Ethereum vs Ether

People often use the words interchangeably, but they mean different things. Ethereum is the network — the shared computer that anyone can use. Ether (ticker ETH) is the native coin of that network. You use ETH to pay for actions on Ethereum, and it is also traded as an asset in its own right.

So when someone says they “bought Ethereum,” they usually mean they bought ETH. You can follow ETH’s current price alongside other major coins on the live prices page, or open the dedicated Ethereum page for its chart and market data.

Smart contracts and dApps

A smart contract is a small program stored on the Ethereum blockchain that runs exactly as written, the same way for everyone, with no one able to quietly change it afterward. Think of it as a vending machine for digital agreements: given the right input, it automatically produces the agreed output, without needing a company in the middle to enforce the deal.

Applications built from these contracts are called decentralized applications, or dApps. Because the logic lives on a public network rather than a private server, dApps can keep running as long as the network exists. This is the foundation for much of what people mean when they talk about “Web3.”

• Decentralized finance (DeFi): lending, borrowing, and trading without a traditional bank.
• NFTs: unique tokens that represent ownership of art, collectibles, or in-game items.
• Stablecoins: tokens designed to hold a steady value, many of which run on Ethereum.

Gas and transaction fees

Running a program on a global network is not free, so every action on Ethereum has a cost measured in units called gas. Gas reflects how much computational work a transaction requires — a simple transfer costs little, while a complex contract interaction costs more. You pay for gas in ETH, and the price of gas is usually quoted in a tiny unit called gwei.

Because many people share the network, gas prices rise when it is busy and fall when it is quiet. This is why the same transaction can cost very different amounts depending on the time. Understanding gas helps explain why fees on Ethereum are not fixed.

How Ethereum stays secure: proof of stake

Ethereum originally secured its network with mining, like Bitcoin. In September 2022, in an upgrade known as “The Merge,” it switched to a system called proof of stake. Instead of miners racing to solve puzzles, participants called validators lock up ETH as a deposit and are chosen to confirm blocks. If they behave honestly they earn rewards; if they cheat, part of their deposit can be taken away.

This change cut Ethereum’s energy use dramatically — by well over 99% — because it no longer relies on power-hungry mining hardware. Running your own validator requires 32 ETH, but many people take part with smaller amounts through pooled or “liquid” staking services.

How Ethereum differs from Bitcoin

Both are large, well-known blockchains, but they were built with different goals. Bitcoin aims to be sound, predictable digital money with a fixed 21-million supply. Ethereum aims to be a flexible platform for applications, and its supply is not capped at a fixed number.

Ethereum’s issuance is low, and since an upgrade that burns a portion of transaction fees, the total supply can even shrink during busy periods. The takeaway for beginners: Bitcoin is mainly about storing and moving value, while Ethereum is about what you can build and do on top of a blockchain. Neither is “better” — they solve different problems.

Frequently Asked Questions