1. Ethereum’s Inception - Launch: Ethereum was proposed by Vitalik Buterin in late 2013 and officially launched in July 2015. - Vision: Bitcoin proved blockchain could move digital money. Ethereum expanded the idea: what if a blockchain could also run programs? This gave birth to the concept of the smart contract — self-executing code stored and run on the blockchain. - Initial Use Case: Ethereum created a decentralized “world computer,” where anyone could build and deploy decentralized applications (dApps) without relying on centralized servers. 2. How Ethereum Functions Now - Consensus: Originally Proof of Work (like Bitcoin), Ethereum transitioned in September 2022 to Proof of Stake through “The Merge.” Now, validators stake ETH to secure the network instead of miners using energy-intensive computing. - Smart Contracts & dApps: Thousands of decentralized apps run on Ethereum — from decentralized finance (DeFi) protocols like Aave and Uniswap, to NFT marketplaces like OpenSea, to DAOs (decentralized autonomous organizations). - Ether (ETH): ETH is both the native currency for transactions and gas (fees) and the asset staked by validators to secure the network. - Scaling: Ethereum itself processes about ~15 transactions per second on Layer 1. Demand far outpaced that, leading to high fees. This is where Layer 2 solutions come in. 3. Ethereum’s Role in the Financial Shift to Web3 - Decentralized Finance (DeFi): Ethereum hosts the largest share of DeFi — lending, borrowing, decentralized exchanges, stablecoins — all outside the traditional banking system. - Programmable Money: With smart contracts, money is no longer just value transfer; it can follow rules, automate trades, distribute rewards, or govern treasuries. - Self-Custody: Ethereum empowers people to hold assets without intermediaries (banks, brokers, or custodians). Wallets + smart contracts = sovereignty over funds. - Tokenization: Beyond ETH, Ethereum powers stablecoins (USDC, DAI), governance tokens, and real-world asset tokenization (e.g., real estate, bonds). - Catalyst for Web3: Ethereum laid the foundation for an ecosystem where identity, ownership, and value exchange are decentralized, breaking reliance on corporate-controlled Web2 models.