In the early days of bitcoin, the function OP_RETURN was used by several major blockchain networks including Counterparty, which was the 20th largest cryptocurrency in the market at its peak. The OP_RETURN function allowed developers and users to embed data into bitcoin transactions, allowing platforms like Counterparty to leverage the security of the Bitcoin network to operate an immutable data processing platform.
Earlier this week, Ethereum co-founder Vitalik Buterin revealed that early versions of Ethereum were set to be launched on top of the Bitcoin protocol.
However, the OP_RETURN function and the capacity of the data it can hold was restricted from 80 bytes to 40 bytes, which made it challenging for Counterparty and other platforms to operate on top of the Bitcoin protocol. Eventually, Counterparty shifted away from the Bitcoin network and created its own blockchain network, as did Ethereum. Ethereum first pivoted to Primecoin, before deciding to create their own blockchain.
“The very earliest versions of ETH protocol were a counterparty-style metacoin on top of primecoin. Not Bitcoin because the OP_RETURN wars were happening at the time and given what certain core developers were saying at the time, I was scared that protocol rules would change under me (eg. by banning certain ways to encode data in txs) to make it harder, and I did not want to build on a base protocol whose development team would be at war with me,” said Buterin.
He went on to explain that though it was an issue at the time, it likely did Vitalik and the Ethereum developers a favour as it led to the launch of the Ethereum blockchain:
“So I think it’s fair to say that this willingness to compromise protocol immutability to achieve a desired outcome in a particular application (hmm, sound familiar?) made ETH on BTC even then a nonstarter. That said, perhaps they did a service. Back then I never would have imagined that fees would ever be allowed to rise above $0.20.”
Responding to Vitalik, Jihan Wu, founder of Bitmain, praised the other co-founders of Ethereum and the efforts of the Ethereum Foundation for establishing their own unique brand around a new technology after shifting away from bitcoin and Primecoin as the base protocols.
“I think Ethereum is very smart move, that they don’t even use term including ‘coin’ and even letter ‘B’. The name and brand is very unique,” Wu said.
If Ethereum had launched on top of the Bitcoin protocol, it may not have attracted so much attention from some of the largest financial institutions in the world, nor built an active open source development community.
Since 2015, the year Ethereum was launched, the cryptocurrency market and the industry have evolved, with the emergence of new cryptocurrencies such as Bitcoin Cash and Zcash. In the coming years, it is likely that more cryptocurrencies that complement the weaknesses or limitations of existing cryptocurrencies and blockchain networks will emerge.