If Bitcoin is digital money, Ethereum is a digital platform. Launched in 2015, Ethereum lets developers build applications that run on a blockchain — no company server in control. Its currency, called Ether (ETH), is the fuel that pays for everything on the network.
What is a smart contract?
A smart contract is a small program stored on the blockchain that runs exactly as written. If the conditions are met, it executes automatically — for example, releasing payment when goods are delivered. Lending platforms, exchanges and NFT marketplaces are all built from smart contracts.
Gas fees explained
Every action on Ethereum costs a fee called “gas”, paid in ETH. When the network is busy, fees rise because users compete for limited space. Newer scaling networks built on top of Ethereum, called Layer 2s, offer the same security with much cheaper fees.
From mining to staking
Ethereum originally used mining like Bitcoin. In September 2022 it switched to proof of stake in an upgrade known as The Merge. Now, people lock up (stake) ETH to help secure the network and earn rewards — cutting Ethereum’s energy use by more than 99%.
Why Ethereum matters
- It hosts the largest ecosystem of decentralised apps (dApps).
- Most stablecoins, DeFi platforms and NFT collections began on Ethereum.
- ETH is needed for fees, so demand for the network means demand for the coin.
Ethereum is powerful but still experimental. Smart contracts can contain bugs, and fees on the main network can spike. Understanding gas, staking and Layer 2s will help you use it safely and cheaply.
