What Is Ethereum?
Ethereum is a decentralized, open-source blockchain that enables developers to build and deploy smart contracts and decentralized applications (dApps). It was proposed in 2013 by Vitalik Buterin and officially launched in 2015. Unlike Bitcoin—which was designed purely as a peer-to-peer digital currency—Ethereum was built as a programmable blockchain.
In simple terms, Bitcoin lets you send and store value. Ethereum lets you create entire ecosystems of financial apps, games, marketplaces, and more—without needing a central authority.
How Does Ethereum Work?
Ethereum runs on its native token, Ether (ETH), which powers transactions and serves as “fuel” for the network. Whenever someone interacts with a smart contract or dApp, they pay a small fee in ETH, known as “gas.”
The blockchain uses a consensus mechanism called Proof of Stake (PoS), which replaced its earlier Proof of Work (PoW) system in 2022 through an upgrade known as The Merge. PoS makes Ethereum more energy-efficient and scalable than before, reducing the carbon footprint dramatically compared to Bitcoin’s energy-intensive mining.
How Is Ethereum Different from Bitcoin?
| Feature | Bitcoin | Ethereum |
|---|---|---|
| Purpose | Digital money, store of value | Smart contracts, dApps, programmable blockchain |
| Launch Year | 2009 | 2015 |
| Founder | Satoshi Nakamoto | Vitalik Buterin |
| Consensus | Proof of Work | Proof of Stake |
| Block Time | ~10 minutes | ~12 seconds |
| Supply Limit | 21 million BTC | No fixed cap (but deflationary due to burning) |
Bitcoin is like digital gold—a store of value that’s secure, scarce, and simple. Ethereum, meanwhile, is more like a digital economy, powering decentralized finance (DeFi), NFTs, and Web3 applications.
Why Ethereum Matters
Ethereum’s innovation lies in its flexibility. Developers can build anything on it—from lending platforms to NFT games—without intermediaries like banks or app stores. This makes it a core building block for the next generation of the internet: Web3.
Its growing ecosystem has inspired thousands of other blockchains and tokens, making it one of the most influential technologies in crypto.
Final Thoughts
Bitcoin and Ethereum are both essential pillars of the crypto world, but they serve different purposes. Bitcoin is the foundation of decentralized money, while Ethereum powers the decentralized internet. Understanding both helps you see the bigger picture of how blockchain is transforming the world beyond finance.