ETH, short for Ethereum, is commonly referred to as Ether in Chinese. As the native cryptocurrency of the Ethereum network, Ether (ETH) is a primary digital asset that powers applications built on its blockchain. Many beginners may not fully understand Ethereum, so this article will provide a detailed introduction to what Ethereum (ETH) is, who created it, how it works, and how to interact with Ether.
Ethereum Beginner's Guide
Ethereum is a leading public blockchain network that introduced smart contracts, decentralized applications (dApps), and other decentralized solutions to the cryptocurrency industry.
The native cryptocurrency of the Ethereum network, Ether (ETH), is a major digital asset that supports applications built on its blockchain. By market capitalization, Ether is the second-largest cryptocurrency, trailing only Bitcoin (BTC). While Ethereum is often compared to Bitcoin, the two differ significantly in their implementation of blockchain technology.
Unlike Bitcoin, Ethereum isn't just for storing or transferring value. Its blockchain provides developers with powerful tools to create and deploy interoperable, decentralized assets and services.
A core principle behind Ethereum and its applications is the absence of a central authority managing the network. Instead, Ethereum users collectively maintain and secure the blockchain.
Vitalik Buterin, Ethereum's creator, once described Bitcoin as a pocket calculator and Ethereum as a smartphone. Bitcoin is designed for a single function—transferring value—while Ethereum allows developers to create complex applications with nearly limitless functionality.
Who Created Ethereum?
Vitalik Buterin (often called "Vitalik" or "V神" in Chinese) created Ethereum. A Canadian-Russian computer programmer born in Moscow, Buterin co-founded Bitcoin Magazine in 2011 and created Ethereum in 2013 at just 19 years old.
Later, Buterin received a Thiel Fellowship, enabling him to focus full-time on Ethereum. He established the Ethereum Foundation, a nonprofit organization to support the project. The foundation has since developed a global community of blockchain leaders, innovators, developers, and enterprises, including the Enterprise Ethereum Alliance, which leverages Ethereum's underlying technology for global business needs.
In early 2014, the Ethereum Foundation raised approximately $18 million by selling 72 million ETH in an online crowdfunding campaign.
Ethereum's Co-Founders
Originally, Ethereum had eight co-founders, including Buterin. Over time, all but Buterin left to pursue other interests.
- Gavin Wood – Author of the Ethereum Yellow Paper, creator of Polkadot and Kusama, and developer of the Solidity programming language.
- Jeff Wilke – Creator of the first Ethereum software implementation.
- Joseph Lubin – Founder of Consensys, a major Ethereum investment incubator.
- Charles Hoskinson – CEO and co-founder of Input Output Global (IOG).
- Mihai Alisie – Former VP of the Ethereum Foundation, inventor of Akasha, and co-founder of Bitcoin Magazine.
- Anthony Di Iorio – Founder of Decentral and the Jaxx crypto wallet.
- Amir Chetrit – Contributor to the Colored Coins project.
How Does Ethereum Work?
From a technical perspective, Ethereum operates differently from other cryptocurrencies. Like Bitcoin, it relies on a blockchain ledger and a decentralized network of users.
Key components of the Ethereum network include:
Ethereum Blockchain
The backbone of Ethereum is its blockchain, which stores all transactions and smart contract data—referred to as the "state." In September 2022, Ethereum underwent a major upgrade called "The Merge," transitioning from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism.
This shift significantly reduced Ethereum's energy consumption and laid the groundwork for future scalability improvements, which should enhance transaction throughput.
Nodes
A distributed network of computers, known as nodes, powers the Ethereum blockchain. Nodes store and maintain ETH transaction history, validate new transactions, and verify smart contract data.
Anyone with sufficient computational resources and internet access can run an Ethereum node. Globally, there are over 6.1 million Ethereum nodes, playing a crucial role in securing the blockchain.
Each validator node (or "staker") must lock up a certain amount of ETH to participate in transaction validation. Since September 2022, Ethereum has used PoS to validate transactions. The larger the network, the more expensive it becomes to gain majority control—a security feature.
The network also employs an automated penalty system called "slashing" to deter malicious activity. Nodes violating protocol rules may forfeit part or all of their staked ETH without warning.
