What is Ethereum

Ethereum is a public, open network where anyone can build apps, send money, and run digital agreements (smart contracts) with no company, government, or middleman needed.

If Bitcoin is like digital gold, Ethereum is more like a smartphone you can build apps on. It doesn’t just move money. It runs code, stores value, and powers a whole new version of the internet.

At the center of Ethereum is Ether (ETH), the cryptocurrency you use to pay for everything on the network -from sending tokens to running apps. Think of Ethereum as a shared computer that everyone can use, but no one owns. And ETH is the fuel that keeps that computer running.

1. Who Created Ethereum?

Ethereum started with an idea from Vitalik Buterin, a developer who got involved in Bitcoin when he was just a teenager. Back in 2013, Vitalik noticed that while Bitcoin was great for transferring value, it wasn’t built to do much else.

He believed a blockchain could support way more like building games, digital contracts, financial apps, and social networks that run without a central authority. So he wrote a whitepaper and shared his vision with the world.

In 2014, Vitalik and a group of co-founders launched the Ethereum project and raised $18 million by selling ETH in one of the first major token sales. They also created the Ethereum Foundation, a nonprofit based in Switzerland that would help fund the network’s development.

Some of Ethereum’s early team members later became well-known names in crypto:

• Gavin Wood created the programming language Solidity and later launched Polkadot.
• Joseph Lubin went on to found ConsenSys, a company building Ethereum tools.
• Charles Hoskinson eventually started Cardano.
  
  Vitalik remained focused on Ethereum, and over time, the project grew into one of the most active and important ecosystems in blockchain.

2. How Ethereum Works

Ethereum is a network of thousands of computers around the world, all working together to keep a shared ledger and run applications. This ledger is called the Ethereum blockchain, and it records every transaction, app, and change made on the network.

But Ethereum does more than just store who sent how much to whom. It also runs smart contracts, which are pieces of code that execute automatically when certain conditions are met. For example, a smart contract could say: “If someone sends 1 ETH, give them digital artwork.” That agreement happens instantly, with no human or company managing it.

These smart contracts are what power decentralized applications (dApps) - things like games, marketplaces, and financial tools that live on the Ethereum blockchain. Once deployed, a smart contract can’t be changed, which makes it trustworthy and tamper-proof.

To make all of this work, Ethereum uses something called the Ethereum Virtual Machine (EVM). This is like a universal computer that runs all the smart contracts on the network, making sure every node gets the same result when code is executed. Developers usually write their contracts in a language called Solidity, which the EVM translates into a form the blockchain understands.

3. From Mining to Staking

When Ethereum first launched, it used a system called proof-of-work, similar to Bitcoin. This meant miners used powerful computers to solve puzzles, secure the network, and earn ETH. But this method used a lot of electricity.

In September 2022, Ethereum switched to a more efficient system called proof-of-stake. Instead of miners, the network now uses validators - people who lock up ETH to help process and approve transactions.

Validators are chosen at random to create new blocks and confirm others. If they behave honestly, they earn rewards. If they cheat or go offline, they risk losing some of their staked ETH (a process called “slashing”).

This change, known as The Merge, cut Ethereum’s energy use by over 99%. It also made the network faster, cheaper to maintain, and more environmentally friendly.

To become a validator, you need to stake 32 ETH. But you can also stake smaller amounts through staking pools or services that let people team up and split the rewards.

4. What Is Ether (ETH)?

ETH is Ethereum’s currency. You need it to do anything on the network - whether that’s sending money, interacting with a smart contract, or running a dApp. ETH is also used to reward validators who keep the network secure.

Every time you use Ethereum, you pay a gas fee in ETH. Gas fees depend on how much activity is happening on the network and how complex your transaction is. A simple ETH transfer might cost very little, while a complicated smart contract could cost more.

In 2021, Ethereum introduced a major upgrade called EIP-1559, which changed how these gas fees work. Now, instead of all the gas fees going to validators, a portion is burned—meaning it's permanently removed from circulation. This reduces ETH’s total supply over time and may increase scarcity if demand stays high.

ETH also plays a big role in staking. Validators must lock it up to help run the network and, in return, they earn ETH rewards for doing so.

5. Why ETH Has Value

ETH has value because it powers everything on Ethereum. If you want to use the network, you need ETH. ETH is used for gas fees, staking, and as the currency for most apps built on Ethereum. It also supports decentralized finance (DeFi), non-fungible tokens (NFTs), gaming economies, and digital identity systems. As more people use these apps, the demand for ETH increases.

Another reason ETH is used across the Ethereum network because it’s scarce. With each transaction, a portion of ETH is burned, lowering the total supply. Meanwhile, more ETH is locked up in staking contracts, reducing the amount in circulation.

So ETH isn’t just a digital currency - it’s the fuel, the security layer, and the main asset in a growing digital economy. It’s useful, widely accepted, and deeply tied to one of the most important blockchain networks in the world.

6. What Can You Do with Ethereum?

One of Ethereum’s biggest strengths is its flexibility. You can use it to build or interact with thousands of different apps and tools.

Here are just a few things you can do:

1. Use Decentralized Finance (DeFi)

With DeFi apps like Uniswap, Aave, or Compound, you can interact with lending and borrowing protocols that offer rewards, trade tokens, and more without a bank. These apps are open to anyone and don’t require permission or paperwork.

2. Buy and Sell NFTs

Ethereum is the main blockchain for NFTs - unique digital items like art, music, and collectibles. With platforms like OpenSea or Blur, you can buy, sell, or mint NFTs directly from your wallet.

3. Join or Create a DAO

DAOs (Decentralized Autonomous Organizations) are online groups that make decisions together using smart contracts and token voting. Anyone can join, propose ideas, and help manage shared funds.

4. Create Your Own Token or App

If you’re a developer, you can create your own token or launch an app using Ethereum’s tools. Everything from stablecoins to gaming platforms can be built on Ethereum.

Ethereum makes it possible to build without gatekeepers. No need to ask permission. No need to trust a middleman. Just write the code, and it runs.

7. Why Ethereum Matters

Ethereum is the first programmable blockchain and a new kind of internet infrastructure. It gives people the tools to build, own, and control their digital lives in ways that weren’t possible before.

Instead of relying on companies to store your data or handle your money, you can use Ethereum to manage everything yourself with full transparency and control. It’s a powerful idea: that trust can come from code, not corporations.

Ethereum matters because it opens up financial tools to people everywhere, regardless of where they live or how much they earn. It enables creativity, ownership, and community in the digital world. And it’s constantly evolving with upgrades like Pectra and Glamsterdam focused on scaling, lowering fees, and making the network even easier to use.

More than just technology, Ethereum is a movement toward a more open, fair, and user-owned internet. It’s not perfect, but it’s growing fast and it’s just getting started.