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WHAT IS ETHEREUM?
The foundation for our digital future
A complete beginner's guide to how Ethereum works, the benefits it brings and how it's being used by
millions of people around the world.
Let's start
Summary
Ethereum is a network of computers all over the world that follow a set of rules called the Ethereum protocol. The Ethereum
network acts as the foundation for communities, applications, organizations and digital assets that anyone can build and use.
You can create an Ethereum account from anywhere, at any time, and explore a world of apps or build your own. The core
innovation is that you can do all this without trusting a central authority that could change the rules or restrict your access.
Keep reading to learn more…
What can Ethereum do?
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Banking for An open internet A peer-to-peer
everyone network
Anyone can interact with
Not everyone has access to Ethereum network or build Ethereum allows you to
financial services. But all you applications on it. This allows coordinate, make agreements or
need to access Ethereum and you to control your own assets transfer digital assets directly
the lending, borrowing and and identity, instead of them with other people. You don't
savings products built on it is an being controlled by a few need to rely on intermediaries.
internet connection. mega-corporations.
Censorship- Commerce Composable
resistant guarantees products
No government or company has Customers have a secure, built- All apps are built on the same
control over Ethereum. in guarantee that funds will only blockchain with a shared global
Decentralization makes it nearly change hands if you provide state, meaning they can build
impossible for anyone to stop what was agreed. Likewise, off each other (like Lego
you from receiving payments or developers can have certainty bricks). This allows for better
using services on Ethereum. that the rules won't change on products and experiences and
them. assurances that no-one can
remove any tools apps rely
upon.
What is a blockchain? What is a cryptocurrency?
A blockchain is a database of transactions that is updated and shared across many computers in a network. Every time a new
set of transactions is added, its called a “block” - hence the name blockchain. Public blockchains like Ethereum allow anyone to
add, but not remove, data. If someone wanted to alter any of the information or cheat the system, they’d need to do so on the
majority of computers on the network. That is a lot! This makes decentralized blockchains like Ethereum highly secure.
Why would I use Ethereum?
If you're interested in more resilient, open, and trustworthy ways to coordinate globally, create organizations, build apps and share
value, Ethereum is for you. Ethereum is a story that is written by all of us, so come and discover what incredible worlds we can build
with it together.
Ethereum has also been invaluable for people who have had to handle uncertainty around the security or soundness or mobility of
their assets due to external forces outside of their control.
Cheaper and Faster Crossborder Payments
Stablecoins are a novel type of cryptocurrency that relies on a more stable asset as the basis for its value. Most of them are
linked to the United States dollar and therefore maintain the value of that currency. These allow for a very cheap and stable
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global payment system. Many current stablecoins are built on the Ethereum network.
Ethereum and stablecoins simplify the process of sending money overseas. It often takes only few minutes to move funds
across the globe, as opposed to the several business days or even weeks that it may take your average bank, and for a
fraction of the price. Additionally, there is no extra fee for making a high value transaction, and there are zero restrictions on
where or why you are sending your money.
Refugees
Gamers
Writers
Musicians
Artists
Companies Companies
Developers Developers
Investors Investors Investors
2010 2014 Now
Ethereum in numbers
4k+
Projects built on Ethereum
96M+
Accounts (wallets) with an ETH balance
53.3M+
Smart contracts on Ethereum
$410B
Value secured on Ethereum
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$3.5B
Creator earnings on Ethereum in 2021
993.6K
Number of transactions today
Who runs Ethereum?
Ethereum is not controlled by any particular entity. It exists whenever there are connected computers running software following the
Ethereum protocol and adding to the Ethereum blockchain. Each of these computers is known as a node. Nodes can be run by
anyone, although to participate in securing the network you have to stake ETH (Ethereum’s native token). Anyone with 32 ETH can do
this without needing permission.
Even the Ethereum source code is not produced by a single entity. Anyone can suggest changes to the protocol and discuss
upgrades. There are several implementations of the Ethereum protocol that are produced by independent organizations in several
programming languages, and they are usually built in the open and encourage community contributions.
