Original Author: Jack(0x137)，BlockBeats
"Our graphics cards have been sold, there is no panic." In BlockBeats' conversations with multiple miners, this view represents most Ethereum miners.
Compared with the sudden restriction of Bitcoin mining policy in June last year, and the passive choice of all Bitcoin mining machines in China having to wait for shutdown to stop losses, the mentality of Ethereum miners is obviously much better. They have nearly a year to come Digest the impending inability to mine.
The most traditional mining in the encrypted world is to rely on the computing power of the machine to perform extremely complex calculations. 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 no more. China’s Bitcoin computing power, which once accounted for up to 75% of the world’s computing power, completely disappeared under the policy last June. Ethereum also abandoned computing power mining with its own complete transformation of its mechanism. Theoretically, with the transformation of the consensus mechanism of Ethereum, the two largest network mining in the world will completely disappear in China.
first level title
prehistoric
One night in May 2010, a hungry programmer traded 10,000 bitcoins for two pizzas worth $30, 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.
In the early days, Bitcoin had no value, and there were very few people participating in the network. Mining only required a computer CPU. Hal Finney was one of the first batch of miners at that time. He used his computer to mine thousands of bitcoins in 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 denomination transaction at $0.003 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 the domestic geek forums, which aroused heated discussions among 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 for manufacturing 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".
image description
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 legend in the mining circle, Jiang Xinyu, the roast cat. Roasted Cat entered the University of Science and Technology of China at the age of 15, and later 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 reached an agreement with a blogger to pay 5 bitcoins for each 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.
Gifted since childhood, Vitalik entered the school's "gifted youth class" very early, but because of his fast speech, it was difficult for others to communicate with him, and he was 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.
image description
Vitalik played with IBM as a child, the picture comes from Vitalik blog
image description
Bitcoin magazine periodical, the picture comes from the Internet
first level title
secondary title
mining mecca
image description
Roasted cat (on the left) is one of the few public photos, the picture comes from the Internet
17 days after Roasted Cat’s ASIC prototype 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 established 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.
Roasted cats and Zhang Nangeng are also hard to find a machine, business is booming, and the era of Bitcoin ASIC mining machines is roaring.
The huge wealth effect has attracted countless entrepreneurs to enter the game, and produced a variety of bitcoin mining machines, such as 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 game 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, a large number of gold diggers have poured into China's bitcoin market. 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.
secondary title
"99% of people in the domestic bitcoin circle have missed this opportunity"
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 popular in the United States. Vitalik’s Bitcoin Magazine also held an exhibition in California. This exhibition allowed Vitalik to experience not only the activeness of the online community, but also the offline people’s understanding of Bitcoin, Strong interest in 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.
image description
Vitalik's Ultimate Scripting proposal, image from the Vitalik blog
Vitalik, who was rejected, quickly decided to start anew. In December of the same year, he began to share a white paper he wrote, which explained in detail the shortcomings of the Bitcoin system and the ideas behind his new project: a Turing-complete, Programmable general-purpose blockchain, based on smart contracts, making it 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 finally determined by me." At that time, two seniors, Cancer and Gulu, worked together to translate the Ethereum white paper, making Chinese For the first time on the Internet, the vision of this smart contract network was recognized. In the end, Cancer translated Ethereum as "Ethereum", which represented 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.
At the beginning, Vitalik only sent this white paper to his closest friends. After reading it, they found it very interesting 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, and they came to Vitalik to discuss and discuss in person. Yes, it was Gavin Wood, the founder of Polkadot.
image description
Email from Gavin Wood to Vitalik, image from Vitalik Blog
Coincidentally, due to his outstanding contribution to the development of Bitcoin 2.0, Vitalik received a $100,000 Thiel Scholarship from Peter Thiel, founder of Paypal and early investor of Facebook. 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 disclosed the Ethereum project for the first time at the Bitcoin Miami Conference. In April of the same year, Gavin Wood published the Ethereum Yellow Paper, which explained the EVM technical description and became 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.
On the issue of the consensus mechanism of Ethereum, Vitalik also has very novel ideas. He wrote in the Ethereum white paper:
"Bitcoin mining algorithm (Proof of Work) is vulnerable to two forms of centralized attack. First, the mining ecosystem is specially designed so that it is thousands of times more efficient at the special task of Bitcoin mining." ASICs and computer chip control. This means that Bitcoin mining is no longer highly decentralized and egalitarian, but requires the effective participation of huge capital. Second, most Bitcoin miners are no longer in fact Block verification is done locally; instead, it relies on centralized mining pools to provide block headers. This problem can be said to be serious: at the time of writing, the two largest mining pools indirectly control about 50% of the computing power of the entire network, although The fact that miners can switch to other pools when one pool or consortium attempts a 51% attack mitigates the problem.”
