Ethereum

About Ethereum (ETH)

What Is Ethereum (ETH)?

Ethereum is a decentralized, open-source blockchain platform designed to run smart contracts and decentralized applications (dApps) without relying on a central authority.

Unlike blockchains focused solely on transferring value, Ethereum functions as a global programmable settlement layer. Developers can deploy applications that execute exactly as written, without downtime, censorship, or third-party control.

The network uses its native cryptocurrency, ether (ETH), to pay for transaction fees, execute smart contracts, and secure the network. Since its launch in 2015, Ethereum has grown into the largest ecosystem for decentralized finance (DeFi), NFTs, and Web3 applications.

Ethereum vs. Ether (ETH)

Ethereum is the blockchain network and computing platform.

Ether (ETH) is the native digital asset used to power the network.

ETH is required to:

• Pay transaction fees ("gas")
• Interact with smart contracts
• Secure the network through staking
• Act as collateral in decentralized financial applications

Who Created Ethereum?

Ethereum was proposed in late 2013 by Vitalik Buterin, who envisioned a blockchain capable of supporting applications beyond simple payments.

The project was launched in 2015 by a group of co-founders including Vitalik Buterin, Gavin Wood, Joseph Lubin, Charles Hoskinson, Anthony Di Iorio, Mihai Alisie, Jeffrey Wilcke, and Amir Chetrit.

Development is coordinated by the Ethereum Foundation, a non-profit organization, but no single entity controls the network. Ethereum evolves through community discussion and a formal improvement process known as Ethereum Improvement Proposals (EIPs).

How Does Ethereum Work?

Ethereum operates as a decentralized global computer composed of thousands of independent nodes distributed worldwide.

When a user sends a transaction or interacts with an application:

• The request is broadcast to the network
• Validators confirm its validity
• The transaction is permanently recorded on the blockchain

All computation is executed by the Ethereum Virtual Machine (EVM), which ensures that smart contracts run identically on every node. This guarantees predictable, tamper-resistant outcomes.

To prevent spam and allocate resources fairly, users pay gas fees in ETH for computation and storage.

Smart Contracts and the Ethereum Virtual Machine (EVM)

Smart contracts are self-executing programs stored on the Ethereum blockchain. They automatically enforce rules and agreements when predefined conditions are met.

These contracts:

• Are publicly verifiable
• Cannot be altered once deployed
• Operate without intermediaries

The EVM acts as a shared execution environment, enabling developers to build applications such as:

• Decentralized exchanges
• Lending and borrowing protocols
• NFT marketplaces
• DAOs (Decentralized Autonomous Organizations)

This programmability is the core feature that differentiates Ethereum from Bitcoin.

Proof of Stake and Network Security

In September 2022, Ethereum transitioned from Proof of Work to Proof of Stake in an upgrade known as The Merge.

Under Proof of Stake:

• Validators stake ETH as collateral
• The network randomly selects validators to propose and confirm blocks
• Validators earn rewards for honest behavior
• Malicious or unreliable behavior can result in penalties ("slashing")

This system secures the network without energy-intensive mining and reduced Ethereum's energy consumption by over 99%.

Staking ETH

ETH holders can participate in securing the network through staking.

Options include:

• Running a solo validator (requires 32 ETH)
• Using pooled staking platforms
• Staking via service providers or exchanges

Staking rewards vary based on network conditions and total ETH staked, typically fluctuating over time rather than being fixed.

Ethereum's Monetary Policy and EIP-1559

Unlike Bitcoin, Ethereum does not have a fixed supply cap.

In August 2021, Ethereum implemented EIP-1559, which changed how transaction fees work:

• A base fee is algorithmically calculated
• This base fee is burned, permanently removing ETH from circulation
• Users can add optional tips for faster inclusion

Combined with reduced issuance after The Merge, Ethereum can become deflationary during periods of high network activity, meaning more ETH is burned than created.

What Makes Ethereum Unique?

Ethereum stands out due to:

• Programmability: A general-purpose blockchain for applications
• Largest developer ecosystem: The most active smart-contract developer community
• DeFi leadership: Billions of dollars in decentralized financial activity
• Network effects: More applications attract more users and developers
• Decentralization: Thousands of validators with no central control

Scaling Ethereum: Layer 2s and Future Upgrades

Ethereum's roadmap focuses on improving scalability while preserving decentralization.

Key approaches include:

• Layer 2 networks: Rollups that process transactions off-chain and settle on Ethereum
• Proto-danksharding (EIP-4844): Reduces data costs for rollups
• Future sharding: Increases data availability and throughput

These upgrades aim to make Ethereum faster and cheaper while maintaining security.

What Is Ether (ETH) Used For?

ETH serves multiple roles:

• Paying transaction and smart-contract fees
• Staking to secure the network
• Collateral in DeFi protocols
• Currency for NFTs and digital assets
• Treasury asset for DAOs and companies

ETH is both a utility asset and an economic backbone of the Ethereum ecosystem.

Adoption by Institutions and Enterprises

Ethereum adoption has expanded beyond crypto-native users.

Key developments include:

• Approval of spot Ethereum ETFs in major markets
• Corporate ETH treasury strategies
• Use of Ethereum technology for tokenization and settlement

Unlike Bitcoin, Ethereum's ability to generate yield through staking has made ETH attractive as a productive digital asset.

Where Can You Buy Ethereum (ETH)?

ETH is available on most major cryptocurrency exchanges, as well as through brokers, peer-to-peer platforms, and regulated investment products depending on jurisdiction.