What is Ethereum? A plain-English guide to the network and ETH
Ethereum is a public blockchain that runs programs as well as payments. Here is what that means, how a transaction moves through the network, and what nobody can promise you about it.
Photo: “Ethereum Background” by cryptocoin, CC BY 2.0, via Flickr (edited: cropped and resized).
Ethereum is an open, public blockchain launched in July 2015 that can run programs called smart contracts [1]. Its native currency, ether (ETH), pays the fees for every transaction and is staked by validators who secure the network under proof-of-stake [2].
Key points
- 1Ethereum is a shared computer as well as a ledger: anyone can deploy a program (a smart contract) that then runs exactly as written.
- 2Ether (ETH) is the network’s own currency. Every action costs a fee in ETH, measured in units of computation called gas.
- 3Since September 2022, blocks are produced by validators who lock up ETH as a deposit, not by miners.
- 4ETH has no fixed supply cap: new ETH is issued to validators and part of every fee is destroyed.
- 5No company runs Ethereum, and no one can promise what ETH will be worth.
On this page
- What is Ethereum, in plain words?
- How is Ethereum different from Bitcoin?
- What is a smart contract?
- What is ether (ETH) used for?
- What happens when you send a payment on Ethereum?
- Who runs Ethereum?
- What have been the big moments in Ethereum’s history?
- Does Ethereum have a fixed supply like Bitcoin?
- What is a layer 2, and why do people mention it with Ethereum?
- What are the risks for a beginner?
- What mistakes do beginners make here?
- Frequently asked questions
- The bottom line
- Sources
What is Ethereum, in plain words?#
Ethereum is a decentralized blockchain network and a platform for building software, powered by its own cryptocurrency, ether (ETH) [1]. A blockchain is a shared record of transactions that many independent computers keep in sync — see what is a blockchain if the idea is new. Ethereum’s record is kept by thousands of computers called nodes, run by ordinary people and organisations around the world [1].
What makes Ethereum different from a simple payment network is that its record can hold programs as well as balances. The original whitepaper described the goal as a blockchain with a built-in, fully general programming language, so that anyone could write their own rules for ownership and transactions [3]. Those programs are called smart contracts, and they are why Ethereum hosts stablecoins, exchanges, lending apps and collectibles rather than just one coin.
How is Ethereum different from Bitcoin?#
Both are open blockchains that let people send value without a bank. ethereum.org sums up the difference this way: Bitcoin focuses narrowly on peer-to-peer payments with a deliberately basic scripting language, while Ethereum is built as programmable infrastructure for whole applications [1]. They also secure their networks differently and handle supply differently.
| Feature | Bitcoin | Ethereum |
|---|---|---|
| Main purpose | Peer-to-peer digital money | Payments plus programmable applications |
| Programs on the chain | Basic scripts only | General-purpose smart contracts |
| Who adds blocks | Miners using proof-of-work | Validators using proof-of-stake (since 2022) |
| Block timing | About every 10 minutes on average [4] | A slot every 12 seconds |
| Supply rule | Capped just under 21 million [5] | No fixed cap; issuance minus burned fees |
Ethereum column: ethereum.org. Bitcoin details are covered in our Bitcoin guides.
Ethereum’s block clock is fixed: time is divided into 12-second slots, and in each slot one validator is chosen to propose a block [6]. Thirty-two slots make an epoch of 6.4 minutes [7]. Bitcoin’s pace, by contrast, depends on how quickly miners solve a puzzle — see Bitcoin halving explained for how its fixed schedule works.
| Step | Value |
|---|---|
| Seconds in a day | 86,400 |
| Slots per day = 86,400 ÷ 12 | 7,200 |
| Length of an epoch = 32 × 12 seconds | 384 seconds (6.4 minutes) |
| Epochs per day = 7,200 ÷ 32 | 225 |
7,200 is a maximum, not a promise: a slot stays empty if the chosen validator is offline [6].
What is a smart contract?#
A smart contract is simply a program that runs on Ethereum: a bundle of code and data that lives at its own address on the blockchain [8]. ethereum.org borrows a metaphor from computer scientist Nick Szabo: a vending machine. Put in the right money and press the right button, and the machine hands over the snack. No shop assistant is needed, because the rules are built into the machine [8].
