Ethereum (ETH)

Quick take

• Ethereum isn’t just a coin — it’s a global computer that runs apps, and ETH is the fuel that powers it.
• ETH has no fixed max supply, but part of every transaction fee gets destroyed forever, which can make it scarcer during busy periods.
• Its price swings with crypto-wide sentiment, tech upgrades, and how much people actually use the network day to day.

What is Ethereum?

Ethereum is a decentralized network that lets people run programs — called smart contracts — without a company or server in the middle. Think of it as a shared computer that thousands of independent machines around the world run together, checking each other’s work so no single party can cheat or shut it down.

ETH is the network’s native currency. You need it to pay for anything that happens on Ethereum, from sending money to swapping tokens to minting a piece of digital art. It’s also handed out as a reward to the people who help secure the network.

With a market cap north of $206 billion and roughly 120.7 million ETH in circulation, it’s the second-largest crypto project by size, behind only Bitcoin. Where Bitcoin is mainly digital money, Ethereum is more like digital infrastructure — a platform other apps and tokens are built on top of.

How does Ethereum actually work?

Every action on Ethereum — a payment, a trade, a game move — gets bundled into a “block” and added to a permanent, public ledger called the blockchain. Instead of banks or companies verifying these actions, regular people called validators do it, by locking up ETH as a security deposit. Behave honestly and you earn rewards; try to cheat and you lose your stake. This system is called proof-of-stake.

Here’s a everyday way to picture it: imagine a shared Google Doc that millions of computers keep an identical copy of, and that automatically enforces its own rules — no admin required. If you write a smart contract that says “release the concert tickets once payment clears,” Ethereum executes that instantly and exactly as written, every single time, for anyone in the world.

Every time you use the network, you pay a small fee in ETH known as “gas,” priced roughly by how much computing work your action needs — a simple transfer costs less than a complex trade.

What moves the ETH price?

Demand is the big one: when more people use apps built on Ethereum — trading, gaming, borrowing, collecting NFTs — more ETH gets bought to pay for gas, which can push demand up. Broader crypto sentiment matters too; ETH tends to move with Bitcoin and the wider market during risk-on or risk-off swings.

On the supply side, Ethereum burns a portion of every transaction fee, permanently removing ETH from circulation. When network activity is high, burning can outpace new issuance, tightening supply. Major protocol upgrades — changes to how the network runs or scales — also tend to spark price-moving speculation, since traders try to guess how they’ll affect future demand.

Finally, macro events shake things up: regulatory news, big exchange listings or delistings, institutional buying, and even the memory of Ethereum’s all-time high near $4,953 all shape how traders feel about where things might head next.

Ethereum FAQ

Is Ethereum the same as Bitcoin?

No. Bitcoin was built primarily as digital money, while Ethereum was designed as a programmable platform for building apps and smart contracts. They share some traits, like decentralization, but serve different purposes.

How is new ETH created?

New ETH is issued as rewards to validators who lock up ETH to help secure the network through proof-of-stake. This issuance is partly offset by fee-burning, so net supply growth can vary depending on network activity.

What can you actually do with ETH?

Beyond holding it, ETH is used to pay transaction fees, participate in decentralized finance apps, buy and sell NFTs, and stake to help secure the network in exchange for rewards.

This guide is for general information only and isn’t financial advice. Crypto prices are volatile — always do your own research before making decisions.