What Is Ethereum? Smart Contracts Explained

Ethereum is the second-largest cryptocurrency by market cap and the leading platform for decentralized applications (dapps). While Bitcoin focuses on peer-to-peer payments, Ethereum enables programmable money through smart contracts-self-executing code that runs on the blockchain. Every technical term used in this guide has a plain-English entry in our crypto glossary if you want to dig deeper.

Ethereum vs. Bitcoin

Bitcoin was designed as digital cash. Ethereum’s founder, Vitalik Buterin, envisioned a blockchain that could run any application. Launched in 2015, Ethereum introduced the concept of smart contracts: code that automatically executes when conditions are met, without intermediaries. The two chains now serve very different purposes — our compare coins tool lets you put BTC and ETH side by side on market cap, supply, and price.

What Are Smart Contracts?

Ethereum as a programmable platform: contracts and dApps on one chain

A smart contract is like a vending machine: you put in the right inputs (crypto, conditions), and it automatically delivers the output (tokens, ownership transfer, etc.). They run on the Ethereum Virtual Machine, which is the execution environment that most of crypto has now standardised on.

Examples include:

DeFi protocols - Lending, borrowing, and trading without banks
NFTs - Unique digital assets with provable ownership
DAOs - Decentralized organizations governed by governance tokens
Stablecoins - Dollar-pegged tokens like USDC and DAI

The ETH Token

Ether (ETH) is Ethereum’s native currency. It’s used to:

Pay transaction fees (gas, usually measured in gwei)
Stake for network security (proof of stake)
Serve as collateral in DeFi
Purchase NFTs and access dapps

Ethereum’s Evolution

Ethereum completed “The Merge” in 2022, transitioning from proof of work to proof of stake. This reduced energy consumption by 99%+. That single upgrade changed the environmental argument against crypto overnight. Ongoing development focuses on scaling through Layer 2 solutions (Arbitrum, Optimism, Base) and rollups that process transactions off the main chain. Both optimistic rollups and ZK rollups now handle the majority of Ethereum’s day-to-day activity.

Getting Started with Ethereum

Get an Ethereum wallet (MetaMask is popular) — understand the hot vs cold wallet tradeoff before you store any significant amount
Buy ETH on an exchange, or use our crypto converter to see what any fiat amount is in ETH at today’s price
Explore dapps at defillama.com or dappradar.com
Never share your seed phrase or connect to suspicious sites

Next Steps

Live ETH price - chart, market cap, and 24h change
Compare ETH and BTC - see them side by side on the metrics that matter
Portfolio tracker - log your ETH holdings alongside any other coins
Price alerts - get notified when ETH hits a target
Crypto glossary - A–Z reference for every Ethereum and DeFi term

Bottom line

Ethereum is the leading smart contract platform powering DeFi, NFTs, and dapps. The Merge cut energy use 99%+, and Layer 2s now handle scaling. Track the live Ethereum price, compare it against other coins with compare, and look up any term in the crypto glossary.

Frequently asked questions

What is Ethereum?

Ethereum is the second-largest cryptocurrency and the leading platform for decentralized applications. While Bitcoin focuses on payments, Ethereum enables programmable money through smart contracts, self-executing code that runs on the blockchain.

What are smart contracts?

Self-executing code on the blockchain that runs automatically when conditions are met-no middleman needed.

How is Ethereum different from Bitcoin?

Bitcoin was designed as digital cash. Ethereum enables any application to run on the blockchain through smart contracts. Ethereum supports DeFi, NFTs, dapps, and programmable transactions.

What is ETH used for?

ETH pays gas fees, secures the network through staking, and serves as collateral across DeFi.