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What is Ethereum?
Ethereum explained for beginners: smart contracts, what ETH is used for, staking, layer-2 networks and the main risks.
Updated 18 Oct 2026 · 4 min read
A blockchain for programs
Ethereum is a blockchain that can run programs called smart contracts. Where Bitcoin is mainly designed as digital money, Ethereum is a platform that other applications are built on: lending and trading apps (DeFi), stablecoins, NFTs, games and more.
What ETH is for
ETH is Ethereum's native coin. Every transaction and every smart-contract action costs a fee paid in ETH, called gas. ETH is also staked: holders lock it up to help secure the network and earn rewards in return, a system called proof of stake.
Layer-2 networks
Because Ethereum's main network can get busy and expensive, many apps now run on layer-2 networks such as Arbitrum, Optimism and Base. They process transactions more cheaply and then settle them on Ethereum for security.
Main risks
As with any crypto asset, there are real risks:
- Price volatility: ETH can move sharply in either direction.
- Competition from other smart-contract blockchains.
- Bugs or hacks in apps built on Ethereum, even if the network itself works.
- Changing regulation of DeFi, staking and stablecoins.
Frequently asked questions
Is Ethereum the same as Ether?
Ethereum is the network; Ether (ETH) is its native coin, used to pay fees and for staking.
Does Ethereum have a supply limit?
There is no fixed maximum supply. New ETH is issued to stakers, while part of every transaction fee is burned, so supply can rise or fall over time.
For education only — not financial or tax advice. Crypto is volatile and rules change; do your own research and consult a qualified professional.