Ethereum (ETH) ETH

Ethereum (ETH) is a public blockchain that runs programs called smart contracts. Where Bitcoin focuses on moving one currency, Ethereum works as a shared computer that anyone can use to build applications: exchanges, lending markets, stablecoins, games or digital collectibles. Its native currency, ether (ETH), pays for every operation on the network and secures it through staking. New to the topic? Start with our guide What is Ethereum?.

What is Ethereum?

Ethereum was described by Vitalik Buterin in a whitepaper in late 2013 and announced in January 2014. Development was funded by a public crowdsale in July and August 2014, in which participants paid in bitcoin for ether. The network went live on 30 July 2015.

Ethereum and ether are often used interchangeably, but strictly speaking Ethereum is the network and ether is the coin. There is no company that owns Ethereum: the protocol is maintained by independent client teams, researchers and the non-profit Ethereum Foundation.

How Ethereum works

Smart contracts and gas

A smart contract is code deployed on the blockchain that executes exactly as written when someone calls it. Every operation consumes gas, paid in ETH. Since the London upgrade of 5 August 2021 (EIP-1559), each transaction pays a base fee that is burned, plus an optional tip for the validator. When the network is busy, the base fee rises.

Proof of stake

Since 15 September 2022, Ethereum has used proof of stake instead of mining. Validators lock ETH as collateral, propose and attest to blocks, and lose part of their stake if they misbehave. Time is divided into 12-second slots grouped into epochs of 32 slots. A validator needs at least 32 ETH and, since the Pectra upgrade, can hold up to 2,048 ETH. Smaller holders can stake through pools, liquid staking tokens or exchanges, each with its own trust trade-offs, as explained on the official staking page.

Supply: issuance minus burn

Ether has no fixed supply cap. New ETH is issued to validators as rewards, while the base fees of transactions are burned. When activity is high, the burn can exceed issuance and the supply can shrink for a while; when activity is low, supply grows slowly.

A short history of Ethereum

• Late 2013: Vitalik Buterin publishes the whitepaper.
• 30 July 2015: launch of the network (Frontier).
• June 2016: The DAO, a large smart contract, is exploited; the hard fork that followed split the chain into Ethereum and Ethereum Classic.
• 5 August 2021: London upgrade and fee burning (EIP-1559).
• 15 September 2022: The Merge moves Ethereum to proof of stake, cutting its energy use by more than 99%.
• 12 April 2023: Shapella enables withdrawals of staked ETH.
• 13 March 2024: Dencun introduces blobs, a cheaper data space for layer 2 networks.
• 7 May 2025: Pectra upgrade.
• 3 December 2025: Fusaka upgrade. The next one, nicknamed Glamsterdam, had no date as of October 2026.

What Ethereum is used for

Ethereum hosts much of decentralised finance: trading on decentralised exchanges, lending and borrowing, and dollar stablecoins issued as tokens. It is also the home of NFT standards, DAOs and a growing number of tokenised real-world assets. Many layer 2 networks settle their transactions on Ethereum, which lets users pay lower fees while relying on Ethereum’s security.

What makes Ethereum different

• Programmability: almost any financial or digital application can be written as a smart contract.
• Client diversity: several independent software clients run the network, which limits the impact of a single bug.
• Scaling through layer 2: rather than handling every transaction itself, Ethereum serves as a settlement layer for rollups.
• Regular upgrades: the protocol changes through named hard forks, agreed publicly (see the official timeline).

Risks and criticism

ETH is volatile, and its value depends on continued use of the network. Smart contracts can contain bugs: hacks of applications built on Ethereum have caused large losses over the years, and a transaction approved by mistake cannot be reversed. Fees on the main chain can become expensive during peaks of demand.

Critics also point to the growing complexity of the protocol, the fragmentation of users across many layer 2 networks, and the weight of a few large staking providers and exchanges in the validator set. Staking itself carries risks: penalties for validators, smart-contract risk with liquid staking and counterparty risk with exchanges.

How to store ether

Any Ethereum-compatible wallet can hold ETH and the tokens built on Ethereum. A software wallet is convenient for using applications; a hardware wallet keeps your keys offline and asks you to confirm every transaction on the device. Read each signature request carefully: many thefts come from malicious approvals rather than stolen keys. Back up your recovery phrase offline and never type it on a website.