What is Ethereum?

Ethereum is a decentralized, open-source blockchain with smart contracts. Ether (ETH) is the native cryptocurrency.

What is Ethereum?

Ethereum is a decentralized, open-source blockchain with smart contracts. Ether (ETH) is the native cryptocurrency. Ethereum is the most actively used blockchain, and the second-largest cryptocurrency by market capitalization after Bitcoin at $303 billion, compared to Bitcoin at $754 billion. Ethereum was created in 2013 by a Russian-Canadian programmer Vitalik Buterin.

Ethereum is most popular for for creating and using complex smart contracts, decentralized finance (defi) and other financial services like brokerages, banks and exchanges to lend and borrow money. Ethereum also allows for the creation and exchange of NFTs, although NFTs are possible on nearly any blockchain.

One of the most significant Ethereum tokens is known as ERC-20, which is the technical standard of Bitcoin that all Ethereum tokens must adhere to; it is used for all smart contracts on the Ethereum blockchain.

Many stablecoins operate as ERC-20 tokens on top of Ethereum, and the global stablecoin supply is now worth $100 billion. Tether (USDT) remains the most popular stablecoin with more than 60% of market share. The popularity in stablecoins has led many countries to consider issuing their own central bank digital currencies (CBDCs).

In 2016, a hacker exploited a flaw in a third-party project called DAO and stole $50 million ether. As a result, the Ethereum community voted to hard fork the blockchain to reverse the theft, upsetting many Ethereum fans. The less popular Ethereum Classic (ETC) continues to this day as the original chain. Ethereum has started implementing a series of upgrades called Ethereum 2.0 that is based on a proof-of-stake model instead of a more cumbersome proof-of-work model. The goal of 2.0 is to make Ethereum more scalable, more secure, and more sustainable.

Ether trading made up 15% of volume on Coinbase in 2020, and makes up 13% of all assets stored on Coinbase currently. By comparison, Bitcoin makes up about half of all trading volume on Coinbase each year. Institutions like Goldman Sachs are starting to move into Ether, even after Bitcoin and other cryptocurrency prices fell sharply in May.

View the top Ethereum tokens