What Is Ethereum? Smart Contracts and ETH Explained
Ethereum is the largest programmable blockchain and the second-biggest cryptocurrency after bitcoin. Where bitcoin is mainly digital money, ethereum is a platform that runs software called smart contracts, which power decentralized finance, NFTs, and thousands of applications. Its native coin is called ether, or ETH.
Smart contracts: the core idea
A smart contract is code that runs exactly as written on the ethereum network, without a middleman. It can hold funds, enforce rules, and execute automatically when conditions are met. This is what lets developers build lending apps, exchanges, and games that no single company controls.
Key facts
| Property | Detail |
|---|---|
| Launched | 2015 |
| Native coin | Ether (ETH) |
| Consensus | Proof of stake |
| Transaction cost | Paid in gas |
| Primary use | Smart contracts, DeFi, NFTs |
Gas and fees
Every action on ethereum costs a fee called gas, paid in ETH, which compensates the validators who process transactions. Gas rises when the network is busy. This fee model is part of what makes ETH useful beyond simple speculation.
Proof of stake and staking
Ethereum uses proof of stake, where validators lock up ETH to secure the network and earn rewards. This also means ETH holders can earn yield through staking. For how consensus works in general, see our blockchain guide.
How to own ethereum
Buy ETH on an exchange and store it in a wallet you control. Start with how to buy crypto, then secure it using our crypto wallets guide.
Frequently asked questions
What is the difference between bitcoin and ethereum? Bitcoin is mainly digital money. Ethereum is a programmable platform for applications. See what is bitcoin for the comparison.
Why are ethereum gas fees so high? Gas reflects demand for block space. When many people use the network at once, fees rise. Upgrades and layer-2 networks aim to reduce costs.
Can I earn interest on ethereum? Yes, through staking, which pays rewards for helping secure the proof-of-stake network. It carries price and custodial risk.
Related reading
See how ethereum compares with the original cryptocurrency in what is bitcoin.