It is not difficult to see that Vitalik wrote this remark precisely because he saw the "extreme involution" phenomenon of Bitcoin mining, especially China's Bitcoin mining industry. In his opinion, PoS Proof of Stake would be a better choice for Ethereum.
image description
Vitalik, Andreas M. Antonopoulos, and Gavin Wood working on Ethereum, image from Vitalik blog
After several trade-offs, 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.
Ultimately, the plan was divided into four extremes:Frontier (new frontier), Homestead (homeland), Metropolis (colonial metropolis), Serenity (tranquility).
The main purpose of Frontier is to introduce miners to ensure network security. It adopts the PoW model familiar to the Bitcoin community, including 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. The team also expects to release a dApp store and several carefully designed projects at this stage to demonstrate the capabilities of the network.
first level title
Going to the frontier: China's mining industry first meets the young Ethereum
secondary title
Ethereum's unfavorable start 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 very strong, Huobi and OKcoin had more than 70 people, but there were not many interesting companies other than these few companies. thing".
This is Vitalik's most profound impact on China's encryption industry in 14 years. In order to promote the pre-sale of Ethereum, 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”.
image description
A group photo of event participants, Vitalik is in the back right 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 of Bitmain made 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.
image description
The 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 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 management of Ethereum. 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 pre-sold Ethereum IC0, and 1 Bitcoin can be exchanged for 2,000 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".
secondary title
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 the first cold winter baptism. A three-year bear market pulled Bitcoin back from the 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.
With the decline in currency prices, miners’ demand for mining machines has dropped sharply. The rapidly shrinking market has made mining machine manufacturers unsustainable. Silverfish mining machines and Litecoin mining machines have disappeared. The originally lucrative mining machine business suddenly It became a massacre where blood flowed into rivers and corpses littered the fields. 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."
image description
OKex founder Xu Mingxing and the two Binance founders He Yi and CZ, the picture comes 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 took effect. 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 continued to decline, breaking new lows, and the competition among mining machines entered a fierce 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 "Hash Power 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".
secondary title
Ethereum genesis block mined
On the Ethereum side, development continues. 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, Frontier, the first phase version of Ethereum, was released, the first Ethereum block was mined, and the "infinite machine" officially began to operate.
image description
Vitalik had dinner with Shentu Qingchun and other early Chinese developers, the picture comes from the Internet
Although Frontier is, at best, a public beta at this point, it has far exceeded expectations in terms of introducing miners. 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 also been very depressed for a long time. 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. A loyal fan of 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 mourning everywhere, and Vitalik still encounters great difficulties in financing in China. 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 that 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.
image description
In October 2019, Dragonfly hosted the Encryption Summit, Dragonfly founder Feng Bo, Meituan CEO Wang Xing, Vitalik and Wanxiang Xiaofeng, pictures from the Internet
first level title
Stabilize the homeland, open up wasteland and land: community division, IC0 wave, Nvidia's entry
secondary title
Ethereum roller coaster
After entering 2016, Ethereum gradually ushered in its own spring.
On the day of Pi Festival on March 14, 2016, Ethereum successfully entered the second phase of 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 the same time, at this stage, Ethereum began to provide a wallet with a graphical interface, and the ease of use has been greatly improved. Ethereum is no longer exclusive to developers, and 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 the dream of a decentralized organization (DAO) that he hoped to realize as early as in the white paper. In May, The DAO, the first DAO organization in history, launched a public fundraising campaign, raising a record-breaking US$150 million in a 28-day crowdfunding campaign, making Ethereum once again the focus of the media in the circle.
Perhaps it is because the tree is so big that it attracts the wind, and Ethereum, which has just stabilized its new home, immediately ushered in a blow.
On June 16, The DAO was attacked. Hackers exploited a loophole in the contract code to allow the system to allocate funds repeatedly, and stole more than 3.7 million Ethereum, amounting to about 60 million US dollars. When the news came out, the price of Ethereum fell, 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: shut down 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 favored the latter solution, but it also triggered fierce quarrels in the community, and the Ethereum community was severely divided. 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 allow everyone to choose freely. People who insist that the blockchain cannot be changed will stay to maintain and manage the original Ethereum, and those who agree with themselves will accept the fork and modify the current security vulnerabilities of 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).
Later facts proved that the fork did not kill Ethereum. After the fork was completed, the Ethereum community regrouped and quickly returned to the right track. But people who question the fork are not wrong. This fork did buy another time bomb on the development of Ethereum.
image description
secondary title
The king of IC0 has become a revenue-generating hero for 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 IPO (Initial Price Offering) in the stock market, and 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.
