Ethereum (ETH)

Ethereum (ETH) is the second-largest cryptocurrency and the first blockchain to introduce smart contracts. Launched in 2015 by Vitalik Buterin and a team of developers, Ethereum turned the idea of blockchain into more than just money — it became a programmable platform for decentralized applications (dApps).

What is Ethereum?

Ethereum is a Layer-1 blockchain that lets developers build and deploy applications that run without downtime, fraud, or control from a single authority.
Its native cryptocurrency, Ether (ETH), is used to pay for transactions and network fees (called gas).

Launch year: 2015
Founder: Vitalik Buterin & Ethereum Foundation
Consensus mechanism: Proof-of-Stake (since 2022 “The Merge”)
Native token: Ether (ETH)

How Does Ethereum Work?

Unlike Bitcoin, which is focused on being digital money, Ethereum was built as a general-purpose blockchain. Developers can write smart contracts (self-executing programs) in languages like Solidity, enabling everything from decentralized finance (DeFi) to NFTs.

Proof-of-Stake (PoS): Ethereum transitioned from Proof-of-Work to PoS, where validators stake ETH to secure the network and earn rewards.
Gas fees: every transaction or smart contract execution requires ETH as payment.
EVM (Ethereum Virtual Machine): the engine that runs decentralized apps globally.

Why is Ethereum Important?

Smart contracts pioneer: first blockchain to support programmable contracts.
DeFi hub: most decentralized finance protocols (lending, DEXs, stablecoins) are built on Ethereum.
NFTs & Web3: the birthplace of NFTs, DAOs, and many Web3 applications.
Strong developer ecosystem: thousands of active devs and projects.
Proof-of-Stake sustainability: significantly reduced energy consumption compared to Bitcoin’s Proof-of-Work.

Ethereum Use Cases

DeFi: lending, borrowing, and decentralized trading.
NFTs: minting and trading digital art, collectibles, and gaming assets.
DAOs: decentralized autonomous organizations for collective governance.
Stablecoins: most USD-backed stablecoins (like USDC, DAI) operate on Ethereum.
Payments: ETH is also used directly for transactions and payments.

Risks of Ethereum

High gas fees: transactions can be expensive when the network is congested.
Scaling challenges: Ethereum is still rolling out upgrades (like sharding) to handle global-scale adoption.
Competition: newer blockchains like Solana or Avalanche offer faster/cheaper alternatives.
Regulatory uncertainty: governments are still debating how to classify ETH.

Lanzo Tip 🪙

Ethereum is powerful, but don’t dive into DeFi or NFTs with big money right away. Start small, learn how gas fees, wallets, and smart contracts work — then scale up once you’re confident.