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The 8-year mining era of Ethereum is over: V God, China Mining, and Nvidia

Jack

22-09-15 14:56

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Original author: Jack (0x137), BlockBeats

"We have sold all the graphics cards, no panic." In BlockBeats and several miners In the conversation, this view represents the majority of Ethereum miners.

Compared to the sudden restriction of the Bitcoin mining policy in June last year, the entire Chinese Bitcoin Miners have to wait for the passive choice of shutting down and stopping losses. The mentality of Ethereum miners is obviously much better. They have nearly a year to digest the fact that they will not be able to mine.

The most traditional mining in the encrypted world is to rely on the computing power of the machine to perform extremely complex Calculated, Bitcoin is the originator of mining, and Ethereum is also at the grandpa level. Many people have heard of the large-scale mining industry of Bitcoin in China, the 24-hour roar of mining farms, mining machines, and machines in the valley water, and Ethereum is not bad. For example, the former Spark mining pool is Ethereum in The world's largest mining pool.

But these are gone, China, which once accounted for 75% of the world's computing power Bitcoin computing power completely disappeared under the policy in June last year, and Ethereum also abandoned computing power mining with the complete conversion of its own mechanism. Theoretically, with the transformation of the consensus mechanism of Ethereum, the two largest network mining in the world will completely disappear in China.

In this field, advocating computing power and fighting against entropy increase has created a super unicorn with a quarterly profit of 1.1 billion US dollars, and it will also force graphics card giants like Nvidia to re-plan their pricing strategies. We want to use these words to record a history that all Web3 people should know.

Prehistoric

One night in May 2010, a hungry programmer exchanged 10,000 bitcoins for two $30 pizzas, and bitcoin had its first denomination — $0.003. Since then, this invisible and intangible agreement has real value, followed by a round of bull market full of wealth creation myths and the rise of the encryption mining industry.

Early bitcoins had no value, and there were very few people participating in the network, mining only needed one Computer CPU. Hal Finney was one of the first batch of miners at that time. He used his computer to mine thousands of bitcoins within a week or two. Later, because the CPU was too hot and the noise of the computer fan was annoying, he turned off the mining software. up.

But this $0.003 denominated deal changed everything. Seeing that Bitcoin mining is profitable, more and more people participate in the network. Soon, geeks from all walks of life began to write their own GPU graphics card mining programs and build targeted mining machines. It is the mining machine we are familiar with now.

Soon, this technology craze spread to domestic geek forums, causing A lively discussion by a small group of people. Around this time, Wu Jihan, a finance student at Peking University, established Babbitt, the earliest bitcoin forum in China, and began to discuss how to mine on the forum. Zhang Nangeng, who studied integrated circuit design at Beihang University, became famous because of the manufacture of FPGA mining machines, and was called "Pumpkin Zhang" by netizens. In addition, Xigua Li, a software engineer from Guilin, developed the smash hit "Watermelon Mining Machine".

When the GPU became popular, a small company in the United States called Butterfly Labs (Butterfly Labs) began to declare that it wanted to develop A machine specifically designed for Bitcoin mining - an ASIC. This machine forgoes all other computer power and is designed to target the Bitcoin SHA-256 algorithm at a rate far exceeding that of a GPU miner.

Butterfly mining machine, the picture comes from the Internet

After the concept of ASIC mining machine spread to China, some people took action soon. In addition to the "Pumpkin Zhang" Zhang Nangeng mentioned earlier, there is another mining legend, Jiang Xinyu, the roast cat. Roasted cat entered the University of Science and Technology of China at the age of 15, and then went to Yale to study for a Ph.D. in computer science. When he first heard about Bitcoin, he was attracted by its concept. Before he finished reading the book, he ran back to China and became a miner. He became the second person in China to develop an ASIC mining machine after Zhang Nangeng.

At this time, on the other side of the ocean, our protagonist Vitalik appeared.

Vitalik appeared frequently in major overseas bitcoin forums and began to write And share popular science articles about Bitcoin. Because he had no money to buy bitcoins, he made an agreement with a blogger to pay 5 bitcoins per article (bitcoins were only $0.8 at the time). Although Vitalik was also interested in Bitcoin at that time, he did not participate in the trend of Bitcoin mining to create wealth. For him, the decentralized story of Bitcoin fascinated him even more.

Being gifted since childhood, Vitalik entered the school's "Genius Class" very early , but because he speaks too fast, it is difficult for others to communicate with him. He has been relatively "clumsy" in social aspects since he was a child. When he was 10 years old, Vitalik's father gave him an important gift - an IBM computer. Since then he has opened up a new world, obsessed with writing small computer games while other kids are still playing outside.

When Vitalik was 13 years old, World of Warcraft was born, and like many people, he He became an Internet addicted teenager, playing games day and night, and later sent emails to Blizzard engineers many times because Blizzard weakened his hard-working full-level warlock. After his repeated requests were rejected, Vitalik was very sad, and he later wrote on his blog: "That was the first time I woke up crying in my sleep." It is because of Blizzard's revision this time that Vitalik realized the hegemony brought about by centralization, "Developers can change the game as they say, but players can only accept or give up."

Vitalik played with IBM when he was young, image source Since Vitalik's blog

In 2011, Vitalik's father heard about Bitcoin by accident in the company, and returned Immediately after returning home, he excitedly introduced this novelty to his son. His father sold his software company shortly after to start a blockchain incubator. Under the influence of his father, Vitalik also took action. In September of the same year, 17-year-old Vitalik founded the now-famous Bitcoin magazine "Bitcoin Magazine". He wrote and edited the magazine himself and made the magazine bigger and bigger until Acquired by BTC Media in 2015.

Bitcoin Journal, the picture comes from Network

But although his magazine is already well-known, Vitalik has not yet entered the public at this time vision.

