What Is Ethereum (ETH)? — Kraken Learn (2024)
Source: https://www.kraken.com/en-ca/learn/what-is-ethereum-eth
Raw file: raw/articles/what-is-ethereum-eth.md
Overview
A beginner’s guide published by the Kraken exchange team (November 2024), explaining Ethereum to prospective traders and users. The piece provides a more detailed treatment than a marketing blurb — covering Buterin’s backstory, the Bitcoin contrast, staking, dApp development, and Ethereum’s competitive position among smart contract platforms.
Ethereum vs Bitcoin: The Core Distinction
The article uses Vitalik Buterin’s own framing: Bitcoin is a pocket calculator; Ethereum is a smartphone.
| Attribute | Bitcoin | Ethereum |
|---|---|---|
| Primary purpose | Value transfer / digital gold | Programmable platform for dApps |
| Smart contracts | No | Yes (EVM) |
| Developer tools | Limited | Rich ecosystem (Solidity, Vyper) |
| Market cap rank | #1 | #2 |
Vitalik Buterin and Ethereum’s Origins
- Born in Moscow, raised in Canada
- Co-founded Bitcoin Magazine in 2011 at age 17
- Created Ethereum in 2013 at age 19, identifying Bitcoin’s scripting language as too limited for complex decentralised applications
- Launched the Ethereum mainnet in July 2015
How Ethereum Works
Native Currency: ETH
Ether (ETH) serves dual purposes:
- Transaction fees (gas) — every operation on Ethereum costs ETH; this creates economic demand for the token tied to network usage
- Staking collateral — validators lock ETH to participate in proof-of-stake consensus and earn rewards
Smart Contracts and dApps
Smart contracts are self-executing programs on the Ethereum blockchain. They run identically on every node, are immutable once deployed, and accessible to anyone globally. DApps bundle a smart contract backend with a user-facing frontend.
Proof-of-Stake (since 2022)
The Merge (September 2022) replaced energy-intensive proof-of-work mining with proof-of-stake:
- Validators stake ETH as collateral
- Honest behaviour earns staking rewards (~3–5% APY)
- Dishonest behaviour triggers slashing (loss of staked ETH)
- Energy use reduced by >99%
Ethereum’s dApp Ecosystem
The article highlights Ethereum’s role as the dominant smart contract platform:
- DeFi — decentralised lending, trading, and yield generation
- NFTs — unique digital ownership certificates
- Stablecoins — assets pegged to fiat (USDT, USDC, DAI) predominantly on Ethereum
- DAOs — decentralised autonomous organisations governed by token holders
Entities Mentioned
- vitalik-buterin — creator of Ethereum; conceived it in 2013
- kraken — major cryptocurrency exchange; publisher of this guide
Concepts Mentioned
- ethereum — the programmable blockchain platform
- smart-contracts — self-executing code forming the backbone of Ethereum dApps
- proof-of-stake — Ethereum’s consensus since The Merge
- defi — decentralised finance ecosystem on Ethereum
- nft — non-fungible tokens; a major Ethereum use case
- bitcoin — contrasted as a simpler value-transfer network
Related sources: web3canada-2026-what-is-ethereum | ethereumorg-2026-what-is-ethereum | wikipedia-2026-ethereum