What is Ethereum and how is it different from Bitcoin?
While Bitcoin is digital money, Ethereum is a programmable blockchain — a platform where developers build decentralized applications (dApps). Founder Vitalik Buterin proposed Ethereum in 2013, and the network launched in 2015. The key innovation: smart contracts — self-executing code that lives on the blockchain and can never be altered or stopped.
Ether (ETH) — gas for the network
ETH isn't just a currency — it's the "fuel" for the Ethereum network. Every transaction and smart contract execution costs a certain amount of ETH (gas). Gas prices vary with network congestion. During high-activity periods, gas can cost more than $50 per transaction (which is why L2 solutions exist).
The Merge — transition to Proof-of-Stake
In September 2022, Ethereum completed The Merge — transitioning from Proof-of-Work mining to Proof-of-Stake consensus. Results:
- Energy consumption reduced by 99.95%
- No more miners — validators "stake" ETH as collateral
- ETH issuance dramatically reduced (net deflationary during active periods)
EVM — Ethereum Virtual Machine
The EVM is the "computer" inside the Ethereum network that executes smart contract code. Every node runs the EVM and arrives at the same result — this guarantees determinism. Many other blockchains are "EVM compatible" (BNB Chain, Avalanche, Polygon), meaning the same Solidity code runs on them.
Ethereum ecosystem
- DeFi — Uniswap, Aave, Compound, Curve — dominant on ETH
- NFT — OpenSea, Blur, Foundation — ERC-721 standard
- DAO — decentralized organizations that vote with ETH tokens
- L2 — Arbitrum, Optimism, zkSync — built on Ethereum L1