What is Ethereum?

Ethereum is the second-biggest cryptocurrency by market cap after Bitcoin. It is also a decentralized computing platform that can run a wide variety of applications — including the entire universe of DeFi.

Ethereum, which launched in 2015, was designed to be more than digital money. Its founders aimed to create a decentralized computing platform for secure applications built on blockchain technology.

Developers use Ethereum to create applications such as financial tools, games, and databases using smart contracts — self-executing agreements that run when certain conditions are met.

Ethereum’s open-source architecture and decentralization mean that anyone can interact with the network or build applications on top of it. Popular innovations include stablecoins, DeFi apps, and dapps.

Ether (ETH)

Ether (ETH) is Ethereum’s native token, used to pay for transactions and smart contract execution. These transaction fees are known as “gas.”

Security

Ethereum uses a Proof of Stake consensus mechanism for network security. Validators stake ETH to help maintain the blockchain, receiving rewards for their participation.

Ethereum 2.0

Ethereum 2.0, implemented in 2022, upgraded the network from Proof of Work to Proof of Stake to improve scalability, efficiency, and reduce energy consumption.

Smart Contracts

Smart contracts are digital agreements that self-execute once predefined conditions are met. They eliminate the need for intermediaries in many types of transactions.

Buying and Storing Ethereum

To own ETH, users need a digital wallet with a public and private key. The public key receives ETH; the private key must be securely stored to maintain access to funds.

Value Proposition

Ethereum derives value from its flexible blockchain platform, large user base, and the variety of applications it supports. Its price is influenced by supply, demand, and technological utility.