Ethereum founder Vitalik Buterin abruptly announced in a blog post Tuesday that a 42-day presale for ether — the platform’s unit of currency — had begun after weeks of anticipation.

- Vitalik Buterin

Slightly more than a half day after the sale began, 7.4 million ETH had already been presold, which at current prices works out to just more than 3,700 BTC. In fiat terms, that’s about about US$2.3 million. In Bugatti terms, that’s about 1.2 Veyrons.

A lot of activity is taking place, so we thought we would clarify some key points about the Ethereum presale.

Why is a Presale Necessary?

“Ether is a necessary element — a fuel — for operating the distributed application software platform we are building: ethereum,” the company’s home page reads.  “Without the requirement of payment of ether for every computational step and storage operation within the system, infinite loops or excessive storage demands could bog down ethereum and effectively destroy it.”

Essentially, the developers at Ethereum have big plans, and they need money to execute those plans. Hitting the presale’s financial goals will keep them on pace to releasing the Ethereum platform sometime this upcoming winter.

The presold ether will be created in the Genesis Block around that time; until then, the 7.4 million ETHs already sold are just claims on coins that have yet to be created. The site’s wording is careful in saying that the presold ETH are neither a store of value nor shares in the company, wording that simply keeps the presale on the right side of the law.

Ethereum developers have claimed the right to use 5,000 BTC worth of presold ether immediately, a target they’re fast approaching.

“We reserve the right to use up to 5,000 BTC from the presale while the presale is running in order to speed up development,” the July 22 blog post reads. “We may or may not take this option depending on community response; if done at all it will be done transparently.”

The Presale’s Structure

The presale will run for 42 days, thus through September 2 [until 11:59 PM local time in Switzerland, GMT +1]. For the first 14 days, 1 BTC will buy you 2,000 ETH. Afterward, the price will go up linearly so that, on the final day, 1 BTC will buy you 1,337 ETH.

After the Genesis Block is mined, everyone who participated in the presale will receive their ether.

Also, despite previous warnings to the contrary, US users are able to participate in the presale.

The Long Wait

Ethereum said six months ago that the presale would be two weeks away. Then, five and a half months elapsed. Buterin’s blog post reads:

“We certainly miscalculated the sheer difficulty of navigating the relevant legal processes in the United States and Switzerland [where the company is set up], as well as the surprisingly intricate technical issues surrounding setting up a secure sale website and cold wallet system.”

During those six months, developers also built up Ethereum clients, worked on the programming language itself, and even managed to cut the block time down from 60 seconds to between 10 and 20.

Did you enjoy this article? You may also be interested in reading these ones:

  • Here is a conditional breakdown of how Ethereum will use its funds, depending upon how much money is raised between now and September 2.
  • Here is the roadmap for planned development.
  • Here is a post to help presale participants troubleshoot any problems that might arise.

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