What is Ethereum?

Ethereum is more than just digital money—it's a global, programmable supercomputer. Introduced in 2013 by Vitalik Buterin, Ethereum enables the creation of decentralized applications (dApps) and smart contracts. Its currency, Ether (ETH), is the "digital oil" that powers this network.

  • Programmable: Developers can create tamper-proof programs (Smart Contracts) on Ethereum that execute automatically.
  • The Foundation of Web3: It is the base for thousands of projects in areas like DeFi, NFTs, and DAOs (Decentralized Autonomous Organizations).
  • No Fixed Cap: Unlike Bitcoin, ETH has no fixed supply cap, but through a "burning" mechanism, the circulating supply is reduced during high network usage.

How Does Ethereum Work?

In 2022, Ethereum underwent a historic transition with "The Merge": from Proof-of-Work (like Bitcoin) to Proof-of-Stake (PoS). This makes the network significantly more energy-efficient.

  1. Users wanting to make transactions pay a fee in ETH, called "Gas".
  2. So-called validators (instead of miners) deposit a large amount of ETH as collateral (they "stake" their coins).
  3. From these validators, one is randomly chosen to validate the next block of transactions and add it to the chain.
  4. As a reward, the validator receives the transaction fees. If they act maliciously, they lose their staked ETH.

This system makes attacks extremely expensive and secures the network without the high energy consumption of mining.

Why is This Important?

Ethereum is the undisputed market leader for decentralized applications and has a massive ecosystem:

  • DeFi (Decentralized Finance): It enables lending, borrowing, and trading of assets without a bank.
  • NFTs (Non-Fungible Tokens): The vast majority of the NFT market, from art to gaming, is built on Ethereum.
  • Innovation: It is the largest playground for developers building the internet of the future (Web3). An investment in ETH is also an investment in this innovative power.

Milestones of Ethereum

The Whitepaper

A young Vitalik Buterin publishes the concept for a blockchain that can do more than just send money: a platform for everything.

The Crowdsale (ICO)

In one of the first major crowdfundings in crypto history, the team raises over $18 million to fund development.

Genesis Block & Launch

The Ethereum network goes live. The era of smart contracts and dApps begins.

The DAO Hack & Fork

After a massive hack, the community splits. The original chain becomes Ethereum Classic (ETC), while the new, "rescued" chain is today's Ethereum (ETH).

"The Merge": Switch to Proof-of-Stake

In one of the most ambitious upgrades in crypto history, Ethereum changes its consensus mechanism, reducing its energy consumption by over 99%.

Common Myths About Ethereum

Myth: "Ethereum is too slow and expensive."

Fact: This was a problem for a long time. Through "Layer 2" solutions like Arbitrum or Optimism, transactions are now processed lightning-fast and for just a few cents. Ethereum itself serves as the secure base layer.

Myth: "Ethereum is only for NFTs."

Fact: NFTs are just one use case. The much larger area is DeFi, where billions of dollars are working in decentralized financial applications. Ethereum is an entire ecosystem.

Debunk all myths