Ethereum (ETH): What It Is, Uses and Risks

Ethereum is an open-source blockchain that runs programs called smart contracts. These are pieces of code, commonly written in a language called Solidity, that carry out agreed rules automatically once their conditions are met. Because anyone can deploy such programs, the network hosts lending markets, exchanges, NFT marketplaces, games, and many other applications, collectively known as dApps.

The network's native asset is ether, which trades under the ticker ETH. People often say "Ethereum" for both the network and the coin, but strictly the network is Ethereum and the coin is ETH. ETH is a native coin rather than a token issued on another chain.

Ethereum differs from Bitcoin mainly in purpose. Bitcoin is designed chiefly as a digital store of value and payment network, while Ethereum works as a programmable platform. Its Ethereum Virtual Machine, or EVM, executes contract code across thousands of independent nodes, so no single company controls the applications built on it.

At the time of writing, ETH ranks second by market capitalization, at about $292 billion as of 2026-11-05. That ranking changes, but Ethereum has held a top-two position for most of its history.

ETH has several jobs inside the network. The first is paying fees. Every transaction or contract interaction costs a fee, often called gas, and that fee is paid in ETH. The cost rises when the network is busy and falls when demand is low.

The second job is security through staking. Under proof of stake, validators lock up ETH as collateral to propose and check blocks. Honest work earns rewards, while provably bad behavior can lead to penalties, including loss of part of the stake. Running a validator directly takes a fixed deposit of 32 ETH, and many people stake through pooled or liquid staking services instead.

The third job is as a base asset across applications. In decentralized finance, ETH is widely used as collateral and as a trading pair. Many NFT marketplaces and games price items in ETH. Layer 2 networks, which batch transactions and settle them on Ethereum, also generally rely on ETH for fees or for bridging value.

Public reporting and project descriptions describe uses such as DeFi, NFT ownership, DAOs, and identity-style apps. ETH is not a stablecoin, and holding it carries no right to profits from those applications.

At the time of writing, about 122.19 million ETH exist, and the circulating and total supply figures are the same in the data. Ethereum has no fixed maximum supply, so the amount can grow or shrink depending on how issuance and burning balance out.

New ETH is issued as rewards to validators. Since the EIP-1559 upgrade in 2021, a portion of every transaction fee, the base fee, is burned and removed from circulation. When network activity is high, more ETH can be burned than is issued, which makes the supply shrink for a time. When activity is low, the supply grows slightly. This is why people describe ETH as potentially deflationary, though that depends on usage rather than being guaranteed.

Because there is no cap, fully diluted valuation equals market capitalization in the data, at about $292.32 billion as of 2026-11-05.

For context on price, ETH traded around $2,392 as of 2026-11-05, with roughly $14.9 billion in 24-hour trading volume. It was up about 4% over seven days and down about 26% over one year. Its all-time high was about $4,946 on 2025-08-24, and its all-time low was under one dollar in October 2015. These figures move constantly and are not a forecast.

ETH is the native coin of the Ethereum main network, often called Layer 1. It is not issued on another chain in the data, though wrapped versions exist elsewhere. Wrapped ETH is a token that represents ETH and can be used in applications that need token-style standards.

Ethereum also anchors a wide family of Layer 2 networks, which handle transactions more cheaply and then post proofs or data back to the main chain. ETH can be moved to these networks through bridges. Bridges add their own technical risk, so it is worth understanding which one you are using and why.

In general terms, people hold ETH in two ways. Custodial holding means an exchange or broker keeps the coins for you and you log in with an account. Self-custody means you control the private keys through a wallet, either software on a phone or computer or a dedicated hardware device.

ETH is traded on most large centralized exchanges against fiat currencies, stablecoins, and Bitcoin. It also trades on decentralized exchanges directly from a self-custody wallet. Fees, supported countries, and identity checks vary by platform, so check the rules that apply where you live.

Vitalik Buterin proposed Ethereum in 2013. Seven co-founders helped build it, among them Gavin Wood, who wrote the technical specification for the EVM and created Solidity, and Joseph Lubin, who founded ConsenSys. A crowdfunding sale raised over $18 million, and the network launched on 2015-07-30.

The project launched with proof of work, and the data lists Ethash, the mining algorithm used in that era. That is no longer how the network is secured. In September 2022, an upgrade known as the Merge moved Ethereum to proof of stake, which cut its energy use by more than 99%, according to the project description.

Other notable events include The DAO incident in 2016, when a flaw in a crowdfunded smart contract allowed funds to be drained. The community responded with a contested chain split, which produced the separate network now called Ethereum Classic. The 2021 EIP-1559 upgrade changed fee mechanics and introduced the burn.

Ethereum also became a base layer for many token launches, including stablecoins and NFTs, which is one reason its ecosystem is large. Its price peaked at about $4,946 in August 2025 and has since traded well below that level.

ETH is volatile. As of 2026-11-05 it was down about 26% over a year, and large swings in either direction have happened many times. Only hold what you could afford to see fall sharply.

Smart contract risk is a second concern. ETH itself is simple, but the applications built around it can contain bugs, be exploited, or be abandoned. Using DeFi means trusting code that may not have been audited, and audits do not remove risk.

Staking carries its own risks: lock-up and withdrawal queues, penalties for validator faults, and added exposure to the smart contracts or companies behind liquid staking products. Bridges and Layer 2 networks add further layers of technical and operational risk.

Fees can also be high when the network is congested, which makes small transactions expensive. Competition is real too, since other Layer 1 chains and Layer 2 networks are all trying to attract users and developers.

Regulatory treatment of ETH, staking services, and exchanges differs by country and can change. Scams are common, including fake airdrops, phishing sites, and malicious token approvals. Nothing here is financial advice, and this page does not suggest buying or selling.

Safe storage starts with deciding who holds the keys. Leaving ETH on an exchange is convenient, but you rely on that company's security and solvency. Self-custody removes that dependence and replaces it with personal responsibility: lose the keys and no one can recover the funds.

For larger amounts, many people use a hardware wallet, which keeps private keys on a dedicated device that signs transactions offline. Buy it directly from the manufacturer, never from a reseller, and confirm the packaging is sealed.

Write your recovery phrase on paper or metal and keep it in a secure, private place. Never type it into a website, photograph it, store it in cloud notes, or share it with anyone, including anyone claiming to be support. Legitimate wallets never ask for it outside of setup or recovery.

Before sending a large amount, send a small test transaction and double-check the address, because blockchain transfers cannot be reversed. Be careful with token approvals in DeFi apps, and review and revoke ones you no longer use. Keep software updated, use separate wallets for experimenting and for long-term holdings, and treat unexpected links or direct messages with suspicion.