During the frenzy, the price of Ethereum rose again and again. At the end of May, Ethereum was launched on domestic first-line trading platforms such as Huobi, and the price was rising steadily. By the end of the year, the total amount of IC0 financing in the market exceeded 6 billion US dollars, followed by All kinds of chaos are out of control. Not only blockchain projects issue tokens, but also the 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.
image description
Vitalik gave a speech at an event in the Chinese community, the picture comes 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 issues. 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, and ICO have become the focus of the daily reports of financial media, 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 US$14 billion to US$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, a month-on-month increase of 40.58%. As CEO, Huang Renxun is very satisfied with the company's performance, so he even got a new tattoo on his left arm.
image description
In 2018, Nvidia CEO Huang Renxun showed off 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 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.
Therefore, Ethereum uses the Ethash encryption algorithm. During the mining process, it is necessary to read the memory and store 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 algorithms makes Bitcoin and Ethereum have great differences in mining equipment and computing power scale. 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.
That is to say,This world's largest decentralized development network has created an extremely huge market for Huang Renxun's graphics card sales.
As the absolute leader in graphics card production, Nvidia will not miss this big and sweet cake. In 2017, seeing Ethereum trading and mining becoming increasingly active, Nvidia immediately launched a GTX 1060 6GB graphics card that canceled the output interface for Ethereum mining. The first batch of supply was 300,000 pieces, and later even stopped the normal output The market supply of graphics cards. 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.
In order to seize the chip supply in the mining market, Nvidia even did not hesitate to cooperate closely with AMD, its number one mortal enemy, 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%.
image description
Steam June 2022 hardware and software survey, image via 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 forecast 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 wasn't until 2018 that Nvidia's CFO publicly disclosed the fact that he relied on selling "mining cards" to make money, while Huang Renxun revealed his "interest" in the mining industry in words: "Nvidia is actually interested in users buying GPUs. We must control its use... We must pay attention to its existence (users buy graphics cards 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 cold winter.
On January 14, 2018, the market value of cryptocurrencies reached its peak, the price of Ethereum reached 1,418 US dollars, the daily trading volume was nearly 10 billion US dollars, and the market value 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.
secondary title
The PoW problem is beginning 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 dropped to as low as $80, and it was even lower than XRP in terms of market capitalization. The market was 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" for 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 an article titled "The Collapse of ETH Is Unavoidable" on TechCrunch, saying 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.
image description
Vitalik replied to Jeremy's Reddit blog, the picture comes from the Internet
Finally, at the core developers meeting at the end of 2018, 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 when the block height reached 7,280,000.
The Constantinople upgrade kicked off an “ice age” for Ethereum, where the difficulty of creating blocks on the Ethereum network began to increase until it slowed 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 successful upgrade of Constantinople, the team did not stop, and successively formulated plans to enter Serenity, that is, our Ethereum 2.0 today. It will be divided into "Istanbul" as before (this step is also included in the three phases of Metropolis) ) and "Ethereum 1.X" in two steps. The Istanbul hard fork was successfully completed on December 8, 2019. The key words of this upgrade are cost and speed, which reduces the Gas cost and increases the upper limit of TPS to 3000.
first level title
Restlessness Before 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 lock-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 NFT 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 expansion opportunities. On November 4, 2020, the Ethereum 2.0 deposit contract was officially deployed, and then Lido and other Ethereum 2.0 liquid pledge agreements 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 .
secondary title
Nvidia, who is out again
image description
Huang Renxun shows the RTX 30 series graphics card, the picture comes from the Internet
At this time, the price of Ethereum has approached $3,000, and PoS mergers are no longer considered a potential threat in the face of rising prices. 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 time, 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 encryption market dived again, and the market began to turn bearish. This month, Nvidia released its first-quarter financial report for the latest fiscal year, but its profits fell by 46% month-on-month. In the second-quarter financial report released in August, revenue from mining chip CMP-related businesses fell by 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 headache for Nvidia. 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 graphics card sell-off, apart from the price drop, is the upcoming Ethereum 2.0, which 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.
secondary title
next 8 years
The importance of PoS conversion to the Ethereum network is self-evident, but is this the final form of Ethereum? of course not.
There are still a series of problems in Ethereum that have not been resolved, such as the anti-censorship of PoS, which is the foundation of the blockchain, and is now being questioned; such as performance, to what level can Rollups improve the performance of Ethereum; Fragmentation technology, etc., these are all problems.
In the white paper of Ethereum in 2014, it was written that it would transform PoS. Who would have thought that it would take 8 years to wait, and the above problems require every member of the ecology to explore bit by bit to look forward to the next 8 years.
references:
references:
《A Prehistory of the Ethereum Protocol》
《Why Vitalik Buterin is Known as the 'V God' in China》
《Overview of the entire development history of Bitcoin mining machines in China》
