What is the Ethereum Blockchain?

Ethereum is an open-source blockchain that behaves like a global “app store.” Anyone can deploy programs (called smart contracts) that run exactly as written, and then they are executed on thousands of independent nodes. The network’s native currency, Ether (ETH), pays for the computation that keeps those apps running. Think of Ethereum as a decentralized cloud computer: you spend ETH to rent computing time, while validators keep the transactions honest. 

Key takeaways:

1. Ethereum is a programmable blockchain where smart contracts run autonomously.
2. EVM guarantees that every node executes the same code, while the Proof-of-Stake consensus mechanism maintains the ledger’s security with significantly lower energy consumption.
3. ETH fuels the network, pays validators, and—thanks to EIP-1559—can become scarcer over time.
4. You can buy, stake, or earn ETH, then put it to work in DeFi, NFTs, or simply hold it as a long-term bet on Web3.
5. Future upgrades, such as Fusaka and Glamsterdam, aim to reduce fees and increase capacity, but high gas and regulatory costs remain real challenges.

Who created Ethereum?

Ethereum was conceived in a white paper penned by Vitalik Buterin in late 2013. Within months, he teamed up with Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin to crowdfund the project and shipped the first live network, “Frontier,” on July 30, 2015. The founders of Ethereum were among the first to consider the full potential of blockchain technology beyond just enabling a secure virtual payment method. Since the launch of Ethereum, ether, as a cryptocurrency, has risen to become the second-largest cryptocurrency by market capitalization. It is outranked only by Bitcoin.

What is the EVM?

The Ethereum Virtual Machine (EVM) acts as a virtual computer in every Ethereum node, executing identical bytecodes across the network. When one node returns a result that differs from the others, the network rejects that outlier, preserving consensus and protecting contract logic from tampering. This distributed engine enables smart contracts and, by extension, decentralized applications such as DeFi protocols and NFT marketplaces, all without relying on centralized servers.

What is a smart contract?

A smart contract lives at a blockchain address and stores both code and data. After deployment, the contract follows its programmed logic, and any change requires launching a new version. Decentralized exchanges, on-chain games, and NFT marketplaces combine many such agreements to provide complex features. By executing rules directly on the chain, smart contracts let participants transfer value without intermediaries. They work as self-executing agreements: the terms appear in code that computers run and verify, leaving no room for interpretation.

Overview of Proof-of-Stake

Ethereum initially relied on energy-intensive proof-of-work mining. The Merge on September 15, 2022, replaced that consensus mechanism with proof-of-stake. The transition from POW to POS reduced the blockchain’s energy consumption by more than 99 percent.

PoS relies on participants (or validators) locking Ether (ETH) as a promise to validate network transactions and follow the blockchain’s rules. Validators are randomly chosen to check new transactions and add them to the blockchain.

About one million validators now lock 32 ETH each, take turns proposing blocks, and earn annual yields of roughly three to five percent for validating network transactions. Validators that go offline or attempt to cheat lose part of their stake, which incentivizes honest behavior. 

Ethereum limitations

Ethereum is one of the most powerful and widely used blockchains, but it still has several limitations that affect its performance, usability, and scalability. Here are the main ones explained simply:

High gas fees

When many people use Ethereum at the same time, transaction fees (called gas fees) can spike dramatically. High gas fees make it expensive to send ETH, use dApps, or mint NFTs—especially during peak periods. Even small transactions can cost several dollars or more. High fees are a barrier for people who want to send small amounts or try out blockchain apps on a low budget.

Scalability issues

Ethereum can handle only 15–30 transactions per second (TPS) on its base layer, which is far less than centralized platforms like Visa. This limited speed often results in slow confirmation times and network congestion during periods of high demand.

Ethereum’s long-term plan includes Layer 2 solutions (like Arbitrum, Optimism, and zkSync) to handle more transactions at lower cost. However, relying on external networks introduces complexity, and the ecosystem is still fragmented.

Complex user experience

Interacting with Ethereum requires using wallets, gas estimations, private keys, and sometimes bridging between networks. For newcomers, this can be confusing and risky. Losing access to a wallet or making a minor error can result in the permanent loss of funds.

Ethereum updates and hard forks

Ethereum updates refer to changes and improvements made to the blockchain over time. These upgrades, also known as Ethereum Improvement Proposals (EIPs), aim to make Ethereum faster, cheaper, more secure, and more scalable. 

What you see below is a brief history of the major Ethereum hard forks, highlighting the major upgrades that Ethereum has had over time.

What’s coming next (Fusaka & Glamsterdam)

Fusaka, scheduled for late 2025, will introduce PeerDAS data-availability sampling and begin rolling out Verkle Trees, reducing node storage requirements and further lowering Layer-2 costs.

Glamsterdam, slated for 2026, will polish gas economics and complete the stateless-client vision begun by Verkle Trees. The proposal solicitation opened in June 2025.

ETH: The native crypto of Ethereum

Ether is the network’s native currency, and Ethereum is the network itself. Ether is to Ethereum what gasoline is to a car: every transaction burns a little ETH. Since EIP-1559, a portion of each base fee is burned, counterbalancing new issuance and occasionally making ETH deflationary. 