Birth: China Mining and Ethereum

Mining Holy Land

Look back to the country. In August 2012, Roasted Cat established a company in Shenzhen and conducted an IPO on the Internet, issuing 160,000 shares at a price of 0.1 bitcoin per share, coded as ASICMINER. Afterwards, he opened a mine in Shenzhen with the crowdfunding funds and used his own mining machine to mine bitcoins. It is rumored that he earned 200 million yuan in three months.

Toasted cats (on the left) are numerous Many public photos, the pictures are from the Internet

17 days after the ASIC prototype of Roasted Cat was announced, Zhang Nangeng also formed his own Avalon team to complete the delivery of the first mining machine Avalon 1. While Roasted Cat and Zhang Nangeng were developing rapidly, another competitor also entered the arena. In the first half of 2013, Jihan Wu founded Bitmain, and within 13 months, he launched 3 computing power chips, forming a tripartite rivalry with Roasted Cat and Zhang Nangeng. After the winter, Bitmain’s Antminer S1 swept away a large number of competitors and made a lot of money for its own mining machine agents.

The age of the machine is roaring.

The huge wealth effect attracts countless entrepreneurs to enter the game and produces all kinds of bitcoin There are countless coin mining machines, chrysanthemum mining machines, Xiaoqiang mining machines, and whitebait mining machines. Manufacturers are competing with each other, and the iteration of mining machines is getting faster and faster, so that there is a crazy scene of early-order futures mining machines, which will become obsolete after they are available. Later, the manufacturers found that their own mining machines were still on the production line, and the opponent's customers had already obtained better performance mining machines. And companies like Bitmain, which entered the market early, have begun to deploy larger-scale computing power in units of P. Since then, more than 70% of Bitcoin’s computing power has been firmly rooted in China.

On the other hand, under the leadership of geek miners, China’s bitcoin market has poured into A lot of gold diggers. Driven by the "Chinese aunt", the price of Bitcoin skyrocketed. After breaking through the 4,000 yuan mark, it approached 7,000 yuan in a few days. At the beginning of the year, Bitcoin was less than 80 yuan. In just a few months, about 10 billion yuan of capital has been invested in the market, and China has become the world's most enthusiastic market for mining and trading Bitcoin.

In 13 years, Bitcoin has created one wealth myth after another, and Li Xiaolai is the most typical one . This early New Oriental English teacher bought 100,000 bitcoins in 2011, and now he has become the "richest man in bitcoin" in China. He not only founded the Bit Fund, but also established Yunbi.com. Laomao is another example. On a business trip with his boss to discuss business, the 10-year-old Mao saw a report about Bitcoin in a newspaper on a newsstand, which changed his life trajectory.

“99% of the people in the domestic bitcoin circle have missed this opportunity”

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This is what Lao Mao wrote when recalling the early investment opportunities of Ethereum in a later article. In the early days of Bitcoin’s development, the Chinese capital circle’s grasp of opportunities established the unshakable position of Chinese people in the blockchain world, and it can even be said that they have the ability to influence the future development of this industry. But even under such conditions, most of the elites in the circle still missed the early opportunity of the next crypto gold trend.

In 2013, Bitcoin was also very hot in the United States, and Vitalik’s Bitcoin Magazine was also in California An exhibition was held. This exhibition allowed Vitalik to experience not only the activeness of the online community, but also the strong interest of offline people in Bitcoin and blockchain. Vitalik, who was still in college, decided to drop out and go to other parts of the world to see the development of the Bitcoin community and the encryption industry.

While traveling in Israel, Vitalik met two digital encryption companies who were trying to develop a set of Bitcoin-based smart Contracts, which are used to issue their own tokens and run financial contracts. Vitalik immediately became interested. As one of the developers of Bitcoin 2.0, he immediately proposed a new idea to the Mastercoin community, which is studying the scalability of Bitcoin: to develop a smart contract platform for Bitcoin, so that users can conveniently Quickly write scripts to create your own applications based on Bitcoin. But because all the improved technologies of Bitcoin at that time revolved around payment and security attributes, Vitalik's proposal was quickly rejected.

Vitalik's Ultimate Scripting proposal, image source Vitalik, who was rejected from Vitalik blog

, soon decided to start anew. In December of the same year, he started Share a white paper written by yourself, which explains in detail the shortcomings of the Bitcoin system, as well as the idea behind your new project: a Turing-complete, programmable general-purpose blockchain, based on smart contracts, making it Become the ultimate platform for decentralized applications. In the white paper, Vitalik named his project Ethereum.

“Ether is ether, and the root of eum means factory.” Cancer recalled to BlockBeats , "The Chinese name of Ethereum was the last one I decided on." At that time, two seniors, Cancer and Gulu, worked together to translate the Ethereum white paper, which made the Chinese Internet realize the vision of this smart contract network for the first time. In the end, Cancer will Ethereum The translation is determined to be "Ethereum", which represents the historical positioning of this platform-based public chain. The translation of Ethereum seems unparalleled to us now, but there were also voices of dissatisfaction back then. "If it weren't for the name you translated, I would have voted for this project." At that time, an investor said to Cancer.

In the beginning, Vitalik only sent this white paper to his closest friends , they found it very interesting after reading it, and sent it to other community members. In this way, Vitalik's ideas about Ethereum quickly exploded in the Bitcoin community. Many people were excited about this avant-garde idea. Yes, it was Gavin Wood, the founder of Polkadot.

Dr. Gavin Wood has strong C++ programming skills and is also the first batch to contact and support Vitalik He also became the co-founder and CTO of Ethereum. Later, Vitalik wrote on his blog: "The Ethereum protocol at the time was entirely my own creation. However, from here on, new players started to join. So far, the most prominent on the protocol side is Gavin Wood, He contacted me via an about.me message in December 2013... Gavin is also credited with the subtle shift in seeing Ethereum as a programmable platform, which started with a slight change in terminology, followed by changes to This influence is intensified by the growing emphasis on 'Web3' systems that see Ethereum as part of a suite of decentralized technologies."


