Ethereum (ETH)

Discover the basics of Ethereum and find links to beginner-friendly guides that show you the best way to invest in it.
By:  &  James Knight
Updated: Oct 4, 2022

About Ethereum

What is Ethereum?

Ethereum is a cryptocurrency project with its own blockchain, much like Bitcoin. Ether (ETH) is the cryptocurrency coin that powers it. ETH can be used as a store of value, unit of exchange, to pay for services on the platform, or to create other cryptocurrency tokens that run on Ethereum (known as ERC-20 tokens).

Ethereum’s blockchain can be used by developers to build their very own decentralised apps (dApps): software that runs on a decentralised computer system. These dApps function via something called a smart contract, which is a piece of code that automatically completes instructions when set requirements are fulfilled.

How does Ethereum work?

Blockchain technology is key to how Ethereum and most other cryptocurrencies work. Think of it as a large, decentralised ledger where transactions are recorded. As part of this technology, Ethereum uses smart contracts which execute automatically, without the need for any intermediary. This means Ethereum is decentralised: there is no need for a central governing authority like a bank to manually oversee it.

The platform is used by many developers to provide services that we might otherwise have never seen. From banking to betting, Ethereum functions to improve services and security through smart contracts. Its aims are more extensive than most cryptocurrencies, such as Bitcoin’s aim to singularly act as an electronic payment solution.

How is the Ethereum network secured?

The blockchain technology that powers Ethereum also secures the network. Ethereum is a proof of stake blockchain. This means that other users, known as validators, verify and secure every transaction on the network. Validators must stake 32 ETH or more to be able to participate in verifying transactions.

What is Ethereum used for?

Ethereum has multiple uses, it can be used as a store of value, traded, or used as a ‘base’ to build applications on.  Its one of the most popular cryptocurrencies to speculate on because its price can fluctuate much more than traditional assets.

In addition to speculation, Ethereum can be used in many different ways. The network allows developers to build their own decentralised apps. Its use of smart contracts means sectors like decentralised finance (DeFi) and blockchain-based gaming also make use of the Ethereum network.

Why does ETH have value?

It’s the most actively used blockchain network in the world and its platform powers many cryptocurrencies in the decentralised financial sector. Once in the shadow of Bitcoin, Ethereum has established itself in its own right and is now the second largest cryptocurrency by both volume and market capitalisation.

Another feature is its correlation with Bitcoin. Its price tends to move in tandem with BTC; when the price of Bitcoin moves higher, ETH usually will follow, although ETH is much less expensive than BTC which makes it more accessible. In recent years, due to the growth in DeFi, Ethereum less closely follows Bitcoin and is seen as a cheaper alternative.

Who created Ethereum?

It was launched in 2015 by founder, Vitalik Buterin. Born in 1994, the Russian-Canadian programmer became involved in cryptocurrency in the early stages of its inception by co-founding Bitcoin Magazine in 2011, and this interest later blossomed into one of the most successful careers in the blockchain sector.

What was the Ethereum Merge?

The Ethereum Merge officially completed on 15th September 2022 and was the process where Ethereum became a ‘proof of stake’ cryptocurrency. Since its foundation in 2015, Ethereum had been running as a ‘proof of work’ blockchain, one that required significant energy resources. The merge is the point at which it transitioned from one to the other.

The transition to proof of stake now means that Ethereum will consume 99.95% less energy, according to the developers. It has also introduced  ‘sharding’, which is a method of breaking down data to enable it to cope with more information simultaneously.

Before the Merge completed, Ethereum had been running two blockchains; the first, known as the ‘mainnet’, which stored the Ethereum code and the entire history of all transactions made on the network, and the ‘Beacon’ chain, which used the new technology. Following the merge, these two became one.

Where can I buy Ethereum?

You can buy Ethereum on a crypto exchange. An exchange is a marketplace that allows you to sign up, deposit your money, and buy some crypto, just as you would with a stock platform.

