Ethereum is the second largest cryptocurrency and the platform on which most of the programmable-blockchain story has actually played out. It was conceived by Vitalik Buterin in 2013, specified in a whitepaper that year, raised funds in a token sale in 2014, and went live in July 2015. The core idea was simple and genuinely new: take Bitcoin’s insight about decentralised consensus and bolt a general-purpose programming environment on top of it, so that you could write arbitrary code that would execute on a decentralised network.
Bitcoin has a scripting language, but it is intentionally limited. Ethereum’s EVM is Turing-complete. You can write a smart contract that does anything a normal program could do, constrained only by gas and the determinism of the execution environment. That flexibility is what enabled the ICO boom in 2017, DeFi in 2019-2020, NFTs in 2021, the rollup explosion in 2023, and pretty much every new on-chain primitive that has appeared in crypto since Bitcoin.
What ETH the Asset Actually Does
Ether (ETH) is the native currency of the Ethereum network. It has three main jobs. It is the gas token — every transaction and contract call burns ETH to pay for computation, which creates continuous demand tied to network usage. It is the staking asset — since the 2022 Merge, ETH is locked up by validators to secure the network, and about 28% of supply is currently staked. And it is a store of value in its own right, though Ethereum’s holders tend to be less dogmatic about this than Bitcoin’s.
Unlike Bitcoin, Ethereum has no hard supply cap. Issuance started at about 4% per year under proof-of-work, dropped to under 0.5% after the Merge transitioned the chain to proof-of-stake, and is partially offset by the EIP-1559 fee burn. During busy periods more ETH is burned than issued and the supply shrinks. During quiet periods issuance wins. Over the long run the supply is roughly flat, which is sometimes described as “ultrasound money” by supporters and as “monetary policy by committee” by critics. Both are fair.
The Road So Far
The major milestones are worth knowing. The 2015 launch. The DAO hack and subsequent hard fork in 2016 that split Ethereum from Ethereum Classic. The 2017 ICO boom that both defined and embarrassed the space. The rise of DeFi through 2019-2020 (“DeFi summer”). The NFT boom in 2021. The Merge in September 2022, which switched the consensus from proof-of-work to proof-of-stake and cut energy use by about 99.95%. EIP-4844 in March 2024, which introduced blob transactions and dramatically lowered costs for rollups. The spot Ethereum ETFs approved in July 2024.
As of now the bulk of Ethereum’s activity happens on Layer 2 rollups (Arbitrum, Base, Optimism, zkSync, Linea, Scroll), with mainnet increasingly used as a settlement layer rather than an execution environment for ordinary users. This was always the plan and it is starting to work, though the ecosystem is fragmenting faster than most people are comfortable with and there is an ongoing argument about whether Ethereum has captured enough value to justify the scaling story.
It is still the most developer-rich, most liquid, and most composable smart-contract platform by a wide margin. Whether that stays true over the next five years is one of the real open questions in crypto.