What Is Ethereum?
Ethereum is a decentralized blockchain platform that enables smart contracts and decentralized applications (dApps). Created by Vitalik Buterin and launched in 2015, Ethereum extended Bitcoin's concept of decentralized money to decentralized computation — allowing developers to build programmable financial applications without intermediaries.
How Ethereum Works
Ethereum's native token, Ether (ETH), fuels the network by paying for transaction execution (gas). The platform transitioned from Proof of Work to Proof of Stake in September 2022 ("The Merge"), reducing energy consumption by ~99%. Smart contracts on Ethereum power the vast majority of DeFi protocols, NFTs, DAOs, and Layer 2 scaling solutions.
Why It Matters for Traders
ETH is the benchmark for the smart contract ecosystem, similar to how BTC benchmarks the broader crypto market. The ETH/BTC ratio is a key market health indicator — rising ETH/BTC signals risk-on appetite and altcoin strength. Ethereum's gas fees, staking yield, and burn rate (via EIP-1559) are fundamental metrics that directly affect ETH's supply dynamics and value proposition.