The Star Garden
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Bacteria begun to photosynthesise just over two billion years ago, releasing even more oxygen and taking in carbon dioxide, by this point the atmosphere was mostly composed of nitrogen with about twenty percent oxygen. Within two million years, one bacterial cell engulfed another and eukaryotic cells were born. Eukaryotic cells contain nuclei and store genes in the form of DNA, the engulfed bacteria eventually became mitochondria which provide the cell with energy.

Eukaryotic cells later engulfed photosynthetic bacteria and evolved into chloroplasts, eventually becoming green algae. About one and a half billion years ago, eukaryotes divided into three groups, the ancestors of plants, fungi and animals.

Multicellular life is thought to have developed just under a billion years ago. Sponges evolved a hundred million year later and the Cambrian explosion began less than five hundred million years after that. Many new species evolved during this time including the first animal with a backbone and the first trilobites. Trilobites had primitive eyes, gills, limbs and a simple brain.

Animals moved from the sea to the land five hundred million years ago and plants followed within forty million years, carpeting the ground in a thin layer of algae and seaweed. On land, animals could no longer float weightlessly and so had to grow stronger spinal cords and evolve to take their oxygen straight from the air, giving up their redundant gills. Tetrapods, the first four legged animals formed about four hundred million years ago. These are the ancestors of all amphibians, reptiles, birds and mammals.

99.99% of all species that have ever lived are now extinct and after a mass extinction the path is cleared for new forms of life to develop. The greatest mass extinction occurred two hundred and fifty million years ago wiping out many species including trilobites. Another mass extinction occurred fifty million years later, paving the way for the dinosaurs to evolve.
The first bird, Archaeopteryx, evolved one hundred a fifty million years ago, around the time that mammals and marsupials diverged and within twenty million years plants begun to flower. Grass had only existed for about five million years when the dinosaurs were wiped out along with seventy percent of all the land animals, by the Chicxulub asteroid. This was a ten kilometre wide asteroid that struck the Yucatan Peninsula in Mexico sixty five million years ago, releasing the same amount of energy as one hundred thousand billion tonnes of TNT, this two million times more powerful than the most powerful hydrogen bomb ever detonated. The asteroid landed on a bed of sulphur, ten meters under the ocean. Since the atmosphere contained more oxygen than it does today, the sky was more combustible and it set alight, mixing with the sulphur to create a rain of sulphuric acid which burnt the skin of anything it touched.

The only creatures that survived were those that retreated under the ground or into the water, as well as lucky scavengers who lived on rotting carcasses. The remaining dinosaurs evolved into smaller reptiles and birds, and mammals began to prosper.
The last common ancestor of humans and chimpanzees lived six million years ago and humans evolved about a quarter of a million years ago. Although humans appear to dominate the Earth, we are still living in an age of bacteria. There are more bacteria than all other life forms combined and humans contain more bacteria than they do cells.

References

See New Scientist's Timeline of the Evolution of Life.
The Evolution of Life on Earth

It is still not known exactly how life came into existence on Earth, although all lifeforms are built from amino acids which can arise naturally. The first life consisted of simple cells, or prokaryotes, which evolved almost four billion years ago, and within a billion years of the formation of the Earth. A common ancestor soon gave rise to two groups, bacteria and archaea and there is evidence that viruses have existed for at least three billion years. During this time, the atmosphere of the Earth was mostly composed of carbon dioxide, water and molecular nitrogen. This changed rapidly just under two and a half billion years ago when bacteria began to excrete oxygen for the first time, poisoning almost all life that had evolved before.