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Ethereum (ETH)

Ethereum is an open, decentralized blockchain network that runs smart contracts and decentralized applications, and its native cryptocurrency, ether, is used to pay transaction fees.

What Is Ethereum?

Ethereum is a blockchain network, launched in 2015, that lets developers build and run smart contracts. These are programs that carry out agreed actions automatically when set conditions are met. The network's native cryptocurrency, called ether (ETH), is used to pay for the work the network performs. Ethereum is often described as a platform for decentralized applications, or dApps, which run across many independent computers instead of on one company's servers.

How It Works

Ethereum keeps a shared record of transactions that many independent computers maintain together. Each action on the network, from a simple payment to a smart contract call, requires computing resources. Users pay a gas fee in ether to cover that cost, and gas fees rise and fall with network demand.

Ethereum originally used proof-of-work, in which participants competed to add new blocks using energy-intensive hardware. In 2022 the network moved to proof-of-stake, where validators lock up ether as a stake to confirm transactions. This change sharply reduced the network's energy consumption.

Common Uses

Ethereum hosts much of decentralized finance, often called DeFi, which offers lending, borrowing, and trading without traditional banks. It is also used to issue tokens and non-fungible tokens (NFTs), which can represent ownership of digital items. Many other blockchains and applications were designed to work with Ethereum's tools, which has made it a central part of the crypto ecosystem.

Risks to Consider

  • Price volatility: ether's market value can change sharply over short periods.
  • Technical risk: smart contracts can contain bugs, and past exploits have caused losses.
  • Regulatory uncertainty: rules for crypto assets differ by country and continue to change.
  • Competition: other blockchains compete for developers and users.
  • Custody: holders must choose between exchanges and personal wallets, each with different security trade-offs.

Updated October 25, 2026. For general education only; not financial, tax or legal advice.

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Related Terms

Blockchain

A blockchain is a shared digital ledger in which transaction records are grouped into blocks, each cryptographically linked to the one before, so that past entries are very difficult to alter.

Smart Contract

A smart contract is a program stored on a blockchain that automatically carries out the terms of an agreement when preset conditions are met, without a middleman enforcing it.

Cryptocurrency (Crypto)

A cryptocurrency is a digital form of money that uses cryptography to secure transactions and usually records them on a decentralized ledger called a blockchain, rather than through a central bank or other intermediary.

Proof-of-Stake (PoS)

Proof-of-Stake (PoS) is a blockchain consensus method in which validators are chosen to create new blocks and verify transactions based on the amount of cryptocurrency they lock up as collateral.

Ether (ETH)

Ether (ETH) is the native cryptocurrency of the Ethereum blockchain, used to pay transaction fees and computation costs on the network and traded as a digital asset.