Cryptocurrency and blockchain, explained in 20 facts

Ethereum is a blockchain network, proposed by programmer Vitalik Buterin in a 2013 paper and launched in July 2015, that runs software instead of just recording payments. Where Bitcoin's blockchain mainly tracks who owns how much bitcoin, Ethereum's blockchain can run entire programs, called smart contracts, that execute automatically once their conditions are met.

That difference matters because it turns a blockchain into a platform other people can build on. A developer can write an application, publish it to the Ethereum network, and know it will keep running exactly as coded, without needing a company's servers to stay online or a company's terms of service to stay unchanged. Thousands of applications now run this way, covering lending, trading, insurance, gaming and digital art, collectively described as decentralized finance, or DeFi.

Ethereum has its own currency, ether, often written as ETH, which pays for the computing power the network uses to run these programs. Every action on Ethereum, whether that's sending money, trading a token or executing a smart contract, costs a small amount of ether, called a gas fee, that goes to the computers processing the transaction.

Ethereum originally secured its network the same way Bitcoin does, through mining, but switched entirely to a different method called proof of stake in September 2022, in an upgrade widely referred to as the Merge. The change replaced competitive, energy-intensive mining with a system where validators post cryptocurrency as collateral instead, a shift covered in more detail elsewhere in this guide.