What is Ethereum?
Ethereum is a programmable blockchain — a decentralized platform that does far more than move money around. Its breakthrough is the smart contract: programmable code that runs on the blockchain exactly as written, with no middleman. That turns Ethereum into a foundation for decentralized applications, not just a currency.
Because of smart contracts, Ethereum powers most of the activity in DeFi and NFTs, along with countless tokens and stablecoins. Its native coin, ETH (ether), is used to pay the "gas" fees that cover transactions and computation on the network.
Who created it & why
Ethereum launched in 2015. It was proposed by Vitalik Buterin and built by a founding team who saw a bigger opportunity than digital money alone: a blockchain that could run general-purpose code. Their goal was a "world computer" — a shared, neutral platform anyone could build applications on without asking permission.
Because no single company controls Ethereum, the applications built on it can run without a central operator that could shut them down or change the rules.
How Ethereum works
Ethereum records transactions and runs code on a blockchain maintained by a global network of computers. A few core ideas make it work:
Smart contracts & gas
Smart contracts are programs stored on the blockchain that execute automatically when their conditions are met. Running them takes computing power, so every action carries a "gas" fee paid in ETH. Gas keeps the network from being overloaded and rewards those who secure it.
Proof of stake & the Merge
Ethereum is secured by proof of stake. It originally used proof of work, then transitioned to proof of stake in an upgrade known as the Merge, which drastically cut its energy use. Instead of miners, validators lock up ETH to help confirm transactions — a process you can read about in our staking guide.
Supply & issuance
Ethereum has no fixed supply cap. New ETH is issued to reward validators, while a portion of transaction fees is permanently removed ("burned"). Because issuance and burning offset each other, net new supply tends to stay low — though the exact balance shifts with network activity.
What it's used for
- Smart-contract platform: the base layer that developers build decentralized apps on.
- DeFi & NFTs: Ethereum secures most decentralized finance and the majority of NFT activity.
- Tokens & stablecoins: a huge share of crypto tokens and stablecoins are issued on Ethereum.
Strengths & trade-offs
Strengths
- Huge ecosystem and developer base
- Programmable and flexible via smart contracts
- Energy-efficient proof of stake
- Secures most of DeFi and NFTs
Trade-offs
- Gas fees can be high at peak demand
- More complex than simpler chains
- Scaling still maturing — relies on layer-2s
- Volatile price
Key takeaways
- Ethereum is a programmable blockchain, not just digital money.
- Its breakthrough is the smart contract — code that runs on-chain.
- It powers most of DeFi, NFTs, tokens and stablecoins.
- It uses proof of stake after the Merge, cutting energy use sharply.
- There's no fixed supply cap; issuance is offset by burned fees.
Frequently asked questions
What is Ethereum in simple terms?
It's a programmable blockchain — a decentralized platform that runs smart contracts, which are pieces of code that execute automatically. ETH (ether) is its native coin, used to pay transaction and computation fees.
Who created Ethereum?
Ethereum launched in 2015. It was proposed by Vitalik Buterin and built by a founding team who wanted a blockchain that could run general-purpose applications, not just handle payments.
What are smart contracts?
Smart contracts are programs stored on the Ethereum blockchain that run exactly as written when their conditions are met. They power decentralized apps such as DeFi protocols, NFTs, tokens and stablecoins.
Does Ethereum use a lot of energy?
No longer. Ethereum transitioned from proof of work to proof of stake in an upgrade known as the Merge, which drastically cut its energy use. It's now secured by validators who stake ETH rather than by mining.