Ethereum is more than a cryptocurrency—it’s a programmable blockchain that powers decentralized apps, smart contracts and new forms of online organization. Launched in 2015, Ethereum introduced the idea that code could run on a global, tamper-proof ledger, enabling innovations from decentralized finance (DeFi) to non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs).
How Ethereum works in plain language
At its core, Ethereum is a distributed computer made of many nodes that agree on state using a consensus mechanism. The network’s native asset, Ether (ETH), pays for computation and secures the chain. The feature that set Ethereum apart is the smart contract: self-executing code stored on the blockchain that runs automatically when its conditions are met. Smart contracts remove intermediaries and enable composable building blocks for finance, gaming, identity and more.
Key milestones that changed Ethereum
Vitalik Buterin’s 2013 whitepaper kickstarted the project; a 2014 token sale funded development and the network went live in 2015. Major moments since include the DAO hack and ensuing hard fork in 2016, the rise of NFTs (ERC-721) in 2017–2021, and a multi-year technical transition to Proof-of-Stake (PoS). The Merge (September 2022) replaced energy-intensive mining with staking validators, cutting Ethereum’s energy use dramatically. Subsequent upgrades—Shanghai, Dencun and the 2025 Pectra improvements—focused on staking flexibility, lower transaction costs and proto-danksharding to improve scalability.
What runs on Ethereum today
Ethereum hosts a wide range of applications: DeFi (lending, decentralized exchanges), marketplaces for NFTs, social and file-storage dapps, payment rails and DAOs that coordinate funding and governance. Layer-2 solutions like Polygon and rollups such as Arbitrum help scale activity by batching transactions off-chain and settling to Ethereum’s mainnet.
Challenges and what to watch
Ethereum’s biggest limits are scalability and cost: the base layer handles far fewer transactions per second than centralized payment networks, which historically produced high “gas” fees. Security risks—vulnerable smart contracts and economic exploits—are real issues. Competition from faster, cheaper blockchains also pressures Ethereum to improve user experience and cost efficiency.
Why it matters: Ethereum created a platform model for programmable money and decentralized coordination. Whether it becomes the backbone of a user-controlled Web3 or cedes ground to competitors depends on continued technical upgrades and developer adoption.
Source: Decrypt. Read the original coverage for full details.