Gavin Wood's email to Vitalik, the picture is from Vitalik blog

Just in time, Vitalik received Paypal for his outstanding contribution to the development of Bitcoin 2.0 $100,000 Thiel Scholarship from founder and early Facebook investor Peter Thiel. Vitalik, who got the money, didn't stop for a minute, and started to work full-time on the development of Ethereum with Gavin Wood.

In February 2014, Vitalik first publicized the Ethereum project at the Bitcoin Miami Conference. In April, Gavin Wood published the Ethereum Yellow Paper, explaining the EVM technical description and becoming the technical bible of Ethereum. According to the specific instructions in the Yellow Paper, Ethereum is compatible with 7 programming languages such as C++, Go, Python, and Java, making Ethereum more optimized in development and programming.

As for the consensus mechanism of Ethereum, Vitalik also has very novel ideas. He wrote in the Ethereum white paper:

"Bitcoin mining algorithm (Proof of Work ) are vulnerable to two forms of centralization. First, the mining ecosystem is controlled by ASICs and computer chips that are specially designed to be thousands of times more efficient at the specific task of Bitcoin mining. This means that the Bitcoin Coin mining is no longer highly decentralized and egalitarian, but requires the effective participation of huge amounts of capital. Second, most Bitcoin miners actually no longer complete block verification locally; instead, they rely on the central The standardized mining pool provides block headers. The problem is arguably serious: at the time of writing, the two largest mining pools indirectly control roughly 50% of the network's computing power, although miners can switch to other mines when a pool or consortium attempts a 51% attack. The fact that pools lessen the severity of the problem."

It is not difficult to see that Vitalik wrote these words precisely because he saw Bitcoin mining Mining, especially the phenomenon of "extreme involution" in China's bitcoin mining industry. In his opinion, PoS Proof of Stake would be a better choice for Ethereum.

In fact, the PoS consensus mechanism was proposed on the BitcoinTalk forum as early as 2011, and Has been the most popular PoW alternative. Therefore, in the earliest Ethereum white paper, Vitalik hoped to adopt PoS as the consensus mechanism of Ethereum. However, when discussing with development members such as Gavin Wood, the Ethereum team also realized that the PoS technology at the current stage is not yet mature, and everyone does not have a good agreement on PoS, which cannot guarantee the security of Ethereum. At the same time, the entire blockchain industry is still in its early stages, and there is not so much capital involved. Therefore, in comparison, PoW is still the best choice to ensure the robust growth of Ethereum.

Vitalik, Andreas M. Antonopoulos and Gavin Wood is developing Ethereum, the picture comes from Vitalik blog

After several weighings, the team still adopted PoW. However, Vitalik did not give up on the pursuit of PoS. He always believed that PoW would only make the entire network more expensive and less efficient. Therefore, after deciding to adopt PoW as the consensus mechanism, Vitalik and his team immediately started Worked on plans for Ethereum's future move to PoS.

In the end, the plan was divided into four phases:Frontier ), Homestead (homeland), Metropolis (colonial metropolis), Serenity (tranquility).

The main purpose of Frontier is to introduce miners to ensure network security, it adopts the Bitcoin community The familiar PoW model includes an interface to mine Ethereum and some simple ways to upload and execute contracts. Homestead is mainly to make the Ethereum network run safely and smoothly, such as adjusting mining incentives and providing a wallet with a graphical interface. Metropolis will provide a user interface with relatively complete functions for a wide range of users, and the team also expects to release a dApp store and several carefully designed projects at this stage to demonstrate the capabilities of the network.

The Serenity stage will realize the final conversion of Ethereum PoW to PoS. In the introduction article on the four stages of Ethereum development released in 2015, the tone of Ethereum developer Vinay Gupta was full of expectations and hopes. Years, along the way is also accompanied by various winds and frosts.

Going to the frontier: China's mining industry meets the young Ethereum for the first time

According to the established development route, Vitalik started the promotion and development of Ethereum. The first step to start and secure the Ethereum network is to attract development funds and miners, and the first place Vitalik thought of was China.

Ethereum is unfavorable and hit a wall

“The first time I came to China was in May 2014. At that time, I only saw miners and trading platforms. They were already strong, Huobi and OKcoin There are already more than 70 people, but there is not a lot of interesting things outside of these few companies.”

This is Vitalik's most profound influence on China's encryption industry in 14 years, in order to give Ethereum To promote the pre-sale, Vitalik came to the world's largest encryption market. At the first stop, I visited Huobi’s Du Jun and introduced the goals and ideas of Ethereum to him. I hoped to get funding from Du Jun, but was dismissed as a “liar”.

Later, at the blockchain community event in Shanghai, Vitalik used "the second generation digital Opportunities for Encrypted Currency” and gave speeches for more than an hour to Da Hongfei, Chu Xiahu, Xu Yiji and other bigwigs sitting in the audience. As a result, half of the bosses were drowsy, and the other half was busy with trading. They gave roughly the same conclusion to the 19-year-old "Little V" in front of them: this kid is a liar, and he is here to make money. When taking a group photo, Vitalik was not only squeezed into the last row, but half of his face was covered.

Group photo of event participants, Vitalik on the right In the back corner, the picture comes from the Internet

It is not surprising that Vitalik encountered such a cold reception, The Chinese encryption market in 2014 is undergoing rapid changes, and no one has time to talk to this young man who came out of nowhere.

At the beginning of this year, Wu Gang, the founder of Haobitcoin, and Wu Jihan, the founder of Bitmain A 10-bitcoin bet: Can the bitcoin computing power break through 1000P by the end of the year? Wu Jihan thought it was impossible, but Wu Gang thought it was possible. At that time, the global bitcoin computing power had just broken through the P level, and it was unrealistic to break through a thousand. But after a whole year of soaring prices, everyone in the circle is full of confidence, capital talents are rushing into the market, and the mining machine business continues to heat up. It seems that nothing can stop the pace of Bitcoin.