Run a node
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What are smart contracts?
Smart contracts are computer programs living on the Ethereum blockchain. They execute when triggered by a transaction from a
user. They make Ethereum very flexible in what it can do. These programs act as building blocks for decentralized apps and
organizations.
Have you ever used a product that changed its terms of service? Or removed a feature you found useful? Once a smart contract is
published to Ethereum, it will be online and operational for as long as Ethereum exists. Not even the author can take it down. Since
smart contracts are automated, they do not discriminate against any user and are always ready to use.
Popular examples of smart contracts are lending apps, decentralized trading exchanges, insurance, quadratic funding, social
networks, NFTs - basically anything you can think of.
More on smart contracts Explore dapps
Meet ether, Ethereum's cryptocurrency
Many actions on the Ethereum network require some work to be done on Ethereum's embedded computer (known as the Ethereum
Virtual Machine). This computation is not free; it is paid for using Ethereum's native cryptocurrency called ether (ETH). This means
you need at least a small amount of ether to use the network.
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Ether is purely digital, and you can send it to anyone anywhere in the world instantly. The supply of ether isn’t controlled by any
government or company - it is decentralized and completely transparent. Ether is issued in a precise manner according to the
protocol, only to stakers who secure the network.
What is ether? Get ETH
200
131 131
78
0.451 0.0026
Global Gold BTC ETH ETH
data Netflix
centers mining PoW PoW PoS
Annual Energy Consumption in TWh/yr
What about Ethereum's energy consumption?
On September 15, 2022, Ethereum went through The Merge upgrade which transitioned Ethereum from proof-of-work to proof-of-
stake.
The Merge was Ethereum's biggest upgrade and reduced the energy consumption required to secure Ethereum by 99.95%, creating
a more secure network for a much smaller carbon cost. Ethereum is now a low-carbon blockchain while boosting its security and
scalability.
More on energy consumption The Merge update
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I heard crypto is being used as a tool for criminal activity. Is this true?
Like any technology, it will sometimes be misused. However, because all Ethereum transactions happen on an open blockchain, it’s
often easier for authorities to track illicit activity than it would be in the traditional financial system, arguably making Ethereum a less
appealing choice for those who would rather go undetected.
Crypto is used much less than fiat currencies for criminal purposes according to the key findings of a recent report by Europol, the
European Union Agency for Law Enforcement Cooperation:
“The use of cryptocurrencies for illicit activities seems to comprise only a small part of the overall cryptocurrency economy, and it
appears to be comparatively smaller than the amount of illicit funds involved in traditional finance.”
Europol Spotlight - Cryptocurrencies - Tracing the evolution of criminal finances.pdf EN (1.4 MB)
Chainalysis (2021), The 2021 Crypto Crime report EN
What is the difference between Ethereum and Bitcoin?
Launched in 2015, Ethereum builds on Bitcoin's innovation, with some big differences.
Both let you use digital money without payment providers or banks. But Ethereum is programmable, so you can also build and deploy
decentralized applications on its network.
Bitcoin enables us to send basic messages to one another about what we think is valuable. Establishing value without authority is
already powerful. Ethereum extends this: rather than just messages, you can write any general program, or contract. There is no limit
to the kind of contracts which can be created and agreed upon, hence great innovation happens on the Ethereum network.
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While Bitcoin is only a payment network, Ethereum is more like a marketplace of financial services, games, social networks and other
apps.
Further reading
Week in Ethereum News - A weekly newsletter covering key developments across the ecosystem.
Atoms, Institutions, Blockchains - Why blockchains matter?
Kernel Ethereum's Dream
Explore Ethereum
Make something with Ethereum The Ethereum community
If you want to try building with Ethereum, read Our community includes people from all
our docs, try some tutorials, or check out the backgrounds, including artists, crypto-
tools you need to get started. anarchists, fortune 500 companies, and now
you. Find out how you can get involved today.
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Website last updated: October 5, 2023
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