The Infinite Machine

by Camila Russo

They wanted to build a world that would sidestep traditional institutions and allow users to transfer value directly with each other, without having to go through banks and other intermediaries. They wanted to put data and money back under users’ control, instead of in the coffers and computer servers of centralized entities.

At the center of this circle of tech geeks, financiers, misfits, and renegades stood Vitalik Buterin, a nineteen-year-old genius hacker who came up with the idea that would become Ethereum. His dream prompted a cohort of believers from different corners of the planet and disparate backgrounds to join him in making it a reality. They’re working on technology meant to change, at its very core, the way the world works, and this grand vision has drawn even more people in so that several thousands are now building it.

it all started thanks to a jammed printer at the Massachusetts Institute of Technology in the late 1970s. Richard M. Stallman, a staff programmer at the university, had written code for the lab’s printer, which was on another floor, to save time by having the machine send a message to the lab’s central computer when the printer got jammed. Eventually the printer was replaced and when Stallman tried to implement the same hack, he found he couldn’t modify the code because it was proprietary information.

Nick Szabo, the cryptographer who in 1998 invented the digital currency “Bit Gold,” coined the term “smart contract” in the early 1990s. In a 1997 paper, he said smart contracts “combine protocols with user interfaces to formalize and secure relationships over computer networks.” The system eliminates the need to pay for and trust third parties like auditors, accountants, lawyers, and notary publics, as the agreements are executed through a computer program.

Ether is the disproved concept that there’s a very subtle material that fills space and carries light waves in the same way that physical matter carries sound waves. That’s how he thought of the word “Ethereum.” Vitalik wanted his platform to be the underlying and imperceptible medium for every application, just what medieval scientists thought ether was.

Texture took some time to read it and said, “So this thing is trying to be a platform for all the token and blockchain use cases we’ve been talking about, but without having a specific function designed for each use case.” “Right, instead it has a machine that’s at its core,” Adam said. “The Ethereum Virtual Machine,”

“Each computational step has a cost and users pay for it in ether. Whenever you tell the network to run a piece of code, you also tell it the maximum amount of ether you’re willing to pay. The machine will stop working if it doesn’t get enough money to run the program.” “So ETH isn’t just peer-to-peer cash like BTC. It’s also used to run the network itself?”

Vitalik wanted to create the rails under which almost any imaginable transaction could work in a peer-to-peer, unhackable, and uncensorable way. He was picturing a world computer that would take power away from bloated corporations and governments, making the world more efficient and fairer.

A DAO was the groundbreaking idea of creating a computer-run organization. The business’s rules would be set in a computer program and executed with as little human involvement as possible. Because the organization would be built on top of a public blockchain like Ethereum, decision making and flow of funds would be fully transparent, uncensorable, and immutable.

Camino de Santiago, a pilgrimage crossing northern Spain.

When he was about thirteen, he thought the math and science he was learning at school were clashing too much with what he was learning at church, so he quit church and became a “radical agnostic,” which meant he very specifically didn’t care whether God exists. He taught kids fractals with the hope that he would open their eyes to the idea that the world is made out of math and rule sets, and that you don’t need a high and mighty creator.

Gavin remembers hearing about the fallout of the financial crisis on a TV in a bar in Nicaragua. For Gavin, it was more confirmation of what he thought all along: the world is ruled by elites who will seek to maximize their own profit at the expense of others.

The solution was decentralization. Computer science made it clear to him that the more centralized a system is, the higher the potential to create critical points of failure. To him, the banking system is one example of these closed systems, so it was only natural that it would fester and rot.

This technology had an actual chance of rebalancing power in favor of the individual,

Amir is the guy who had led Mihai and Vitalik to the hacker community near Barcelona. He invited Gavin over to the abandoned office building in central London that had been taken over by Bitcoin people.

His initial impression was that Ethereum was an interesting albeit half-baked concept, with inefficient design decisions. He was skeptical, but decided to email Vitalik offering to write an implementation of Ethereum on the C++ programming language.

At one point, Charles started testing him, drawing up one complicated math problem after another, and the nineteen-year-old Ethereum creator would instantly solve them in his head and spit them out.

Gavin wasn’t the only one writing Ethereum code at that time. While most of the gang was in Miami for the conference, Jeffrey Wilcke decided to stay at home in Amsterdam. Jeff, who dropped out of computer science because he thought the way it was taught at his university was too “artsy,”

While Bitcoin was digital money, he understood that Ethereum could be digital anything. It was a hacker’s dream: a decentralized platform that was flexible enough to support any computer program.

Joseph Lubin, who had met Vitalik at a Bitcoin meetup Toronto, took the lead. He helped confront the suspect, and the bitcoin was finally returned to the rightful owner.

He was pessimistic and critical about the financial system, which he viewed as easily corruptible and ruled by debt-addicted central banks whose reckless policies are devaluing their currencies.

