What Is Ethereum?

Ethereum is a decentralized, open-source blockchain with smart contract functionality. Ether (ETH) is the native cryptocurrency of the platform. Amongst cryptocurrencies, Ether is second only to Bitcoin in market capitalization. 

The Ethereum Foundation website describes Ethereum as a community-run technology powering the cryptocurrency ether (ETH) and thousands of decentralized applications. Essentially,  Ethereum is a software that simultaneously exists on thousands of computers worldwide and allows smart contract applications to be launched on its blockchain. 

Ether (or ETH) is the native cryptocurrency used to power the Ethereum blockchain. Ether is used to reward miners that mine new blocks and also to pay gas fees for transactions on the Ethereum blockchain.

Ethereum uses blockchain technology to store and secure transactions on its network. The decentralized nature of the blockchain requires a majority consensus of the nodes to make changes to the network, and Ethereum currently uses Proof of Work (PoW) but is in the process of shifting to a Proof of Stake (PoS) consensus mechanism. Miners mine new blocks that store transaction history while securing the network and are rewarded with the newly issued supply of Ether (ETH) for their work. 

Ethereum enables developers to deploy smart contracts on a decentralized platform built on the blockchain; thus, it has gained utility in a number of ways.

Tokens: smart contracts can be used to create fungible tokens or Non-Fungible Tokens (NFTs) that represent tangible or intangible assets. NFTs are used to represent digital art and audio, while fungible tokens or just tokens can be used for governance or transacting value on their native platforms.

Ether: The native currency of the Ethereum blockchain can be used as a medium of exchange or store of value.

Decentralized Finance (DeFi): smart contracts can be programmed on the Ethereum blockchain to create DApps that offer Traditional Financial (TradFi) services.

Decentralized Autonomous Organization (DAO): Enables the creation of an organization governed by smart contract code.