How was ETH initially distributed

The Ethereum network started off with a supply of 72 million Ether (ETH). Eighty-three percent of that (60 million) was distributed to people who had purchased ETH in a crowd sale that was conducted in July and August of 2014. Crowdsale participants, who likely numbered in the low thousands at most, sent a total 31,000 bitcoin to a specified Bitcoin address in exchange for an Ethereum wallet address and a promise that, at network launch, they'd receive the ETH they purchased. Participants spent the equivalent of approximately $18 million, which put the sale price at an average of about $0.30 per ETH. The money raised in the crowd sale was used to pay for development of the Ethereum protocol, legal expenses, communications, and research.

Of the remaining 12 million ETH distributed at the launch of the network in 2015, half was split amongst 83 early contributors to the protocol based mostly on time contributed. The other half were set aside for the Ethereum Foundation, a non-profit organization tasked with promoting adoption and further development of the network.

The relatively small number of crowd sale participants meant that the initial distribution of ETH was concentrated. While, over time, ETH's distribution would become more widespread as early buyers sold off a portion of their holdings to new entrants and as supply was added by Proof of Work mining, ETH would remain highly concentrated for quite some time. For example, a report from blockchain analytics firm Chainalysis found that, as of May 2019, just 376 individuals controlled 33% of the circulating supply.

Why is this important?

Wide distribution of tokens is important for the health of a public blockchain primarily because it supports decentralization - a key value proposition of the technology. When tokens are widely distributed, the network is less susceptible to influence and collusion by a small group of participants, something that threatens the 'credible neutrality' of the network. Wealth concentration may be exacerbated in Proof-of-Stake systems, like what is planned for Ethereum 2.0. Further, the dangers of wealth concentration are said to be more acute in Proof-of-Stake systems.

Read more: What is Ethereum's monetary policy?

¿Te ha servido de ayuda??

Guías relacionadas

Empezar desde aqui →
What is Ethereum?

Understand Ethereum's key characteristics.

Lee este artículo →
What is ETH used for?

Understand the function and utility of ETH.

Lee este artículo →
Who created Ethereum?

Understand the origin and early history of the Ethereum protocol.

Lee este artículo →
What's a smart contract?

Get the basics on the "software" that runs on the Ethereum shared computer.

Lee este artículo →
What are ERC-20 tokens?

Learn the basics of the Ethereum token standard, what ERC-20 tokens are used for, and how they work.

Lee este artículo →
What's a DApp?

Understand the basics of decentralized applications on Ethereum; their features and their limitations.

Lee este artículo →
What's decentralized finance?

Learn what makes decentralized finance (DeFi) apps work and how they compare to traditional financial products.

Lee este artículo →
What is Ethereum's monetary policy?

Learn about the issuance rate of ETH and how it's governed.

Lee este artículo →
What is ETH gas and how do fees work in Ethereum?

Transactions in Ethereum are measured by computational effort, and that effort is delineated in 'gas.' One unit of gas is equivalent to 0.000000001 ETH.

Lee este artículo →
What is EIP 1559?

Understand how EIP 1559 overhauls the fee market in Ethereum and what it means for ETH's circulating supply.

Lee este artículo →
How does governance work in Ethereum?

Why governance is needed, Ethereum governance in practice, the concept of credible neutrality, and more.

Lee este artículo →
What is Ethereum 2.0?

ETH 2.0 is an updrade to Ethereum that aims to increase the speed, efficiency, and scalability of the Ethereum network while not compromising its security or decentralization.

Lee este artículo →
How to buy ETH

Learn how to buy ETH and hold it securely in a digital wallet you control.

Lee este artículo →
How to create an Ethereum wallet

Creating an Ethereum wallet is as easy as installing software on your mobile device or laptop/desktop.

Lee este artículo →
Empezar desde aqui →
Comienza a invertir de forma segura a través del monedero de Bitcoin.com
Más de de carteras creadas

Todo lo que necesitas para comprar, vender, operar e invertir en bitcóin y otras criptomonedas de forma segura

Bitcoin.com en tu bandeja de entrada

Un resumen semanal de las noticias importantes, además de recursos educativos y actualizaciones de productos y servicios que promueven la libertad económica