Basics
What Ethereum is
Short answer
Ethereum is an open, public blockchain launched in July 2015 by Vitalik Buterin and a small team of co-founders. It builds on basic blockchain technology with open-source smart contracts, enabling users to create decentralized applications (dapps) and digital assets that run 24/7 globally without central oversight. Its native cryptocurrency is ether (ETH), which powers network operations and secures the system.
Core Definition and Origin
Ethereum is an open, public blockchain launched in July 2015 by software developer Vitalik Buterin and a small team of co-founders. Unlike Bitcoin, which focuses on peer-to-peer digital cash, Ethereum was designed to support open-source programs called smart contracts. The network is made up of thousands of independent computers (nodes) run by people around the world, which work together to provide services without central control.
Sources: ethereum.org ethereum.org
Smart Contracts and Decentralized Applications
Smart contracts are open-source programs that live on Ethereum and run 24/7, 365 days a year, accessible to anyone with an internet connection. They let users create decentralized applications (dapps) and digital assets including stablecoins, non-fungible tokens (NFTs) and governance tokens. The ecosystem of these dapps and assets is often called web3, representing a phase of the internet centered on user ownership. Common use cases include decentralized finance (DeFi), art and collectibles, gaming and decentralized social media.
Sources: ethereum.org
Ether (ETH) and Network Economics
Ether (ETH) is Ethereum's native cryptocurrency. It is used to pay transaction fees (called gas fees) when users interact with the network, such as sending funds, minting NFTs or using dapps. These fees prevent spam and reward validators who process transactions. A portion of ETH paid in fees is burned with each transaction, permanently removing it from circulation; on high-usage days, more ETH can be burned than created, making it deflationary. ETH can also be staked by validators to earn rewards.
Sources: ethereum.org ethereum.org
Consensus Mechanism and Security
When Ethereum launched in 2015, it used a proof-of-work consensus mechanism, where computers solved puzzles to validate transactions. In 2022, Ethereum upgraded to proof of stake, which is 99% more energy efficient. Under proof of stake, validators lock up ETH as collateral to propose and validate blocks; honest validators earn ETH rewards, while dishonest ones lose part of their staked ETH. The network's design ensures high reliability: even if some nodes go offline due to bugs, disasters or crackdowns, the network keeps running. Dapps on Ethereum are censorship resistant, as no single entity can block access or freeze accounts.
Sources: ethereum.org ethereum.org
Layer 2 Scaling
To handle high demand and lower transaction costs, Layer 2 (L2) networks run on top of Ethereum. L2s act as express lanes for transactions, making them faster and cheaper—sometimes costing less than a cent on average. Popular L2s include Optimism, Arbitrum, ZKSync and Base, which process millions of transactions worth billions of dollars each year.
Sources: ethereum.org
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Questions
What are smart contracts?
Smart contracts are open-source programs deployed on the Ethereum network that run automatically when predefined conditions are met. They let users create decentralized applications and digital assets without needing a central intermediary, and are accessible to anyone with an internet connection.
Sources: ethereum.org ethereum.org
What is the Ethereum Virtual Machine (EVM)?
The Ethereum Virtual Machine (EVM) is the global virtual computer that all Ethereum nodes store and agree on the state of. Any participant can request execution of code on the EVM, and all nodes verify, execute and record the resulting state changes on the blockchain. Smart contracts and dapps run on the EVM.
Sources: ethereum.org
Why is Ethereum considered censorship resistant?
Ethereum's network of thousands of independent nodes records every transaction without discrimination, and this rule is embedded in the network's code. No bank, corporation or government can block access to dapps or freeze user accounts on the network. To take down a single dapp, an attacker would need to take over the entire Ethereum network, which would cost billions and be extremely difficult to coordinate.
Sources: ethereum.org