Most cryptocurrency brokers allow you to keep the coins you buy in your account. However, you may want to sign up for a dedicated Ethereum wallet for some extra security.

You can deposit money into a broker or exchange account by a bank transfer or card payment. However, if you prefer to use a different payment method, like PayPal, then your options may be more limited. Use these guides to find out how to buy Ethereum with different payment methods.

Are there any other ways to invest in Ethereum?

The simplest way to invest in Ethereum is to buy it outright. However, another option is to simply open a crypto account. Crypto accounts are like regular bank accounts and allow you to store a variety of currencies, send and receive payments, earn interest on savings, and spend freely with a credit card.

You can also invest in crypto more generally through a Ethereum ETF or a crypto fund. These are financial instruments that give you exposure to a group of leading cryptocurrencies, more suited to high net worth individuals.

More about ETH

What is the Ethereum price today?

The price of ETH has been fluctuating between $890 and $3850 during the last year. The price of Ethereum is down 70% from its all time high. You can use the live Ethereum chart to track the ETH/USD price in real time above, or compare the Ethereum value today to its past performance using the Ethereum price history tab at the top of this page.

What is the price prediction for Ethereum?

The average Ethereum price prediction values the coin at $14,000 by the end of 2025. Things like the economic climate, establishment support and acceptance, and the crypto market as a whole can all have an impact on the price.

It’s best to take predictions with a grain of salt but you can use expert estimates to help you understand the weight of opinion about a coin. Read our latest Ethereum price prediction for more analysis and guidance.

What is the total supply of ETH?

The circulating supply is 120,530,000 ETH. This is up from 109,000,000 ETH in 2020 and an increase of 30,000,000 ETH from 2018.

Are there any Ethereum alternatives?

There are a few Ethereum alternatives and while some cryptocurrencies have attempted to imitate it, many others have built their own platforms on the Ethereum network. Ethereum’s popularity has led to a growing number of ‘killers’ or rival blockchains developing platforms with the aim of solving some of Ethereum’s flaws. Below is a selection of alternative cryptocurrencies you can find more information on.

  • Solana. Solana is one of the biggest platforms in the world and can handle more transactions per second than Ethereum.
  • Cardano. Cardano is faster, cheaper, and more scalable than Ethereum.
  • Polkadot. Polkadot uses technology to make different blockchains compatible with eachother.

More crypto guides

FAQs

Is Ethereum safe?

Yes, Ethereum is safe. The basic concept of the blockchain is that no one is able to gain control of the network unless they own the majority of it. In Ethereum’s case, it is an impossible task to own or control the majority of its network. Many instances of security issues relating to Ethereum are more to do with third party apps built on its blockchain, rather than Ethereum itself.

Has the Ethereum merge completed?

Yes, the Ethereum merge officially completed on 15th September 2022. Up until the merge, Ethereum was running on two blockchains, Mainnet and Beacon. As its name suggests, the Merge combined these two blockchains resulting in a faster and more energy efficient platform for developers.

When will Ethereum 2.0 launch?

Ethereum 2.0 launched on September 15th 2022. Ethereum 2.0 was the original name given to what is now referred to as the Merge.

What is an Ethereum Killer?

Its a rival blockchain that has the aim of solving some of Ethereums flaws. These competing blockchains are referred to as ‘killers’ as they are seeking to ‘kill’ Ethereum and take its top spot. A few well known Ethereum Killers include Cardano, Avalanche, and Polkadot.

 

Recent Ethereum price analysis

What does the Ethereum Merge mean? A post-merge analysis
September 15, 2022
The Merge is done! Ethereum price analysis
September 15, 2022
Ethereum-based projects worth investing in before The Merge
September 12, 2022
Ethereum price analysis ahead of “The Merge”: how far can ETH climb?
August 25, 2022

Sources & references
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Max Adams
Editor of Education
Max has a keen interest in the transformative power of technology and is the founder of a platform called Current Frequencies. When not at his desk,… read more.
James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.