What Is Ethereum? A Beginner's Guide
Bitcoin gets the headlines, but Ethereum is the engine behind a huge slice of the crypto world — stablecoins, DeFi, NFTs and much more all run on it. If you have wondered what Ethereum actually is (and how it differs from Bitcoin), here is the beginner-friendly version.
Key takeaways
- Ethereum is a blockchain that can run software, not just move money.
- ETH is its native coin, used to pay network fees ("gas").
- It powers DeFi, stablecoins, NFTs and thousands of apps.
- Bitcoin is digital money; Ethereum is a programmable platform.
Ethereum in one sentence
Ethereum is a global, decentralised computer: a blockchain that can run programs, called smart contracts, exactly as written, without any company in control. Where Bitcoin lets people send value, Ethereum lets people build applications that handle value automatically.
What is ETH?
Ether (ETH) is Ethereum's native cryptocurrency. It has two jobs: it is an asset people buy and hold, and it is the "fuel" that pays for using the network. Every action on Ethereum — sending tokens, using an app — costs a small fee called gas, paid in ETH. Gas prices rise when the network is busy and fall when it is quiet.
What Ethereum powers
- DeFi — lending, borrowing and trading without banks. See our intro to DeFi.
- Stablecoins — a large share of dollar stablecoins like USDC and USDT live on Ethereum.
- NFTs — digital ownership of art, collectibles and more.
- Thousands of apps and tokens built on its standards.
How is it different from Bitcoin?
Bitcoin does one thing and does it superbly: it is a scarce, secure form of digital money, often called "digital gold". Ethereum is more like a platform or operating system for money and apps. They are not really competitors — many people hold both, for different reasons.
Proof of stake
In 2022, Ethereum switched from energy-hungry mining to proof of stake (an upgrade known as "the Merge"), cutting its energy use dramatically. That is also why you can now earn a yield by staking ETH.
How to buy and store ETH
Buying ETH works just like buying Bitcoin: use a reputable exchange, verify your identity, fund with your local currency, and buy on the market screen to keep fees low (the same steps as our how to buy Bitcoin guide). For anything long-term, move it to a wallet you control. Because ETH is used across so many apps, a wallet with Web3 support is handy if you plan to explore DeFi — but keep your main holdings in secure cold storage.
Frequently asked questions
What is the difference between Bitcoin and Ethereum?
Bitcoin is designed to be digital money and a store of value — it does one thing extremely well. Ethereum is a programmable platform: a blockchain that runs software (smart contracts), powering things like DeFi, stablecoins and NFTs. Think of Bitcoin as digital gold and Ethereum as a global computer.
What is gas on Ethereum?
Gas is the fee you pay to use the Ethereum network — it compensates the network for processing your transaction. Gas is paid in ETH and rises and falls with how busy the network is. It is separate from any exchange fee.
Related reading
This article is general information for Australian and global crypto users, not financial, tax or legal advice. Crypto is volatile and you can lose money. Always do your own research and, where relevant, speak to a licensed adviser or registered tax agent. We may earn a commission from some links, at no cost to you — it never changes what we recommend.