Taylor Gerring was trying to build applications on top of Bitcoin in Chicago but he quit that, gave away his dog, broke up with his girlfriend, and bought a one-way ticket to Switzerland. It was a similar path for Mathias Groennebaek, who came from Denmark; Stephan Tual, who came from London; Lorenzo Patuzzo, who had rented out the room for Mihai and Vitalik in Barcelona and decided to jump on the blockchain train; and for the rest of the ten or so early team members. They were web and graphic designers and programmers who gambled everything on what was still just an idea in a white paper written by a nineteen-year-old.

Anthony Di Iorio’s, and later Joe Lubin’s, loans paid for major expenses. The big ones were rent and legal fees. Anthony estimated that, between the two of them, they had lent Ethereum about $800,000, though Joe said it was less than $500,000,

But all this corporate talk made some of the guys in the house nervous. This wasn’t what they signed up for. They wanted a new, decentralized world, where they didn’t need to ask Silicon Valley investors or Wall Street bankers for permission. They started to escalate these concerns to Vitalik, who started to become concerned that Charles was losing the team’s trust.

Would they be a for-profit company or a nonprofit foundation? By the end of the Toronto trip, that question was still up in the air for some, even though Charles, Joe, and Anthony thought the matter had been settled. To them, Ethereum would be a for-profit software company, which would build applications to run on top of the open source protocol. The Gmbh company that Mihai had incorporated in Zug would be dissolved to give way to a new corporation owned by the eight cofounders. There would still be a foundation to manage the funds raised and give support to the open source protocol.

One key characteristic about ether is that it’s not just a digital currency used to transfer value. Ether is also used to pay for that transfer, and for any other operation performed by the Ethereum Virtual Machine using the unit called “gas.” To Steven, ether was much like a stamp needed to send a letter, or like the name “gas” suggests, like gasoline needed to fuel a car. He was thinking about these things one day walking along the leafy roads in his Long Island neighborhood when an idea started to form: Nobody would ever think of stamps or gasoline as securities. They’re goods, which have market prices, and can be bought and sold. Ether is pretty much the same. It’s a good that can be bought and sold. It’s made to serve a function on the Ethereum platform, not to be an investment, even if it’s sold in a process that may look a lot like an offering.

In April 2014, after building the Ethereum proof of concept with Jeff, Gavin published the Ethereum Yellow Paper, a technical specification of Vitalik’s white paper. While the white paper described the concept of Ethereum for the first time and included the basics on how it would work, the Yellow Paper dove into the exact details, the nuts and bolts of the Ethereum Virtual Machine, and served as a guide for any developer who wanted to build a software implementation.

Gavin also put into writing what he had been thinking the bigger picture for blockchain technology should be. He saw decentralized networks as a tool to build the next version of the internet, or Web 3.

Gavin’s version of Web 3 would allow people to interact without needing to trust each other. It should be a peer-to-peer network with no servers and no authorities to manage the flow of information. Ethereum would be instrumental for this Web 3 vision to become a reality, and much of how the project was defined, with teams focusing on decentralized messaging, storage, and browsers, had the goal of helping shape this next version of the internet.

The framing in that letter, that ether was a product with a specific functionality, opened the door for a whole new way of raising money. Now startups would be able to get funding from anyone who wanted to contribute, all over the world, under what seemed like a safe haven. They weren’t selling securities. These weren’t shares in any company. They didn’t give out dividends that depended on the company’s revenue and investors didn’t have any rights. They were selling digital tokens, made to be used inside these platforms. They were selling utility tokens.

Dislike for Charles and his management style had morphed into outright distrust. Some of the hackers, with their inherent suspicion of the established financial system, came to see Charles as the figurehead of an evil corporate mind-set that would corrupt Ethereum’s soul. They suspected that Charles wanted to partner with Wall Street banks and Silicon Valley funds instead of using Ethereum to create better versions of those aging institutions.

“Ethereum will be a nonprofit and open source project” is the first thing Vitalik announced. “The eight founders will always stay founders and they’ll get everything that’s due. All your back wages, and all your ether. Going forward there will still be a leadership team of eight. This leadership team will be: Gavin, Jeff, Mihai, Joe, Anthony, Stephan, Taylor, and myself.” With that, he had effectively removed Charles and Amir, and promoted Stephan and Taylor. Amir was out because the team didn’t think he had enough commitment to the project—he had also resigned himself. And Charles? Well, even if he ultimately wanted the best for Ethereum, he’d lost the support and trust of the rest of the team. Anthony stayed on but his vision for how Ethereum should be developed was crushed. Joe was already thinking about leaving Ethereum to run the for-profit company building the application layer that he envisioned. Charles didn’t speak to anyone. He went to his room in the basement and sat on his mattress, his back slumping over his legs. Eventually his assistant Jeremy Wood came down and offered to get him a ticket back home. “I don’t want to go back home yet,” Charles said. “Can you just get me a ticket to England?” “Sure, but why not just go home?” “I don’t want to go home and face my parents and my wife and everybody else. Here I was, talking to Google and going on TV, speaking at big conferences as CEO of this thing that’s going to be worth a billion dollars. Now I’ll have to com...