Ethereum Virtual Machine (EVM)
The Ethereum blockchain isn't just a record of ETH transactions. It also stores smart contract data and tracks state changes. The EVM executes smart contracts, ensuring all nodes follow protocol rules.
Smart contracts are primarily written in Solidity or Vyper, programming languages compiled into EVM bytecode for execution. The EVM is Turing-complete, meaning it can perform any computational task by running combinations of its 140 opcodes.
What Is Ether (ETH) Cryptocurrency?
Ether (ETH) is Ethereum's native cryptocurrency, supporting smart contracts and transactions on its decentralized network. By market cap, ETH is the second-largest cryptocurrency globally.
Like Bitcoin, ETH can be traded on exchanges and serves as a store of value. However, ETH is primarily used to pay gas fees—transaction costs on the Ethereum network. These fees fluctuate based on network demand.
ETH's supply is elastic, with no maximum cap. As of June 2025, CoinMarketCap reports ~120.5 million ETH in circulation.
Why Does Ether Have Value?
- Utility: ETH powers Ethereum's ecosystem, serving as "fuel" for transactions and smart contracts. Increased adoption of Ethereum-based apps drives demand for ETH.
- Intrinsic Qualities: ETH is decentralized, censorship-resistant, and accessible globally.
- Market Dynamics: Supply and demand dictate ETH's value, with investors weighing Ethereum's potential as a smart contract platform.
What Can You Do With Ethereum?
Ethereum enables the creation of interoperable tokens and dApps, forming the foundation of decentralized finance (DeFi). Key applications include:
- DeFi Platforms: Lend, borrow, or trade assets without intermediaries (e.g., Aave, Uniswap).
- NFTs: Prove ownership of digital items like art or collectibles (e.g., CryptoPunks, Bored Ape Yacht Club).
- Tokenization: Represent real-world assets (e.g., real estate) on the blockchain.
How to Use Ether? Five Common Methods
Beyond trading ETH, users can generate passive income through:
| Method | Description | Risk Level |
|---|---|---|
| Spot Trading | Buy/sell ETH directly on exchanges. | Low |
| Contracts | Leveraged trading (e.g., perpetual contracts) for experienced traders. | High |
| DeFi | Earn interest via lending or liquidity pools (e.g., Uniswap, Aave). | Medium |
| Staking | Lock ETH to validate transactions and earn rewards (~4-7% APY). | Medium |
| Exchange Mining | Participate in exchange promotions to earn new tokens (e.g., Bitget Launchpool). | Low |
1. Spot Trading
- Ideal For: Long-term investors.
- Risks: Price volatility.
2. Contract Trading
- Ideal For: Skilled traders.
- Risks: Leverage magnifies losses; potential liquidation.
3. DeFi
- Ideal For: Tech-savvy users.
- Risks: Smart contract vulnerabilities; impermanent loss.
4. Staking
- Ideal For: Long-term holders.
- Risks: Lock-up periods; ETH price fluctuations.
5. Exchange Mining
- Ideal For: All investors.
- Risks: Exchange insolvency.
👉 Explore ETH staking opportunities
Ethereum's Future Outlook
1. Expanding Utility
Ethereum's ecosystem hosts thousands of dApps and NFTs, driving ETH demand. Upgrades (e.g., Dencun) aim to reduce fees and improve scalability.
2. Investment Potential
ETH's price surged from <$10 (2017) to $4,800 (2021). With ETF approval in 2024, institutional adoption could further boost its value.
Risks of Investing in ETH
- Competition: Rival blockchains (e.g., Solana) challenge Ethereum's dominance.
- Regulation: PoS systems face scrutiny (e.g., SEC actions).
- Security: Smart contract bugs or hacks could undermine confidence.
FAQ
Q: Is Ethereum better than Bitcoin?
A: They serve different purposes—Bitcoin is digital gold; Ethereum is a programmable blockchain.
Q: How do I buy ETH?
A: Purchase ETH on exchanges like Coinbase, Binance, or Kraken using fiat or other cryptocurrencies.
Q: What is gas fee?
A: A fee paid in ETH to process transactions or smart contracts on Ethereum.
Q: Can ETH supply exceed 120 million?
A: Yes—ETH has no hard cap, but EIP-1559 burns a portion of fees, making it deflationary over time.
Q: Is staking ETH safe?
A: Generally yes, but risks include slashing or exchange failures. Use reputable platforms.