What Is Ethereum?

Jan 1, 0001

What Is Ethereum?

Ethereum is a decentralized, open-source blockchain platform that enables developers to build and deploy smart contracts and decentralized applications (dApps). Launched in 2015 by Vitalik Buterin, it extends beyond simple peer-to-peer value transfer—like Bitcoin—to offer a full Turing-complete scripting environment.

Key Components

  1. Ethereum Virtual Machine (EVM):

    • The runtime environment for smart contracts on every node in the network.
    • Ensures code executes identically across all participants.

  2. Ether (ETH):

    • The native cryptocurrency used to pay gas fees for transactions and contract executions.
    • Serves as the economic incentive securing the network.

  3. Gas & Transactions:

    • Gas measures computational work; users set gasPrice to prioritize their transactions.
    • Miners (PoW) or validators (PoS) include transactions in blocks, earning gas fees.

  4. Consensus Mechanism:

    • Originally Proof-of-Work (PoW), transitioning to Proof-of-Stake (PoS) with Ethereum 2.0 (the “Merge”).
    • PoS validators stake ETH to propose and attest new blocks, reducing energy consumption.

Why Ethereum Matters

  • Smart Contracts: Self-executing agreements enforceable on-chain without intermediaries.
  • dApp Ecosystem: DeFi protocols, NFT marketplaces, DAOs, and more—all running atop Ethereum.
  • Network Effects: Largest developer community and richest set of tooling (Truffle, Hardhat, Remix).

Ethereum vs. Bitcoin

Feature Bitcoin Ethereum
Purpose Digital gold, value transfer Programmable blockchain, dApps & DeFi
Consensus PoW PoW → PoS (Beacon Chain / The Merge)
Scripting Language Very limited (Script) Turing-complete (Solidity, Vyper, etc.)
Block Time ~10 minutes ~12 seconds
  • DeFi Lending & Exchanges: Aave, Uniswap
  • NFT Minting & Marketplaces: OpenSea, Rarible
  • DAOs & Governance: Compound governance, MakerDAO
  • Token Standards:
    • ERC-20 (fungible tokens)
    • ERC-721 (non-fungible tokens)
    • ERC-1155 (multi-token standard)

Getting Started

  1. Install a Wallet: MetaMask or Trust Wallet.
  2. Acquire ETH: Through centralized exchanges like Coinbase.
  3. Explore dApps: Try simple swaps on Uniswap or experiment with an NFT mint.
  4. Learn Solidity: Use Remix IDE to write and deploy your first smart contract.

For broader context, return to our pillar page Understanding Ethereum: From Basics to NFTs.