Ether is not to be confused with Ethereum Gas. Gas is the unit used by the Ethereum network to gauge the computational effort required to execute certain operations.

ETH market cap and total supply

As of June 12, 2025, Ethereum’s circulating supply stands at about 120.72 million ETH, with the market capitalization sitting at $332 billion. At the time of writing, ETH price ranges from $2,500 to $2,800 per ETH. Because the supply adjusts to network activity, Ethereum’s monetary policy falls between Bitcoin’s fixed cap and the flexible issuance seen in fiat currencies.

How to get ETH

In this section, we’ll enumerate the many ways to obtain Ether (ETH), sorted from the easiest to the most complicated method.

Buy ETH

You can buy ETH in several ways. Centralized exchanges, such as Coinbase and Kraken, allow users to trade local currency for Ether, and there is no strict minimum account size. 

Peer-to-peer platforms like Binance P2P and Paxful facilitate direct trades through smart-contract escrow, so the capital required depends on each listing.

Here’s the general process on how to buy from CEX, DEX, and P2P marketplaces:.

• Create an account: Open the platform of your choice and start the signup process. You will need a valid ID and may be asked to provide proof of address to transact, so be sure to have those documents ready. Verifying your ID may take longer than a few minutes, depending on your location.
• Add a payment method: Tap on the payment method box and connect a payment method. You can use a bank account, debit card, or initiate a wire transfer.
• Enter the amount you want to buy: Input the amount you want to spend in your preferred currency.
• Finalize your purchase of Ethereum: Make sure everything looks good, and then confirm your purchase.

Participate in learn-and-earn programs

Ethereum Learn and Earn programs, such as Bitdegree, Swyftx, and CoinGecko, exist primarily to educate users with the hope that they will eventually invest in or build on Ethereum. Participants in these programs typically earn small amounts of crypto tokens, often ranging from $3 to $20 per course. In some cases, users receive NFTs, such as those awarded through Ethereum Cat Herders’ Learn2Earn program. Others may earn exchange credits or trading bonuses, such as those offered by platforms like Phemex.

Get paid in ETH

Many companies in the blockchain and Web3 space offer ETH as a form of payment for full-time employees and freelancers, while platforms such as Gitcoin offer ETH bounties in return for their services. Contributors to decentralized autonomous organizations (DAOs) also frequently receive ETH for their work.

In addition to earning ETH as a salary, individuals and businesses can accept it in exchange for goods and services. Merchants can integrate payment solutions, such as Coinbase Commerce, NOWPayments, or BitPay, to accept ETH on their e-commerce websites. Even in-person transactions can be facilitated using QR codes or crypto point-of-sale systems.

Stake ETH

Staking is a process where you lock up your ETH to help secure the Ethereum network and earn rewards in return. Staking rewards typically range from 3% to 5% annually but can fluctuate based on network conditions. The downsides of getting ETH with this method are that you must obtain ETH first through other means, ETH is locked up for a long period, and staking can be a big investment. 

There are several ways to stake ETH, such as:

Native ETH staking

Solo staking requires a minimum of 32 ETH and a dedicated validator setup. This option offers complete control and higher rewards, but it involves technical complexity and greater responsibility.

Pooled staking is more beginner-friendly, allowing users to stake smaller amounts (even under 1 ETH) by pooling their funds together and earning rewards proportionally. Centralized exchanges often have pooled staking built into them, allowing you to stake your assets directly through their mobile app.

ETH liquid staking

Liquid-staking services like Lido and Rocket Pool accept ETH deposits starting at roughly $10 and return yield-bearing tokens, such as stETH. Because each platform operates differently, treat staking as a case-specific decision and study its terms before committing funds.

For example, to liquid stake on Lido, you must:

• Create an account.
• Select the wallet you wish to connect.
• At this point, you’ll see the APR that Lido is currently offering on staking rewards. Enter the amount of ETH you wish to stake. 
• Review the details of the transaction, then click ‘Confirm.’ 
• Once you’re finished, you’ll receive stETH in your wallet and earn rewards over time.

Is ETH a good investment?

Yes, Ethereum is not just a blockchain; it’s a promising investment opportunity. According to CoinMarketCap‘s five-year data, Ethereum has shown significant growth, climbing from about $241 on June 6, 2020 to an all-time peak of $4,891.70 on Nov 16, 2021. Even during the bear-market bottom on June 18, 2022, when the price plunged to roughly $ 994, it rebounded above $4,000 in March 2024 as staking yields, ETF buzz, and Layer-2 adoption reignited demand. Ethereum now trades around $ 2,600-2,620 in mid-June 2025, according to Coindesk’s data. A beginner who dollar-cost-averaged through those cycles would still sit on triple-digit percentage gains. 

Ethereum now trades around $2,600–2,620 in mid-June 2025, according to Coindesk’s data. A beginner who dollar-cost-averaged through those cycles would still sit on triple-digit percentage gains. 

If you want to earn money through ETH staking, Proof-of-Stake rewards offer a modest 4-6 % compound annual yield.All in all, Ethereum offers several advantages that make it a compelling long-term play for investors. Its broad developer community supports a steady flow of new applications, which in turn speed up adoption and increase the value of ETH.