In May, the Bitcoin mining machine conference organized by Bao Erye Guo Hongcai was held in Shenzhen, Zhang Nangeng , Li Lin, Xu Mingxing, Xie Jian and other big names in the circle were all present. The atmosphere of the conference was very lively, and the whole market was full of vitality. At this time in the Chinese encryption market, the mainstream voice is Bitcoin mining and trading, and they have no knowledge of Ethereum, which is new to the market. Many people even suspect that Ethereum is a project developed by people from Hangzhou, and Vitalik is an actor they hired.

2014 Bitcoin Mining Machine Conference, the "Hanzi Bureau" of the Bao Erye Group, the picture comes from the Internet

In July 2014, Vitalik, who had run into obstacles everywhere in China, moved his team to Zug, Switzerland, which was later called "Crypto Silicon Valley", and created the Ethereum Foundation here, which is responsible for the development and development of Ethereum. manage. Because there is no money to run the project, the team even posted a note on the gate, saying "Everyone is welcome to sponsor a cup of coffee."

In order to obtain development funds, the team quickly carried out the Ethereum IC0 pre-sale, 1 bit Coins can be exchanged for 2000 Ethereum. The whole process lasted for 42 days, and the total amount of Ethereum sold exceeded 60 million, and a total of 31,531 bitcoins were raised, which was equivalent to approximately US$18.43 million at the price at the time, which exceeded everyone's expectations. Although the proceeds from the sale were quickly used to repay growing legal debts and pay developers, the fundraising still caused quite a stir in China, and people began to ask: What is Ethereum? What's the background? Only then did the old cat lament that "99% of the people in the domestic bitcoin circle missed this opportunity".

At the same time, the encryption market is undergoing a subtle shift.

Negative market

At the end of 2013, the central bank issued the "Notice on Preventing Bitcoin Risk and the Impact of the Tulip Bubble", and the wind direction of the entire market began to change. After experiencing crazy skyrocketing, the encryption industry ushered in its first cold winter baptism. A three-year bear market pulled Bitcoin back from its sky-high price of 8,000 yuan to 900 yuan. Due to the sharp drop in prices, many people's beliefs collapsed, and the crowds who once poured in like a tide also began to leave quickly. Amidst the wailing, the Chinese bitcoin market began to experience earth-shaking changes.

As the currency price falls, miners’ demand for mining machines drops sharply, and the rapidly shrinking market It made mining machine manufacturers unsustainable. Silverfish mining machines and Litecoin mining machines disappeared one after another. The originally lucrative mining machine business suddenly turned into a slaughterhouse full of blood and corpses. The Xiaoqiang mining machine, which was once very prosperous, also shut down the mine in the second half of 2014 due to continuous losses. According to the founder Xie Jian, "the investment of 6 million at the beginning of the year is now only 2 million."

The trading platform is not good-looking. In order to retain investors in the bear market, various companies have begun to look for potential opportunities other than spot trading. Chance. In the second half of 2013, Li Lin from the group buying website Renrenzhe founded Huobi, and Xu Mingxing left his position as CTO of Douding.com and founded OKCoin, the predecessor of OKex. In the second year, He Yi, the host of Travel Satellite TV, and Zhao Changpeng (CZ), a researcher of Bloomberg futures, joined OKCoin and formed the famous "iron triangle in the currency circle". Everyone should know what happened next.

OKex founder Xu Mingxing and two He Yi and CZ, the founders of Binance, the pictures are from the Internet

At that time, in order to retain users, OKCoin and Huobi, which successfully completed financing in 2014, successively announced the launch of financial leverage tools such as Bitcoin futures services and peer-to-peer lending, in order to achieve new growth.

These new ways of playing quickly worked. Prior to this, there was no leveraged trading in the Bitcoin market, and the dominance of the price trend was mainly in the hands of mining machine manufacturers. After the emergence of new financial leverage tools, it immediately attracted a large number of speculative funds to re-enter the market to seek arbitrage opportunities, and the price of Bitcoin gradually broke away from the control of manufacturers and began to be set by the market. This also directly threatens the living space of mining machine manufacturers.

In the second half of the year, the price of Bitcoin is still falling all the way, breaking new lows, mining machines The competition has entered a white-hot stage. When the living space was shrinking and the sales of mining machines were deadlocked, Bitmain and Roasted Cat started cloud computing business one after another. At the beginning of September, Bitmain took the lead in announcing the launch of the cloud computing power service platform "Hashpower Nest", and the number of user registrations exceeded 10,000 within 30 days. And Xie Jian of Xiaoqiang Mining Machine has reached a cooperation with Roasted Cat to jointly promote the cloud computing power project AMHash. However, soon after the platform broke the door of counterfeit computing power, and then the roasted cat disappeared, investors lost their money, and AMHash became a "pyramid scheme".

In the end, Wu Jihan won the 10 bitcoin bet, but this Compared with the beginning of the year, his mood at that time was already in heaven and earth.

Ethereum Genesis Block has been mined

Ethereum, the development is still going on. At the end of 2014, the first Ethereum developer conference Devcon-0 was held in Berlin. This conference brought together Ethereum developers from all over the world. They discussed various topics of Ethereum technology and some issues that can make Ethereum more reliable. , security plan. In May of the following year, Olympic, the last test network of Ethereum, was launched. In order to better complete the network test, the team launched the "Vgrants" program. Anyone who participated in the test network will receive Ethereum rewards.

After nearly two months of rigorous testing,on July 30, 2015 , the first stage version of Ethereum, Frontier, was released, the first Ethereum block was mined, and the "infinite machine" officially began to operate.

