Ethereum is a blockchain network and software platform powered by its native cryptoasset, ether (ETH), which is currently the second-largest cryptoasset by market capitalisation. Vitalik Buterin proposed Ethereum in a 2013 white paper; co-founders including Gavin Wood and Joseph Lubin joined the project in 2014, and the network launched in July 2015 after a public crowdsale.
Ethereum is renowned for introducing "smart contracts" to cryptocurrency, something which bitcoin lacked at the time. It is an open-source blockchain-based platform, which allows developers to create projects on top of the original Ethereum blockchain, using ether as a payment token within the ecosystem. Smart contracts can be set up to execute once pre-programmed conditions are met.
In September 2022, Ethereum switched from proof of work to proof of stake in an upgrade known as the Merge. Instead of miners competing to validate transactions, validators now stake their ETH to secure the network and can earn rewards in return. Many holders take part through staking services offered by exchanges and wallets. Staking rewards can have tax consequences, which we cover in our article on how staking is taxed in the UK.
Ethereum supports a wide range of decentralised applications. ERC-20 is a technical standard for fungible tokens on Ethereum; using the same standard helps those tokens work with compatible wallets, exchanges and applications. The Enterprise Ethereum Alliance also brings together organisations working on business uses of Ethereum technology.
Ethereum expanded blockchain technology beyond payments by supporting programmable applications. It remains a major platform for decentralised finance and NFTs and has competitors including Solana and Cardano.
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