The first version of Ethereum came to life on Gavin Wood's laptop at midnight on January 30, 2014. A few days before, while still in Miami, Gav had completed the first-ever trade of ether when he sent a test transaction to Charles Hoskinson. Even though it was in its infancy, Gavin had now built a full working version, which he called the alpha client. It would go through nine revisions, known as proof-of-concepts, before being released publicly in 2015.
For the blockchain to be effective it needs applications running on top of it. And for that you need a programming language for smart contracts. Gav wrote the first one, dubbed LLL. Vitalik and Jeff Wilcke followed his lead when they created their own languages, Mutan and Serpent. Gavin started writing smart contracts, kicking the tires as it all advanced. His first was for a name registry to link people with their test net accounts. Another one he wrote was for a decentralized exchange, where buyers and sellers find each other directly with no party in the middle of the transaction.
This particular part of the Ethereum network, the applications that will run on its blockchain, held a special fascination for Joe Lubin – but maybe not for the reason you might think for the founder of ConsenSys, one of the largest application incubators in Ethereum. Joe actually loves the protocol layer. That's the guts of the blockchain, the code and the clients and how it all interacts. Being an expert in this part of the infrastructure allowed Lubin to instruct and help people who wanted to build decentralized companies.
“The really fun stuff for me is the foundational protocol layer,” Lubin said. “It's where the fundamentally new is being built.”
As Joe battled with Gavin over the balance of power, he also incorporated ConsenSys in November of 2014. Lubin still had crypto-Google on his mind, even if he knew it was years in the future. His belief that it will arrive one day has never wavered; he simply upped the ante by creating a for-profit developer studio. Of course, EthDev continued to hum along in Berlin, and the stakes became a bit more long-term for Joe and Gavin. They were no longer just trying to wrest control of Ethereum for short-term control over how it would be built; their antagonism extended to commercial competition for the applications and industries that would want to use the Ethereum network.
While these issues began to expand in the background, Joe continued to work full time on Ethereum during the fall of 2014 on things like helping to fix a bug that had affected a small number of people buying ether in the crowdsale.
After the Zug meeting, Vitalik headed to San Francisco for a summit of the Thiel Fellowship. He'd been named a fellow in 2014 and had been awarded $100,000 to fund the continuation of Ethereum. Overall he'd been a bit disappointed in the summit; he'd hoped to meet Peter Thiel, a successful venture capitalist and founder of Palantir Technologies, the enormous and secretive data mining and analytics firm that features in the nightmares of privacy advocates the world over (an April 2018 Bloomberg Businessweek story carried the headline “Palantir Knows Everything about You”). While some of the sessions were boring, Vitalik did meet Nick Szabo at the event, whom he described as “one of the major pre-Satoshi pioneers of cryptocurrency.” It turns out Szabo was putting a substantial amount of work into Ethereum, Vitalik wrote home in an email.
But soon, the newest crisis within the Ethereum leadership team would again remake how the foundation was run.
The new makeup of the Ethereum Foundation hadn't helped relieve any of the tension that had come out in the open in June 2014. Gavin recalled many instances after the Zug gathering where Anthony, Mihai, and Stephan Tual engaged in various fights.
“Vitalik attempted to avoid taking sides,” Gav said. “This generally resulted in indecision,” and even small details were taking hours of bickering to resolve. “No individual person was to blame for the bickering, though I think Vitalik could have stepped in if he wanted.”
The crowdsale had changed the calculus for Gavin. The foundation now held public money; they had shareholders in a sense. While owning ether wasn't as clear-cut as owning shares of IBM in terms of shareholder rights, Gavin felt he had a duty to deliver Ethereum in a professional, responsible manner. Put another way, not the way the cofounders were behaving on any given day.
“I came to the realization that the project would be endangered if this ineffectiveness continued,” Gavin said. A developer named Aeron Buchanan, a friend of Gavin's, had joined the project in February, and by the fall of 2014 was helping Gavin run operations in Berlin. The team of developers wanted Ethereum to go live in the winter, and the work seemed to never end.