The initial version of the Ethereum network is not safe, V began to travel around to give speeches, inviting Ethereum enthusiasts Contribute code, invite miners to join the Ethereum network, and earn ETH while increasing network security. With the efforts of V God, the Ethereum community became active. Early Ethereum was very easy to mine. Some Internet cafe owners used idle equipment to mine Ethereum, and some of them accumulated tens of thousands of ETH.

Vitalik and Shentu Qingchun and other early Chinese developers having dinner, the picture comes from the Internet

Although now Looking at it, Frontier is at best a public beta version, but its performance in introducing miners has greatly exceeded people's expectations. Because of the strong incentives, miners from all over the world began to mine the Ethereum network, including many domestic Bitcoin miners. They have increased the computing power of the Ethereum network and also improved the network's ability to resist attacks. The release of Frontier is the first milestone event in the history of Ethereum development.

However, affected by the Bitcoin market, the price of Ethereum has remained the same for a long time It is very sluggish, and some investors have not seen returns for a long time, and even questioned Ethereum. At that time, Lu Xujun, the founder of Wanchain, went against the mainstream consensus and believed that Ethereum was the future of blockchain technology. He even invested all his bitcoins in Ethereum. They all laughed at me, I didn’t dare to say that I invested in Ethereum at that time.”

The low price affects not only investors, but also the Ethereum development team itself. Seeing that the foundation was running out of money, Vitalik came to China to try his luck again.

At this time in China, both the mining circle and the currency circle are overwhelmed and howling, Vitalik Financing in China still encountered great difficulties. But by chance, Vitalik met Xiao Feng, CEO of Wanxiang Blockchain Labs and partner of Fenbushi Capital. As one of the first batch of investors who embraced blockchain technology, Xiao Feng immediately purchased ether worth $500,000 at the time. square. Vitalik said in a later interview: "Wanxiang's $500,000 at the time became the lifeline of Ethereum." The timely rain sent by Xiao Feng gave Vitalik enough funds to pay the developers and continue to develop the Ethereum platform.

In addition to the $500,000 grant, Xiao Feng also relied on his experience in investment and politics Huge influence has brought wider investment and community connections to Vitalik and Ethereum, and helped them communicate with Chinese regulators. Under his impetus, Shen Bo, a partner of Fenbushi Capital, invited Cancer and Gulu to translate the Ethereum white paper. Under the influence of Wanxiang, Xie Jian, the founder of Bitcoin Xiaoqiang Mining Machine, established China's largest and earliest Ethereum community Ethfan in Hangzhou, and contributed a lot of computing power to the early Ethereum.

October 2019, Dragonfly hosts encryption Summit, Dragonfly founder Feng Bo, Meituan CEO Wang Xing, Vitalik and Wanxiang Xiaofeng, pictures from the Internet

From November 9th to November 13th, 2015, the first DEVCON-1 developer conference held by Ethereum was held in London, with more than 100 speakers, attracting more than 300 people from all over the world developers participated. What really benefited Ethereum at this conference was the presence of big names like SoftBank, IBM, and Microsoft. This is a critical moment for the blockchain to enter the mainstream, and Ethereum represents this technology, standing at the forefront of the frontier of blockchain development.

Stable homeland, open up wasteland Soil: Community split, IC0 wave, NVIDIA entry

In the second half of 2015, some domestic transactions The platform began to launch Ethereum, among which Li Xiaolai's Yunbi was the earliest. At that time, Lao Mao, the person in charge of Yunbi, called Li Xiaolai and advised him to buy more Ethereum, but Li Xiaolai replied that he would not buy it. In his eyes, Ethereum is too complicated, and the complex system means that it is not safe enough, so he feels that Ethereum does not conform to his investment logic. At that time, the total market value of Ethereum was less than 70 million US dollars, but in just 3 months, its market value reached 1.1 billion US dollars.

Ethereum roller coaster

After entering 2016, Ethereum has gradually ushered in its own spring.

On March 14, 2016, on the day of Pi Festival, Ethereum successfully entered the second stage Homestead. Compared with Frontier, Homestead has no obvious technical milestones, but has made improvements in the stability, security and usability of network operation. The release of the Homestead version also means that Ethereum has truly become a safe and reliable network.

At this stage, Ethereum began to provide a wallet with a graphical interface, and the ease of use has been improved Greatly improved, Ethereum is no longer exclusive to developers, ordinary people can also experience and use Ethereum conveniently. In addition, in order to prevent future miners from boycotting the upgrade of Ethereum from PoW to PoS, the team introduced the difficulty bomb (Difficulty Bomb) that has been mentioned many times in the mining difficulty design.

After the ecology was initially stable, Vitalik began to pursue what he hoped to achieve in the white paper The centralized organization (DAO) dream. In May, The DAO, the first DAO organization in history, launched a public fundraising campaign, raising a record-breaking US$150 million in 28 days of crowdfunding, making Ethereum once again the focus of the media in the circle.

On June 16, The DAO was attacked. Hackers exploited the contract code loopholes to allow the system to allocate funds repeatedly and stole 370 More than 10,000 Ethereum, the amount is about 60 million US dollars. When the news came out, the price of Ethereum fell in response, directly causing the market value to evaporate by 500 million US dollars. Thanks to the contract not yet allowing users to withdraw their own ether, this bought the team time to formulate a countermeasure. After a brief discussion, the team came up with two options: close The DAO, and everyone including the hacker should bear the loss, or compensate DAO investors by forking and rolling back the block.

As the leader of Ethereum, Vitalik clearly leans towards the latter solution, but also It triggered fierce quarrels in the community, and serious splits appeared in the Ethereum community. Those who oppose the fork insist on the principle that the blockchain cannot be changed, and believe that the fork will kill Ethereum, because as long as this fork is passed, a new fork may appear at any time in the future. Those who support the hard fork believe that the actions of hackers have caused harm to many people and let them succeed, which is morally unjustifiable.