Ethereum has two kinds of account. An externally owned account is controlled by whoever holds its private key — that is what your wallet manages. A contract account has no private key; it is controlled by its code and only acts when a transaction reaches it [9]. Two properties matter for beginners: deployed contracts cannot be deleted by default, and interactions with them are irreversible [8]. If you want the short definition, see smart contract.
What is ether (ETH) used for?#
ETH has two jobs inside the network. First, it pays for computation: every transaction costs a fee measured in gas, and gas fees must be paid in ETH [10]. That fee exists to stop spam and endless loops that could jam the network. Second, ETH is what validators lock up as a security deposit to earn the right to add blocks [2]. Our guides on gas fees and staking cover each job in detail.
ETH divides into very small units. The smallest is the wei; one ETH equals 10¹⁸ wei. Fees are usually quoted in gwei, where one gwei is one billionth of an ETH (10⁹ wei) [7].
Ethereum in numbers
What happens when you send a payment on Ethereum?#
ethereum.org walks through a simple case: sending $10 of a stablecoin to a friend [1]. The same path applies to almost every action, from swapping tokens to minting a collectible.
The life of an Ethereum transaction
The waiting room in step 2 is the mempool, a list of pending transactions that each node keeps [2]. The last step leads to finality: once two-thirds of all staked ETH has voted for a pair of checkpoints, the block is finalized and could only be reverted by an attacker willing to lose at least a third of all staked ETH [2]. For the general idea, see what is the mempool.
Who runs Ethereum?#
No single person or company. There is no CEO or board; developers propose upgrades, node operators run the infrastructure, stakers validate blocks, and users choose which software to run [1]. Changes are written up as Ethereum Improvement Proposals (EIPs), discussed in public, and adopted only if the wider community supports them [1]. The Ethereum Foundation funds research and development but does not control the network.
Anyone can run a node, and running one does not require any ETH. A consumer computer with 1–2 TB of free storage and an internet connection is enough to check every block for yourself [11]. Only nodes that propose blocks — validators — need staked ETH.
What have been the big moments in Ethereum’s history?#
- 2014The Ethereum whitepaper is published, according to the ethereum.org page that hosts it [3].
- July 2015The network launches with the Frontier release [1].
- 2016A bug in The DAO smart contract lets an attacker drain 3.6 million ETH (about $60 million), prompting a chain fork [1].
- 1 December 2020The Beacon Chain launches as a separate proof-of-stake chain [11].
- August 2021The London upgrade starts burning part of every fee under EIP-1559 [13].
- 15 September 2022The Merge: proof-of-work ends and validators take over block production [11].
- 12 April 2023Shanghai/Capella enables withdrawals of staked ETH [12].
- May 2025Pectra raises the maximum validator balance from 32 to 2,048 ETH [12].
- December 2025Fusaka introduces PeerDAS, a more efficient way for layer 2 networks to post data [1].
The Merge also cut Ethereum’s estimated energy use by about 99.95% [11]. It did not, however, change the currency itself: there is no “ETH2” token, and anyone telling you to swap or “upgrade” your ETH is likely a scammer [14].
Does Ethereum have a fixed supply like Bitcoin?#
No. Two forces move the supply of ETH: issuance, the new ETH paid to validators, and the burn, the part of every transaction fee that is destroyed [13]. Which force is bigger depends on how busy the network is. The authors of EIP-1559, the proposal that introduced the burn, wrote that they could not say in advance whether ETH would end up inflationary or deflationary, because nobody controls demand for block space [15]. Our EIP-1559 guide shows the arithmetic.
What is a layer 2, and why do people mention it with Ethereum?#
Because every node checks every transaction, Ethereum’s main chain has limited capacity, and fees rise when demand is high [10]. Layer 2 networks handle transactions off the main chain and then post the results back to Ethereum, borrowing its security [16]. The most common design is the rollup. They come with their own trade-offs, explained in layer 2 rollups explained.
What are the risks for a beginner?#
- Smart contract bugs. Code does exactly what it says, including its mistakes. The DAO incident in 2016 showed how much can be lost to one flaw [1].
- Irreversible mistakes. Interactions with contracts cannot be undone [8], and a payment to the wrong address will not be refunded by anyone.
- Scams. Fake support agents, giveaways and phishing sites target Ethereum users. No legitimate service will ever ask for your recovery phrase [14]. See common crypto scams.
