What Is Ethereum? — ethereum.org (2026)
Source: https://ethereum.org/what-is-ethereum/
Raw file: raw/articles/what-is-ethereum-2.md
Overview
Ethereum is an open, public blockchain launched July 2015 by Vitalik Buterin and co-founders. The key insight: while Bitcoin lets you send digital cash, Ethereum adds smart contracts — open-source programs that let anyone create digital assets and decentralised applications (dapps) that run 24/7 globally without a company or bank controlling them.
The resulting ecosystem is called web3 — the internet centered around ownership.
The Ethereum Network
Thousands of independent computers (“nodes”) run together to provide financial services and digital applications to anyone, anywhere. Three key advantages over institutional networks:
| Property | What It Means |
|---|---|
| Censorship resistant | No bank or corporation can block access or freeze accounts; nodes record every transaction without discrimination |
| Highly secure | dapps are secured by the entire network; to take one down, an attacker must take over the whole network (billions in cost) |
| Durable and reliable | Designed for 100% uptime; runs even if some nodes go offline due to bugs, crackdowns, or disasters |
Ether (ETH)
ETH is the native cryptocurrency of Ethereum — programmable money that powers the network:
- Gas fees: every transaction and smart contract execution requires paying ETH to validators
- Staking: validators lock up ETH as a security deposit to earn the right to process transactions; earn ETH rewards if honest, lose stake if they cheat
- Deflationary mechanism: EIP-1559 burns a portion of every transaction fee — on busy days, more ETH is burned than created, making ETH deflationary and increasing scarcity over time
ETH vs Bitcoin: ETH is a productive asset generating staking yields (3–5% APY); Bitcoin generates no yield. This makes ETH simultaneously a store of value and an income-generating asset.
Smart Contracts
Open-source programs deployed permanently on Ethereum that:
- Run 24/7, 365 days a year without downtime
- Execute automatically when triggered — no intermediary needed
- Are accessible to anyone with an internet connection
- Cannot be tampered with after deployment
Example transaction flow (sending stablecoins):
- User signs transaction in wallet → broadcasts to network
- Transaction enters public mempool
- Block proposer adds it to next block
- Stablecoin smart contract moves funds automatically
- Global validators attest to the change
Proof-of-Stake (since 2022)
Ethereum switched from energy-intensive proof-of-work to proof-of-stake in September 2022 (“The Merge”) — 99% more energy efficient.
- Validators stake ETH as collateral to earn the right to propose/attest blocks
- Correct behaviour → earn ETH rewards
- Dishonest behaviour → lose staked ETH (slashing)
- No complex computational puzzles — just economic stake as the security mechanism
Layer 2 Networks
L2 chains run on top of Ethereum to increase capacity. They act like express lanes — faster and cheaper, sometimes costing less than a cent per transaction, while inheriting Ethereum’s security.
Major L2s: Optimism, Arbitrum, ZKSync, Base — collectively processing millions of transactions worth billions annually.
Entities Mentioned
- vitalik-buterin — co-founder; launched July 2015
- ethereum-foundation — maintains ethereum.org and stewards protocol
Related concepts: ethereum | smart-contracts | proof-of-stake | layer-2 | defi | blockchain