Vitalik finally decided to let everyone choose freely, and those who insist that the blockchain cannot be changed will stay and maintain And manage the original Ethereum, and those who agree with themselves will accept the fork and modify the security holes of the current Ethereum. A few days later, the hard fork plan was announced, and more than 85% of the miners' computing power supported the hard fork. On July 20th, the hard fork was successful, and the Ethereum network and community were divided into two, with the current Ethereum (ETH) and Ethereum Classic (ETC).

Facts later proved that the fork did not kill Ethereum. After the fork was completed, the Ethereum community regrouped and soon Back on track. But people who question the fork are not wrong. This fork did buy another time bomb on the development of Ethereum.

On September 19, 2016, the revitalized Ethereum held its third Developer Conference DEVCON-2. Directly sponsored by Microsoft, the conference mainly discussed some upgrades and updates of the network in March, including smart contracts that allow developers to freely create dApps on Ethereum, and the later far-reaching new token standard-ERC20. The arrival of ERC20 has provided great convenience for the blockchain team to issue tokens for financing, and its huge potential has far exceeded the expectations of the participating developers.

DEVCON-2 promotional poster, the picture comes from the Internet

The king of IC0 has become the king of Nvidia

On May 19, 2017, the price of Ethereum broke through the $100 mark for the first time, and a new round of crypto bull market was imminent . In this round of bull market, the most impressive thing is the prevalence of IC0.

IC0 (Initial Coin Offering) corresponds to the IPO (Initial Price Offering) in the stock market, It was the main way of financing blockchain projects in the early years. With the help of the ERC-20 standard, ICOs on Ethereum have sprung up, bringing a lot of off-market funds to the encryption market. In 2016, there were only dozens of ICO projects on Ethereum, and the total financing amount was only tens of thousands of dollars. After 17 years, both the number of ICOs and the financing amount have doubled by more than ten times. Hundreds of blockchain projects rely on the Ethereum platform for financing. Among the top 100 crypto projects by market capitalization, 94% are built on Ethereum.

In the frenzy, the price of Ethereum rose again and again. At the end of May, Ethereum was listed on Huobi The price of domestic first-line trading platforms has been rising steadily. By the end of the year, the total amount of IC0 financing in the market exceeded 6 billion US dollars, and all kinds of chaos ensued were out of control. Not only blockchain projects issue tokens, but also traditional Internet and various listed companies. Issuing tokens has not only become a channel for institutional financing, but also a money-making machine for pyramid scheme scammers. During the bull market, the price of a soft article introducing the IC0 project in the media reached 50,000 or even 100,000. Packaging ICOs, operating communities, and proxy investment have become the wealth codes of speculators.

In spite of this, IC0 still allows many people to have a deeper understanding of smart contracts, and the users of Ethereum have also exploded The number of addresses increased from 1 million at the beginning of the year to 18 million at the end of the year. Vitalik has also been promoted from "Little V" to "V God", and is often invited to participate in various conferences, round tables and AMAs in China.

Vitalik published at the Chinese community event Speech, pictures from the Internet

At the same time, the loyal group of Ethereum in China is also growing . In addition to Ethfans, ECN, Sparkpool, one of the largest mining pools in Ethereum, and the popular imToken wallet in China at that time were all making continuous contributions to Ethereum. Among them are miners, traders, and early "DeFi missionaries". They will regularly translate Vitalik's articles and spread them in the Chinese community, hold offline gatherings to study the latest topics of Ethereum, and even help Vitalik solve problems on WeChat. technical problems. Once again, the Chinese community has provoked the backbone of the ecological development of Ethereum, providing it with safe computing power and abundant funds.

On the other side of the ocean, the attention and enthusiasm for the blockchain is also high. Bitcoin, Ethereum Fangfang and I0 have become the focus of financial media's daily reports, for fear that they will miss new content and trends. However, in Silicon Valley, which is not far from the encryption arena, the media spotlight ignores an important figure who seems to have nothing to do with the blockchain. He has also tasted the sweetness of Ethereum's take-off in this round of bull market.

From 2016 to 2018, Nvidia's market value increased from $14 billion to $175 billion, The value of this Silicon Valley giant has doubled tenfold in two years, shocking the jaws of all investors. In 2017 alone, Nvidia’s operating income reached US$9.714 billion, an increase of 40.58% month-on-month. As CEO, Huang Renxun is very satisfied with the company's performance, so he even got a new tattoo on his left arm.

At first glance at the data above, you might not compare it to 17 years of ether Fang and even the encrypted market are related, but in fact, after careful observation, we can find an unusually close connection between the two. It is no exaggeration to say that the 17-year crypto bull market has brought considerable returns to Nvidia.

In 2018, Nvidia CEO Huang Renxun showed his new "Nvidia tattoo" at the graphics card conference. The picture comes from the Internet

Here we need to understand the difference between Ethereum mining and Bitcoin mining.

Bitcoin uses the SHA-256 encryption algorithm. When mining, the competition It is computing power. Therefore, in order to increase computing power, ordinary CPUs and GPUs cannot meet the competitive needs of miners, and ASIC mining machines with a higher degree of specialization soon dominated the mining machine market. After seeing the vicious competition in Bitcoin mining, Vitalik believes that the PoW mechanism of Ethereum should allow ordinary users to carry out a certain amount of mining activities through their own desktop or laptop computers, so as to eliminate the centralization of mining pools. needs.

So Ethereum uses the Ethash encryption algorithm, in the process of mining, you need to read Take memory and save the DAG file. Since the bandwidth of the computer to read the memory each time is limited, and it is difficult for existing equipment to make breakthroughs in this technology, no matter how the miners increase their computing power, the mining efficiency will not be significantly improved, which means Let the PoW mechanism of Ethereum have "ASIC resistance".

