, and several incidents have shown that code errors can lead to large losses. Fees rise when the network is busy. These issues motivated later upgrades, including the move to proof of stake in 2022. They also explain why other platforms emerged with different design choices.
A practical lesson for site owners
Software you did not write still needs checking. If your site accepts payments or runs plugins and extensions, review what code you run and keep it updated. The Zebra Hosting VPS plans give developers a server environment for building and testing their own applications, including those that interact with blockchains.