Vitalik spent the entirety of November in Berlin, hacking away with Gav and Jeff to get their respective clients ready to go live. In February they traveled to Seattle for a security audit. But by March 2015, the next identity crisis was about to erupt. A mandatory meeting of the cofounders was called, again in Zug.
“At that meeting Gav, Jeff, and Aeron took me aside and convinced me that the other half of the leadership was counterproductive,” Vitalik said. “That they're parasites, essentially.” The old divide between the technical and nontechnical sides had never been resolved, it had only grown worse as time went on. Now Vitalik had been convinced that major changes were needed.
Gavin had never fully trusted most of the other cofounders. When he locked the bedroom door in the Zug house after Charles and Amir were fired, he did so because the house was full of tension. Part of that tension came from his insistence that if some of the cofounders weren't let go he would leave the project. His desire to reshape the leadership team was about to be realized.
Anthony Di Iorio had spent the months since the Zug meeting shifting his responsibilities to others. He had to dissolve the for-profit Ethereum entities he'd created and he went back to working on his own projects, like KryptoKit.
“I needed to start planning my exit,” he said. The meeting in March took care of that. Anthony was the main power player pushed out of Ethereum this time around. Joe was already on his way out, with ConsenSys taking up more and more of his time. Taylor Gerring and Stephan Tual were stripped of their leadership roles but continued to work for the foundation (Gerring continued to serve on the foundation board with Mihai and Vitalik, as the rules required that it have three members). Anthony though, was out, and he was not happy with how it came about.
Gavin had persuaded Vitalik that with real money in the bank now they had a responsibility to use it effectively, and they needed a professionally run management team.
Gavin and Jeff were of the opinion that “the foundation needed leadership,” Vitalik said. “And we can come up with more competent leadership than this existing set of bozos.”
Vitalik, Jeff, Gavin, and Aeron decided to hold an open call to hire board members and an executive director. In a blog post announcing the new positions, Vitalik said the expanded size and scope of the Ethereum Foundation required it to make changes in how it was run “to more closely resemble a mature organization.” Among the qualifications he noted: “Lack of prior unethical or illegal behavior, particularly in the areas of embezzlement, insider trading or fraud.” They received about 80 applications.
The resumes were narrowed down to a group of 3 people for the executive director position and 10 for the board seats. They rented a hotel room in Zürich for interviews, and it became clear that Gavin, Jeff, and Aeron wanted executives who had significant work experience. Vitalik wanted something different.
“I cared less about that,” he said. “I cared more about whether the people had a soul, if that makes sense.” The candidates for executive director were Ming Chan, André Laperrière, and Denis Flad. Flad didn't get too far in impressing the foundation members, but Laperrière had an impressive resume, including work for the International Criminal Court, the World Health Organization, and UNICEF. He came with a steep price tag, however, with a starting salary requirement of $230,000.
“This was cash-crunch time, so that was very crazy,” Vitalik said.
For Vitalik, Ming Chan made the biggest impression. “I remember being very impressed with Ming because she was the kind of person I could have a three-hour conversation with and enjoy it,” he said. Gav and Jeff, however, weren't on board with Ming and found her unimpressive.
“To them, a person who can laugh and cry is a disadvantage,” Vitalik said. “To me, it's an advantage.” Vitalik, Jeff, Gav, and Aeron decided to give the executive director position to André Laperrière. As the negotiations were being finalized, Laperrière came in with additional compensation requirements, like moving expenses and severance; his total comp was ballooning.
“When we hired André instead of Ming, we made an agreement that if André's salary demands go really crazy, if they go over $300,000, let's go with Ming,” Vitalik said. Ming had asked for a salary of $150,000. With all the extras André asked for, his annualized salary would have been $320,000. In July 2015, the Ethereum Foundation hired Ming Chan as its first executive director.
