What Is Ethereum?

Ethereum is a decentralized blockchain platform launched in 2015 by Vitalik Buterin and his team.

While Bitcoin was designed to act as digital money, Ethereum was built to become a programmable blockchain - a system that allows developers to create smart contracts and decentralized applications (DApps).

In simple terms, Ethereum lets people build apps that automatically perform actions once certain conditions are met - without relying on banks or middlemen.

Thanks to this innovation, Ethereum became the foundation for DeFi (Decentralized Finance), NFTs, and Web3 technologies.

Ether (ETH) - The Fuel That Powers Ethereum

Ethereum has its own cryptocurrency called Ether (ETH). It serves several key purposes:

Paying gas fees when using DApps, transferring tokens, or minting NFTs.
Rewarding validators who help secure the network through staking.
Acting as collateral in DeFi platforms.
Serving as one of the most widely traded crypto assets in the world.

After transitioning from Proof of Work (PoW) to Proof of Stake (PoS), Ethereum became much more energy-efficient.

Instead of miners, the network now relies on validators who stake ETH to confirm transactions and maintain security.

How Is Ethereum Different from Bitcoin?

If you’re new to blockchain, you may want to start with this article first: What Is Bitcoin? The History and the Real Meaning Behind “Digital Money”

Although both Bitcoin and Ethereum are built on blockchain technology, they were created with different purposes and operate in distinct ways.

Purpose: Bitcoin was designed to serve as a digital currency and a store of value - often called “digital gold.” In contrast, Ethereum was built as a platform that allows developers to create decentralized applications and execute smart contracts.
Consensus mechanism: Bitcoin still uses Proof of Work, which relies on mining, while Ethereum has switched to Proof of Stake, which is more energy-efficient and scalable.
Supply: Bitcoin has a fixed limit of 21 million coins, making it scarce by design. Ethereum does not have a strict cap, but its supply can decrease over time due to its burning mechanism that removes ETH from circulation.
Functionality: Bitcoin’s primary use case is transferring and storing value. Ethereum, however, supports an entire ecosystem of DeFi projects, NFT marketplaces and blockchain-based games.

In short, Bitcoin acts as digital gold, while Ethereum functions as digital infrastructure - powering an entire generation of decentralized applications.

Why Ethereum Matters

Ethereum has become the core of the Web3 ecosystem.

Most DeFi projects, NFT platforms, GameFi apps, and DAOs are either built directly on Ethereum or operate on Layer 2 networks compatible with it - such as Polygon, Arbitrum and Optimism.

Its open-source nature, active developer community, and continuous improvements (like The Merge and Shanghai Upgrade) have made Ethereum one of the most trusted and influential blockchains in the world.

Conclusion

While Bitcoin introduced the world to the concept of digital money, Ethereum expanded that idea into a digital economy.

It enables people to build, trade, and interact freely - without centralized control.

Together, Bitcoin and Ethereum form the foundation of the modern crypto world:

Bitcoin redefines what money means.
Ethereum redefines how the Internet itself can work.