The difference in encryption algorithm makes Bitcoin and Ethereum different in terms of mining equipment and computing power scale There are big differences in the. Bitcoin ASIC mining machines are basically monopolized by several manufacturers, and miners can only buy them from the market. Although Ethereum graphics card mining machines are also produced by specialized manufacturers, most of them are still DIY by miners according to their own needs. Buy accessories online and assemble.

In other words, thisworld's largest decentralized development network, for Huang Renxun Graphics card sales in 2019 created an incredibly large market.

As the absolute leader in graphics card production, Nvidia will not miss this Big and sweet cakes. In 2017, seeing the increasingly active trading and mining of Ethereum, Nvidia immediately launched a GTX 1060 6GB graphics card with no output interface for Ethereum mining. market supply. At the end of the year, the performance of the graphics card was optimized, and a series of professional "mining cards" with stronger computing power and lower prices were launched such as P106 and P104. This series of graphics cards did not even have an IO output interface, and users could not even Use it to play games.

Close cooperation to accelerate the development and production of "mining products". However, contrary to the coquettish operations on the production line, Nvidia has tried its best to distance itself from Ethereum in terms of finance and public relations. Of the huge revenue of US$9.7 billion in 2017, 5.5 billion came from game marketing, accounting for more than 50%.

But in fact, the proportion of income contributed by game players has begun to decline in 2016 micro. According to the latest hardware report of Steam in August 2022, this graphics card, GTX 1060, which was born in 2016, is still the graphics card with the largest number of users on the platform, accounting for 6.6% of the total users of the platform. In other words, in its own financial report, Nvidia put all the income brought by miners' purchase of graphics cards into game marketing with a big wave of their hands.

Steam June 2022 Hardware and Software Investigation, the picture comes from Steam

But smart people still exposed Huang Renxun's little trick. Shortly after the 2017-18 financial report was announced, Susquehanna lowered Nvidia’s stock price expectations on the grounds that virtual currency-related revenue accounted for more than 10% of revenue. In May 2022, the SEC even issued a statement saying that Nvidia had insufficient information disclosure on the impact of encryption mining on the company’s game business graphics card sales, and settled with Nvidia after the lawsuit. Of course, these are things for later.

It was not until 2018 that Nvidia CFO publicly disclosed that he relied on selling "mining cards" to make money In fact, Huang Renxun revealed his "interest" in the mining industry in words: "Nvidia actually controls the use of GPUs purchased by users...We must pay attention to it (users buy graphics card for mining) and ensure sufficient inventory to deal with it.”

But the good times didn’t last long. Not long after Nvidia entered the market, the encryption market ushered in another field cold winter.

On January 14, 2018, the cryptocurrency market cap reached its peak, and the price of Ethereum reached $1,418 , the daily trading volume is nearly 10 billion US dollars, and the market value has increased from 1.1 billion US dollars at the beginning of 2017 to 135 billion US dollars. But one morning shortly thereafter, the entire market began to plummet and never recovered. By April '18, the price of Ethereum had dropped by $400.

Once again, the miners sold their graphics cards and ran away. Leading to a backlog of inventory, the price is much lower than the normal selling price. At this time, no one bought the P104 graphics card specially designed for miners, and Nvidia had to turn the chip to the consumer market. The product line and the pricing system of the next-generation products were severely impacted. The company’s fourth-quarter revenue waterfall plunged, and the stock price was even more unsightly, falling as low as $160 at one point. Nvidia gets its first taste of the crypto winter.

The problem of PoW has begun to appear, and the network upgrade has been delayed repeatedly

Compared with Nvidia, which still has revenue, the situation of Ethereum is even more tragic.

Under the bear market, the price of Ethereum fell to as low as $80, and it even once ranked Below XRP, the market is full of voices of doubt. During the bull market in 2017, CryptoKitties, a dApp game that once exploded the market, appeared on Ethereum. Although there were only a few simple operations, this game overwhelmed the Ethereum network, making other applications basically unusable, and the gas fee was too high. became outrageous. Since then, there have been more discussions about the expansion of Ethereum, but the Constantinople upgrade planned by the team has been repeatedly delayed.

The Constantinople upgrade is a key step for Ethereum to enter the third phase of Metropolis. In order for Ethereum to successfully enter the Metropolis stage, the team designed a two-step plan, which was realized through two hard forks of Byzantium and Constantinople. The first step of the Byzantine plan successfully completed the fork on October 16, 2017. It mainly adjusted the block difficulty evaluation formula, reduced mining rewards, and delayed the detonation of the "difficulty bomb" by one year. The second Constantinople fork was supposed to be completed in early 2018, but it has not been implemented due to various factors such as the market. Faced with this situation, Vitalik was also accused of being an Ethereum "promoter" who did not concentrate on development.

In September 2018, Bitcoin core developer Jeremy Rubin published on TechCrunch titled The article "The Collapse of ETH Is Unavoidable" stated that Ethereum cannot carry a large number of decentralized applications, and even if the Ethereum network survives, it has no value. These remarks immediately caused the price of Ethereum to drop further, and many projects on Ethereum even began to transfer to public chains such as EOS and TRON. Under the influence of prices, the computing power of Ethereum's entire network also began to shrink, falling by nearly 20%.

This article by Jeremy also sounded the alarm for the Ethereum community.

In response to Jeremy's Reddit blog, Vitalik acknowledged the problems with Ethereum, writing "If Ethereum doesn't change, Jeremy Rubin's words may come true," he said. Immediately afterwards, in December, Vitalik called on Twitter that the blockchain using PoS sharding technology in the future will "be thousands of times more efficient."

Vitalik replied to Jeremy's Reddit blog, the picture comes from the Internet

Finally, at the end of 2018 At the core developer meeting, members of the Ethereum development team reached an agreement on the activation time of the fork. After several delays, the Constantinople hard fork was successfully triggered on February 28, 2019 at block height 7,280,000.