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Testing on the Ethereum network continued to home in on more problems as the leadership questions were being settled. Vitalik, Gavin, and Jeff all met in Berlin for three days in March after the Zug meeting. They undertook a hackathon to ensure that the three clients – Go, C++, and Python – all interpreted blocks on the Ethereum blockchain in exactly the same way. If there were different interpretations of the information a block contains on Go and C++, the chain would fork, and the transaction history would be in doubt. Over the three days they succeeded in getting all three clients in perfect synchronization. Now they were ready to release Olympic, the final test net version of Ethereum before the public release of the software. The name came from the fact that everyone involved in Ethereum was trying to crash the software on the test net. It was a competition to find a bug or to overwhelm it with a smart contract that sent 20,000 transactions to 20,000 individual users. The foundation had a bug bounty program, where it paid anyone who discovered a problem in the code. This was one really big, long stress test on the network.
With the development coming along nicely, Vitalik went to China toward the end of April. He stayed for about two months with his friend Bo Shen, who had helped organize his visit to the country the year before. Vitalik had been trying to get Shen's company ZAFED to move its operations onto Ethereum from BitShares. He now understood that not many people in China had bought ether in the crowdsale, and Vitalik wanted to raise its profile in the country. He took meetings in Hong Kong and Singapore, and then flew back to Switzerland to handle the selection process for executive director and board member positions.
Out of the 10 candidates for board members they chose 3. Lars Klawitter was a computer scientist and had founded a startup in the late 1990s. He'd worked for many years at Rolls-Royce, first as manager in its IT department and then as head of the bespoke unit of the company, which created custom cars for customers around the world.
Wayne Hennessy-Barrett was the founder and CEO of 4G Capital, a Kenya-based mobile money and financial technology company. Hennessy-Barrett had served in the British military for 16 years, including a stint as an assistant to the chief of staff at the British Permanent Joint Headquarters.
Vadim Levitin was a physician who'd worked on technology issues for the United Nations and ran a business development firm in Eastern Europe. Vitalik held the fourth board seat, and with Ming as executive director the Ethereum Foundation was set to release its blockchain to the world.
To do that, they set a kind of timer. When the test net processed a certain block, when it was said to reach a predetermined “height,” it would switch to the live Ethereum blockchain. They set that block as 1028201, which Vitalik proudly described to me as “a palindromic prime.” He'd flown to Berlin from Switzerland on July 28, and they spent a few days checking the code for any last-minute issues. On the evening of July 30, Vitalik, Jeff, Gav, and other developers like Vlad Zamfir were waiting for the countdown.
“And then the network launched,” Vitalik said. The countdown was being shown on a TV screen and it switched over to broadcast the first live transactions on Ethereum. Unfortunately for history's sake, there were no fireworks here, no “hello, world” moment. For the first five days of its existence, no transactions could be sent on Ethereum; they'd been disabled. Mining of empty blocks was the only activity on Ethereum for those five days.
Vitalik stayed up until midnight watching the network grow. But there were no crazy celebrations. After years of hard work, management struggles, money pressure, and the simple but stressful constant worry that maybe what they were doing wouldn't work after all, it did work. They'd brought Vitalik's invention to life after toiling collectively for thousands of hours.
In a photo posted by Lefteris of that day, the group with Gavin and Jeff and Christoph Jentzsch and Aeron Buchanan had all gathered in front of the TV monitor. Vitalik is standing behind Liana Husikyan and is barely visible. A few people appear to have small glasses of wine. Vlad Zamfir might be holding a shot of something, it's hard to tell. They didn't go out to dinner that night but ate in the EthDev office.
“We just didn't know how to celebrate,” Vitalik said.
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Once the network was live the cryptocurrency ether could now trade publicly on exchanges, replacing the paper value of the ether held by Ethereum developers with a real-life value. That fall, ether bounced around between $1 and $2, then dipped to 50 cents. It rose back up to about 80 cents for a while. The crazy thing here about cryptocurrencies like ether is that Vitalik, Gav, Charles, Joe, and anyone else who'd received an allotment in the pre-mine were only ever looking at how much profit they'd made. Losses weren't possible with the pre-mined ether each of the cofounders received. I can't think of another area of finance where this is the case. A line from The Usual Suspects comes to mind: the devil's greatest trick is convincing the world he doesn't exist. The ether trick did the opposite, convincing people that Ethereum would exist, that there would be a product. In the beginning, though, the price of ether suggested that people agreed with its potential but also agreed that there was nothing there yet to push its value higher.