Understanding Ethereum (ETH): A Complete Guide
What is Ethereum (ETH)?
Ethereum (ETH) is the second-largest cryptocurrency by market capitalization and a decentralized blockchain platform that enables smart contracts and decentralized applications (dApps). Unlike Bitcoin, which primarily serves as digital money, Ethereum is a programmable blockchain that allows developers to create decentralized applications (DeFi, NFTs, DAOs, etc.).
Ethereum was proposed by Vitalik Buterin in 2013 and officially launched in 2015. It revolutionized the blockchain space by introducing smart contracts – self-executing contracts with the terms directly written into code.
How Does Ethereum Work?
Ethereum operates on its Ethereum Virtual Machine (EVM), a global, decentralized computing network that executes smart contracts. Initially, Ethereum used a Proof-of-Work (PoW) consensus, similar to Bitcoin, but transitioned to a Proof-of-Stake (PoS) mechanism in 2022 with Ethereum 2.0 (The Merge). This upgrade significantly improved scalability and energy efficiency.
Key Features of Ethereum (ETH)
- Smart Contracts – Self-executing contracts power everything from DeFi applications to NFT marketplaces.
- Decentralized Applications (dApps) – Developers can build gaming, finance, and social applications without a central authority.
- Staking & Security – With Ethereum 2.0, users can stake ETH to help secure the network.
- Interoperability – Ethereum serves as the foundation for many Layer 2 scaling solutions, like Polygon, Arbitrum, and Optimism.
Price History & Market Development
- 2015-2016: Ethereum launched at $0.75 per ETH.
- 2017 Bull Run: ETH surged to $1,400 amid growing adoption of ICOs (Initial Coin Offerings).
- 2018-2019 Bear Market: Prices dropped to $80-$200 as the market corrected.
- 2021 All-Time High: ETH peaked at $4,878 in November 2021, driven by DeFi and NFT growth.
- 2022-2023 Market Crash & Ethereum 2.0: After The Merge, ETH remained volatile, fluctuating between $1,000 – $2,500.
- 2024–2025: The price reaches $4,000, and all eyes are on the next Ethereum upgrade – Prague-Electra, or ‘Pectra’ for short.
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