Glossary
What is Ethereum?
In one sentence
Ethereum is a blockchain designed to run programs, not just record payments — which is what most crypto applications are built on.
Where Bitcoin is built to move money, Ethereum is built to run code. Programs deployed to it — smart contracts — execute exactly as written, and anyone can call them. That general-purpose capability is why the great majority of crypto applications, from lending protocols to NFTs, live on Ethereum or on chains that copy its design.
Running code costs money. Every operation consumes “gas”, paid in ether (ETH), the network’s native currency. When the network is busy, gas prices rise, which is why sending the same transaction can cost pennies one day and a great deal more the next.
Ethereum moved from proof-of-work to proof-of-stake in 2022, cutting its energy use dramatically and changing how the network is secured — validators now lock up ETH as collateral rather than competing with hardware.
The trade-off relative to Bitcoin is complexity. A programmable blockchain has a much larger surface for bugs, and a flaw in a smart contract can drain funds irreversibly. Most large crypto losses have come from contract vulnerabilities rather than from the underlying chain failing.
For example
When you swap tokens on a decentralised exchange, you are calling a smart contract on Ethereum and paying gas for it.