It’s an appalling idea that people operating boxes burning huge piles of electricity are somehow the only ones who should be allowed to gain from crypto seignorage revenue.”

By the end of the sale, people behind those jumbled addresses had bought more than 60 million ether, which at around 30 cents per coin, amounted to $18.3 million.

In all cases, $1.8 million was allocated to expenses incurred before the sale and $1 million was to be set aside for a legal contingency fund. Of the rest, 76.5 percent went to the developers, 13.5 percent went to communications and community outreach, and 10 percent went to research.

Vitalik got the biggest share of the contributors’ endowment at about 553,000 ether.

Jutta Steiner joined in Berlin to lead the security audits. Alex Van de Sande focused on user interface based in Rio and was building an Ethereum wallet and browser with Fabian Vogelsteller, who had joined in Berlin. Felix Langue and Peter Szilagyi joined Jeff Wilcke’s Go Ethereum, or Geth, team. Christian Reitwiessner and Liana Husikyan were building a native developing language for smart contracts called Solidity, together with Gavin. Vlad Zamfir was doing research on ways to improve Ethereum’s inner workings and Piper Merriam was building tools for smart contracts and developers.

“Ethereum is not something that’s centrally ‘launched,’ but instead emerges from consensus,” Stephan Tual wrote in a July 22 blog post explaining the steps for developers who wanted to join the main network. “Users will have to voluntarily download and run a specific version of the software, then generate and load the Genesis block to join the official project’s network.”

Joe Lubin’s new startup, ConsenSys.

Vitalik flew to Berlin when it got close to the launch date to be with the developers. The office was an open floor in an old building in Berlin’s Kreuzberg neighborhood. Gavin and Aeron Buchanan had found the place

Gavin was growing increasingly frustrated by the foundation’s push to reduce disbursements for EthDev, where he led the development team. Tensions further grew after he created a UK limited liability, for-profit company called Ethcore in September 2015, to pursue his own vision for Ethereum development.

Before the year was over he was dedicated full-time to Ethcore, the company he had cofounded with Jutta Steiner, who had worked on Ethereum’s security audits. He took Aeron and most of the C++ developers with him and created a whole new Ethereum client on the more cutting-edge Rust language. They called the client Parity and later the company adopted that same name (Parity Technologies), scrapping Ethcore. By April 2016 the new venture had secured $750,000 in a traditional equity funding round led by Silicon Valley–based Blockchain Capital and Shanghai-based Fenbushi Capital. His old friend Ken Seiff also got a stake.

when Joey and Jack were thinking of fundraising to continue developing the protocol, a crowdsale of their REP tokens made more sense than going to venture capitalists. A crowdsale would distribute tokens among potential users and raise funds. They also didn’t want a handful of venture funds to control the protocol. On August 17, two weeks after the Ethereum network launched, Augur started the first Ethereum-based crowdsale. It lasted forty-five days and they sold 11 million REP tokens for 60 cents each, or $5.3 million, to about 3,000 digital addresses distributed across the globe, without the help of banks or funds.

Augur was also the first to build their REP coins using the so-called ERC20 token standard,

Martin Becze had quietly been building a JavaScript client for Ethereum while living in a camper in his parents’ backyard in Indiana, until he’d been hired by the Ethereum Foundation as a contractor.

Fabian Vogelsteller took Vitalik’s initial token standard draft, wrote a proper specification explaining each function and action, and created an issue on Ethereum’s GitHub EIP repository. He called it “ERC: Token standard.” ERC stood for Ethereum Request for Comment,

Charles Hoskinson’s former company with Daniel Larimer, BitShares, was building. He became a BitShares enthusiast but eventually grew tired of the internal drama in the BitShares crowd as well as all the political talk, which was getting extreme,

Ethereum community seemed to be the exact opposite. The drama and politicking within the foundation and among cofounders had been kept out of public view; those outside the inner circle were an optimistic bunch of mostly millennial developers. They had been influenced by Vitalik’s penchant for T-shirts adorned with cats and unicorns. They cultivated the aesthetic, which became particular to Ethereum, featuring rainbows, cute animals, mythical creatures, and internet memes.

if Bitcoiners were typically hard-core libertarian and carnivore, Ethereans leaned more liberal and vegetarian.

March 2015 Reddit post. “Introducing eDollar, the ultimate stablecoin built on Ethereum,” he wrote. “As someone who’s been obsessed with pegged cryptocurrencies for the past 6 months, I was delighted to find out that even with just my meager programming skills, developing for Ethereum is so incredibly easy that I’ve been able to come up with what I believe is close to being the perfect design for a stable cryptocurrency.” The first to reply to his post on eDollar, later renamed Dai, was Vitalik, who goes by “vbuterin” on Reddit. He gave Rune a technical suggestion, which Rune’s project, called MakerDAO, ended up implementing.