Ethereum is a foundational blockchain platform that enables developers to build decentralized applications. Its native currency, Ether (ETH, is used to pay transaction fees—often referred to as "gas"—when interacting with the network. Vitalik Buterin published the Ethereum whitepaper in late 2013, and the blockchain officially launched in 2015 through the work of several co-founders. Since then, the price of ETH has seen significant growth.
How Ethereum Works
Ethereum initially operated on a proof-of-work (PoW) consensus mechanism. In this system, miners used computing power to solve complex mathematical puzzles. The winner of each competition earned the right to add a new block to the blockchain, receiving block rewards and transaction fees in return.
In 2020, Ethereum began its multi-phase transition to Ethereum 2.0 (Eth2), a major upgrade aimed at improving scalability and security. This upgrade involved shifting from proof-of-work to a proof-of-stake (PoS) model. In PoS, validators are required to stake a minimum of 32 ETH to participate in securing the network and validating transactions.
A key feature of Ethereum is its support for smart contracts. These are self-executing contracts with the terms of the agreement directly written into code. They automatically execute actions when predefined conditions are met. This functionality allows developers to create decentralized applications, or DApps, which run on the blockchain rather than on centralized servers.
Developers can also create various types of tokens on the Ethereum network. Popular token standards include ERC-20, often used for fungible tokens like stablecoins and utility tokens, and ERC-721, which is used for non-fungible tokens (NFTs). These tokens are separate assets but operate on Ethereum’s secure and decentralized infrastructure.
Ethereum’s security comes from its decentralized nature. It is maintained by a global network of participants, making it resistant to censorship and single points of failure.
Ethereum Price History and Factors
Ethereum held its initial coin offering (ICO) in 2014, raising funds before the network went live in 2015. In its early years, ETH traded for less than $10. The price of ETH in USD saw tremendous growth in the following years, reaching an all-time high of over $4,500 per token in 2021. Like other cryptocurrencies, however, Ethereum's price has shown significant volatility over time.
Gas fees—the cost required to perform transactions or execute contracts on the network—also play a role in Ethereum's economics. During periods of high network congestion, these fees can rise substantially, affecting user experience and transaction volume.
For the most current ETH price and market data, refer to the live price indicator at the top of this page. This widget also displays updated market capitalization and trading volume. Historical price trends can be analyzed using the interactive Ethereum price chart (ETH chart) available above.
Ethereum Supply Mechanics
Unlike Bitcoin, which has a fixed supply cap of 21 million coins, Ethereum does not have a hard limit on the total number of ETH that can be created. An Ethereum Improvement Proposal (EIP) from Vitalik Buterin in 2018 suggested capping the supply at 120 million, but this was not implemented.
New ETH is issued at a fixed annual rate. According to the Ethereum Foundation, the issuance is set at 0.3 times the amount of ETH sold in the 2014 presale. Since approximately 60 million ETH were distributed during the initial offering, this translates to a maximum of 18 million new ETH per year. This issuance can continue indefinitely.
Although the supply continues to increase, the fixed issuance rate means that the rate of inflation decreases over time. This makes ETH a disinflationary asset. The London upgrade in 2021 introduced a fee-burning mechanism that destroys a portion of ETH from each transaction, potentially further reducing net inflation over time.
How to Buy Ethereum
There are several safe and popular methods for buying ETH. Many users choose to purchase Ether through regulated cryptocurrency exchanges using bank transfers, credit cards, or other payment methods. Peer-to-peer (P2P) platforms also allow users to trade directly with one another.
It is essential to research and comply with all local regulations regarding cryptocurrency purchases and ownership. Always use reputable platforms and ensure you understand the fee structure and security measures before transacting.
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Frequently Asked Questions
What is the difference between Ethereum and Ether?
Ethereum is the name of the blockchain platform that supports smart contracts and decentralized applications. Ether (ETH) is the native cryptocurrency used to pay for transactions and computational services on the network.
How can I track the live price of Ethereum?
You can monitor the real-time price of ETH using live tracking widgets available on many financial and crypto data websites. These tools often also show market cap, 24-hour trading volume, and price change data.
What does 'gas' mean in the Ethereum network?
Gas refers to the fee required to successfully conduct a transaction or execute a contract on the Ethereum blockchain. The cost varies depending on network congestion and the complexity of the transaction.
Is Ethereum a good long-term investment?
Like all cryptocurrencies, Ethereum carries investment risks due to its price volatility. Its long-term value is often linked to the adoption of its platform, the growth of the DeFi and NFT ecosystems, and ongoing technological upgrades. Always do your own research and consider speaking with a financial advisor.
Can Ethereum be converted to cash?
Yes. ETH can be sold for fiat currency, such as US dollars or Euros, on most major cryptocurrency exchanges. The process typically involves transferring your ETH to an exchange, selling it, and then withdrawing the cash to your bank account.
What is Ethereum 2.0?
Ethereum 2.0 refers to a set of interconnected upgrades designed to make the Ethereum network more scalable, secure, and sustainable. The most notable change was the transition from a proof-of-work to a proof-of-stake consensus mechanism.