Ethereum is a decentralized computing platform that uses ETH (also called Ether) to pay transaction fees (or “gas”). Developers can use Ethereum to run decentralized applications (dApps) and issue new crypto assets, known as Ethereum tokens.
(ETH) is a decentralized, open-source that aims to become a global platform for and strives to enable users worldwide to write and run software resistant to censorship, downtime, and fraud. As the nonprofit Ethereum Foundation puts it, it "Is for more than payments. It's a marketplace of financial services, games, and apps that can't steal your data or censor you." Ethereum is the second-biggest by after as of 2023 and a decentralized computing platform that can run a wide variety of applications — including a universe of (or DeFi) apps and services. This platform is powered by its native cryptocurrency, Ether, which is used within the Ethereum network for various operations, making it an integral part of the system.
Ethereum operates through a network, which serves as a decentralized, immutable ledger to record transaction histories. At its core, it uses Ether (ETH), the platform's native digital currency, to enable computations and transaction validation within the ecosystem. In contrast to its predecessor, , Ethereum's blockchain aims to support a diverse range of applications on its network, from to services. Initially using a proof-of-work (PoW) system, Ethereum shifted to a proof-of-stake (PoS) model with 'The Merge,' with the goal of enhancing efficiency and reducing environmental impact. Validators now ETH to secure the network, moving away from energy-intensive mining.
Ethereum's potential use cases extend beyond the simple transfer of value. Its platform enables the development of a wide range of decentralized applications () that operate on its blockchain. These dApps can offer services ranging from games to digital identity systems and from supply chain tracking to complex financial instruments. Ethereum also enables the creation and exchange of non-fungible (NFTs), unique digital assets that can represent ownership of a variety of items and content.
In 2013, a 19-year-old computer programmer (and Bitcoin Magazine co-founder) named Vitalik Buterin released a whitepaper proposing a highly flexible blockchain that could support virtually any kind of transaction. Buterin, along with other co-founders, including Gavin Wood, secured funding for the project with the sale of $18 million in pre-launch tokens in 2014. In July 2015, the first public version of the Ethereum blockchain was launched, and smart contract functionality began to roll out on the Ethereum blockchain. Since its launch, Ethereum has undergone several planned upgrades, known as milestones, which improve the system's functionality, performance, and security. These upgrades are decided by consensus within the community and aim to represent the ongoing development and forward-thinking nature of the Ethereum project. In 2022, Ethereum went through a major upgrade, switching from proof-of-work to proof-of- to become a more secure and energy-efficient blockchain.
Ethereum, like Bitcoin, is an open-source project that is not owned or operated by a single individual. Anyone with an internet connection can run an Ethereum or interact with the network. However, Ethereum differs from Bitcoin in its ability to build and execute smart contracts. Smart contracts enable a vast ecosystem of applications on Ethereum, such as (which are pegged to the dollar by smart contract), decentralized finance apps (collectively known as DeFi), and other decentralized apps (or dApps). Until recently, Ethereum and Bitcoin were both secured by "miners" running specialized hardware to solve difficult math problems. In September 2022, Ethereum mining was phased out, and Ethereum transitioned to Proof-of-Stake. Ethereum is now secured by a global network of running Ethereum's software while (understand "locking") a certain amount of ETH tokens. Validators earn rewards generated in Ether (ETH) for participating in the process and can have their stake slashed if they violate the rules of the protocol. Anyone with an ETH stake and computer meeting the requirements can become a validator.
Coinbase makes it easy and secure to stake your ETH. Through Coinbase's built-in staking feature, anyone can stake their ETH (as much or as little as you'd like) in just a few taps. In your , navigate to the ETH asset page. You'll see a prompt to stake your ETH. If you want to sell or send your ETH staked on Coinbase, you can do so by converting it to cbETH, Coinbase's Wrapped Staked ETH token. The price of cbETH is determined by the market and may lose value. cbETH is available in select regions.
Like Bitcoin, Ethereum's price is based on a global marketplace of supply and demand. Its price can be volatile in the short term as demand overwhelms supply and vice versa.
By creating an account on Coinbase or an increasing number of other reputable financial technology companies, you can buy, send, and receive Ethereum.
Smart contracts are digital contracts stored on a blockchain that are automatically executed when predetermined terms and conditions are met. Essentially, they are programs stored on a blockchain that activate when specific conditions are fulfilled. They are commonly used to automate the execution of an agreement, enabling all participants to anticipate the potential outcome, without the need for an intermediary or time delay. They can also automate a workflow, initiating the next action when conditions are met. Smart contracts operate by following simple “if/when…then…” statements that are written into code on a blockchain. A network of computers carries out the actions when predetermined conditions have been met and verified. These actions could include executing the agreed-upon actions, registering a vehicle, sending notifications, or issuing a ticket. The blockchain is then updated when the transaction is completed. This means that the transaction is typically immutable, and typically, only parties who have been granted permission may have access to the results.
Yes, Ethereum is a type of blockchain. It is a decentralized global software platform powered by blockchain technology. Ethereum is known for its native digital asset, ether (ETH), but it has functionalities beyond being a digital currency. It's a platform that allows developers to build and deploy smart contracts and decentralized applications (dApps). These smart contracts aim to execute transactions when certain conditions are met, with the intention of reducing the need for a third party. Ethereum's blockchain is designed with scalability, programmability, and decentralization in mind, which is why some developers and enterprises consider using it for blockchain technology applications. Ethereum, while having its own digital asset, primarily serves to facilitate and host blockchain-based applications.