- Price swings. EU regulators warn that crypto-asset prices can fall and rise quickly and that you may lose all the money you invest [17].
What mistakes do beginners make here?#
- Thinking Ethereum and ETH are the same thing
Ethereum is the network; ETH is the currency used on it. Many other tokens, such as stablecoins, also live on Ethereum but are not ETH.
- Falling for “ETH2” or upgrade requests
The switch to proof-of-stake did not create a new coin. You never need to migrate, swap or “verify” your ETH.
- Holding tokens but no ETH
Every action on Ethereum needs a fee in ETH. A wallet full of tokens and zero ETH cannot move anything.
- Trusting a contract because it is “on the blockchain”
Being on Ethereum means the code runs as written, not that the code is safe. Bugs and malicious contracts run just as faithfully.
- Assuming supply rules decide the price
Issuance and burn change how much ETH exists. They do not set what anyone will pay for it.
Frequently asked questions#
Who created Ethereum?
Software developer Vitalik Buterin proposed it in a whitepaper [1]. The ethereum.org page that hosts the paper says it was published in 2014 [3], although ethereum.org’s short history lists 2013 [1]. Co-founders including Gavin Wood and Joseph Lubin had joined by 2014, and the network launched in July 2015 [1].
Is Ethereum the same as Bitcoin?
No. Both are public blockchains, but Ethereum is designed to run general-purpose programs, uses proof-of-stake instead of mining, and has no fixed supply cap.
Do I need 32 ETH to use Ethereum?
No. 32 ETH is only the minimum to run your own validator [12]. Sending, receiving and using apps needs only enough ETH to pay the fee.
Can Ethereum be shut down?
There is no central server to switch off; the network keeps running as long as independent nodes do. Individual apps, websites and companies built around Ethereum can still fail or be shut down.
Is ETH a good investment?
TokenTrail does not give investment advice. Regulators warn that crypto-assets are highly risky and speculative and that you could lose all of your money [17].
The bottom line#
Ethereum is a public blockchain that runs programs as well as payments. ETH pays for that computation and secures the network through staking, and the whole system is maintained by independent node operators rather than a company.
To go deeper, read how gas fees are calculated, how staking works, and why most everyday activity is moving to layer 2 rollups.
Sources#
Grade A = primary source (regulator, protocol specification, client code, original author). Grade B = expert secondary source used for explanation only.
- Aethereum.org. What is Ethereum? (A Complete Guide), 2025.
- Aethereum.org. Proof-of-stake (PoS), 2026.
- Aethereum.org (Vitalik Buterin). Ethereum Whitepaper, 2014. Page states the paper was published in 2014
- BBitcoin Wiki. Difficulty, 2026.
- BBitcoin Wiki. Controlled supply, 2026.
- Aethereum.org. Blocks, 2026.
- Aethereum.org. Ethereum glossary, 2026.
- Aethereum.org. Introduction to smart contracts, 2026.
- Aethereum.org. Ethereum accounts, 2026.
- Aethereum.org. Ethereum gas and fees: technical overview, 2026.
- Aethereum.org. The Merge, 2026.
- Aethereum.org. Ethereum staking: How does it work?, 2025.
- Aethereum.org. How The Merge impacted ETH supply, 2026.
- Aethereum.org. Ethereum security and scam prevention, 2026.
- AEthereum Improvement Proposals. EIP-1559: Fee market change for ETH 1.0 chain, 2019.
- Aethereum.org. Scaling, 2026.
- AEuropean Supervisory Authorities (EBA, ESMA, EIOPA). EU financial regulators warn consumers on the risks of crypto-assets, 2022.
Keep reading
Ethereum gas fees explained: what you pay and why
Every action on Ethereum costs gas. This guide breaks the fee into its parts, works through real arithmetic, and explains why a failed transaction can still cost you money.
Ethereum staking explained: how validators earn, and what they can lose
Staking is how Ethereum chooses who adds blocks. Here is what a validator does, how rewards and penalties are calculated, how the different ways to stake compare, and why no staking return is promised.
Layer 2 rollups explained: how Ethereum scales without bigger blocks
Rollups run transactions off Ethereum’s main chain and post the results back to it. Here is how that works, where the savings come from, and which trust assumptions you take on when you use one.