The upgrade of Constantinople started the "Ice Age" of Ethereum. The difficulty of creating blocks for the network starts to increase until it slows down to a complete stop. At the same time, the team reduced the block reward for mining again and delayed the "difficulty bomb" by 5 million blocks. At the heart of this upgrade is the reduction in block rewards. With the reduction of mining revenue, the opportunity cost of mining machine manufacturers and miners increases. The team hopes that the cost performance of miners mining on Ethereum will gradually be lower than that of other currencies, so as to force Ethereum miners to switch to mining ETC. Wait for the PoW public chain.

After the upgrade of Constantinople, the team did not stop, and successively formulated plans to enter , that is, our Ethereum 2.0 plan today is still the same as before. It will be divided into two steps: "Istanbul" (this step is also included in the three phases of Metropolis) and "Ethereum 1.X". The Istanbul hard fork was successfully completed on December 8, 2019. The key words of this upgrade are cost and speed, which reduces the cost of Gas and increases the upper limit of TPS to 3000.

The successful upgrade of Istanbul means that the Metropolis "metropolis third phase" Fang has taken an important step in the transformation to 2.0.

The restlessness before the tranquility: the return of the king, what's next?

We are very familiar with the story of Ethereum after entering 2020. The arrival of DeFi Summer set off another round of strong bull market in the encryption market. Within a few months, the total locked-up volume of DeFi on Ethereum reached 30.5 billion US dollars, and various agreements and applications such as lending, DEX, insurance, and wealth management appeared. With the explosion of NFTs such as NBA Top Shot and BAYC, the transaction volume of Ethereum continues to expand. Followed by the growth of Layer 2, DAO and other tracks.

Ethereum itself has also ushered in new opportunities for expansion. On November 4, 2020, the Ethereum 2.0 deposit contract was officially deployed, followed by Lido and other Ethereum 2.0 liquid pledge agreements, which attracted a large number of pledged assets to the Ethereum PoS network. In August 2021, the upgrade of Ethereum London was completed, including 5 protocols such as EIP-1559, which further optimized and improved the participation experience and mechanism of the Ethereum network, weakened miners' income again, and made preparations for Ethereum 2.0 .

However, what is interesting is that the closer to the tranquility, the restless voice bigger. There is no doubt that the restlessness still starts from the graphics card mining market.

NVIDIA, who is once again a teacher

With the opening of a new round of bull market, Ethereum also ushered in the second wave of mining. To meet the pressure, the CMP series mining cards have been developed for graphics card miners. In order to obtain the highest mining efficiency, CMP directly discards the graphics processing function. Later, under pressure, it was announced that the newly launched GeForce RTX 30 series graphics cards would limit mining performance, causing the price of graphics cards to rise again. What's more interesting is that although the newly launched Lite Hash Rate graphics card limits mining performance, Nvidia released a developer driver in March 2021. In less than a year, all versions of the LHR graphics card have been blocked to varying degrees. to crack.

Huang Renxun shows RTX 30 series graphics card, picture From the network

At this time, the price of Ethereum has approached 3,000 US dollars, and the PoS merger is on the rise Price fronts are no longer seen as potential threats. Huang Renxun has become a full-fledged advocate of cryptocurrency, publicly expressing his long-term optimism about the market upsurge and the value of the blockchain. The miners also bought it, and the graphics cards were all sold out. According to insiders, some large mining farms even directly pick up goods from Nvidia without going to the primary and secondary markets.

For a while, the rise in the price of graphics cards became the content of repeated reports by CCTV and self-media. According to agency reports, in 2021, Nvidia will generate approximately $3 billion in revenue by selling graphics cards to miners. In the same year, Nvidia's market value exceeded US$500 billion. In the financial report for the fiscal year in February of the following year, the company's annual revenue hit a record of US$26.9 billion, a year-on-year increase of 61%, achieving seven consecutive quarters of revenue growth. .

But in May, the situation changed drastically. On May 19, the crypto market plunged again, and the market began to turn bearish. This month, Nvidia released its first-quarter financial report for the latest fiscal year, with profits down 46% month-on-month. In the second-quarter financial report released in August, revenue from mining chip CMP-related businesses fell 66% year-on-year. In 2022, Nvidia has once again received the "involvement" of the encryption market.

Soon, a large number of second-hand graphics cards flowed into the market, directly competing with new products, and destocking became a One thing that makes Nvidia quite a headache. For this reason, Nvidia has rarely lowered the official price of the RTX30 series graphics card. What caught Nvidia off guard the most was that the goods that were directly supplied to the mines were converted into discrete graphics cards by merchants, and returned to the market to impact the inventory sales of existing graphics cards.

The main reason for this video card sell-off, in addition to the price drop, is the upcoming ether Fang 2.0, it means that the once huge graphics card mining market will no longer exist. It is estimated that more than one-third of the consumer graphics card market will disappear completely after Ethereum moves to PoS.

As the Ethermine mining pool, which accounts for 33% of the total network computing power of Ethereum, announced that it will end The golden age of the Ethereum PoW mining pool business and GPU graphics card mining has also come to an end. The Ethereum miners began to look for their own way out, some lay on the sidelines, some sold all their graphics cards at a discount, and some began to transform into Web3 applications with the profits obtained from mining.

Next 8 years

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The importance of PoS conversion to the Ethereum network is self-evident, but is this the final form of Ethereum? of course not.

Ethereum still has a series of problems that have not been resolved, such as PoS’s anti-censorship The foundation of the blockchain is now being questioned; for example, performance, to what level Rollups can improve the performance of Ethereum; for example, whether there is a need for sharding technology with Rollups, etc. These are all questions.

Ethereum wrote in the 2014 white paper that it will transform PoS, who would have thought It is 8 years, and the above problems require every member of the ecology to explore bit by bit to look forward to the next 8 years.

Ethereum PoW has become history, Vitalik, Ethereum development team and miners have worked together for eight years Merit and demerit. We write it down, and then move on.