Ethereum is a blockchain network; Ether (ETH) is its native cryptocurrency. The network records transactions and shared application data, runs smart contracts, and uses ETH to pay for computation and help secure its proof-of-stake system. Calling ETH “Ethereum” is common shorthand, but the network and its asset are not the same thing.
What is Ethereum?
Ethereum is a public blockchain and execution platform. Its shared database is maintained across participating computers, called nodes. Nodes check transactions and agree on the network’s current state; cryptographic links connect blocks of recorded activity to earlier blocks.
Ethereum’s execution environment is the Ethereum Virtual Machine (EVM). When a transaction asks the network to transfer value or run an application, nodes execute the request according to the same rules and update the shared state. This lets applications operate without relying on one computer to keep the authoritative record.
What is ETH, and is Ethereum a coin or a blockchain?
ETH, short for Ether, is Ethereum’s native cryptocurrency. Ethereum is the network; ETH is an asset used within it. ETH pays for the computation required by transactions and plays a role in proof-of-stake security.
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People sometimes say “Ethereum coin” when they mean ETH. More precisely, ETH is the cryptocurrency, while Ethereum is the blockchain platform. Other assets can be issued or used on Ethereum, so not every token associated with the network is ETH.
How does the Ethereum blockchain work?
- A user creates a transaction, such as a request to send ETH or interact with an application.
- The transaction is broadcast to the network. Participating nodes check it and execute any requested computation under Ethereum’s rules.
- Transactions are organized into blocks. Nodes reach agreement on the blocks and resulting network state, which becomes part of the shared record.
- The transaction uses network resources. The sender pays fees in ETH for the computation the transaction requires.
A transaction can do more than transfer cryptocurrency: it can also ask a smart contract to perform an action. Ethereum’s design makes applications and their state available to the network rather than keeping them solely on an individual user’s device.
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What are Ethereum smart contracts?
Smart contracts are programs deployed to Ethereum and executed by the EVM when users submit transactions that call them. Applications can use them for activities such as marketplaces, financial instruments, and games. Running a contract uses network computation and therefore requires transaction fees.
The name does not guarantee that a program is safe, error-free, or a legally enforceable contract. A user should understand what an application is asking a transaction to do before signing it.
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How does Ethereum proof of stake work?
Ethereum currently uses proof of stake, not proof-of-work mining, to reach consensus. The Merge switched off Ethereum’s proof-of-work consensus mechanism and activated proof of stake on September 15, 2022, according to Ethereum.org’s proof-of-stake documentation.
Validators stake ETH and participate in proposing and validating blocks. The protocol can reward validators for participation and penalize certain misconduct, including through slashing. Ethereum.org’s current proof-of-stake materials describe 32 ETH as the amount required to participate directly as a validator. That is a protocol threshold, not a recommendation about how much to buy or stake.
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Ethereum.org’s proof-of-stake FAQ discusses 51% and over 66% of staked ETH as thresholds in its explanation of control over future block contents and rewriting history. These figures describe security assumptions and attack scenarios in that FAQ; they do not establish that an attack would be feasible or profitable in practice.
Direct validator operation is not the only way people encounter staking. Pools and provider-mediated services can offer a different operational or custody arrangement, but may add fees, operational or slashing risks, and concentration concerns. Returns are not guaranteed.
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How can you store ETH?
A wallet is an interface for viewing an account, sending transactions, and connecting to applications. It is not itself the ETH or the account: cryptographic keys control the account. With self-custody, the person who controls the private key or recovery phrase can control the assets.
- Exchange account: The provider holds custody of the assets. The account may offer provider-managed recovery, but you depend on that provider to control access and process transactions.
- Software wallet: A wallet application makes it convenient to interact with accounts and applications. In self-custody use, you are responsible for protecting the keys and recovery phrase.
- Hardware wallet: This physical device keeps private keys offline, reducing their exposure to an internet-connected computer. It does not prevent scams, unsafe transaction approvals, loss of a recovery phrase, theft, or device failure.
Ethereum.org’s wallet directory lists hardware-wallet options and says its listings are informational, not official endorsements. Its criteria include security review, active maintenance, and Ethereum support. Listings, features, and prices can change; consult the current directory and manufacturers’ information before choosing a device.
How do you reduce the risk of losing ETH?
- Never share a private key or recovery phrase. Treat requests for them as a serious warning sign.
- Check the destination address and transaction details before signing. Sending to the wrong address can be irreversible, and Ethereum transactions are not generally reversible.
- Be wary of people impersonating support staff and of unsolicited claims about mining pools or new tokens.
- If using a hardware wallet, verify the transaction on the device and keep its recovery information secure. Offline key storage is one protective measure, not a substitute for careful transaction review.
These precautions matter whether ETH is held in a wallet or used through an application: a wallet’s interface does not guarantee that a transaction or the application receiving it is safe.
What ETH’s usefulness does—and does not—tell you
ETH has functional roles in Ethereum: it pays for computation and supports proof-of-stake consensus. Those uses explain why the asset is part of the network, but they do not predict its future market price or establish an investment return. ETH can carry financial risk, and no return is guaranteed.
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