This page explains what Ethereum is without jargon. Ethereum is a shared computer that anyone can use. It stores value, runs programs called smart contracts, and settles results on-chain. You pay a small fee called gas to use it. Apps live on Ethereum or cheaper layer-2 networks. Read the quick list, the table, and the clear sections below.
Quick answer (read first)
- Ethereum is a public network for value and code.
- Smart contracts are programs that run exactly as written.
- ETH pays for gas, which is the fee to use the network.
- Layer-2 networks make transactions faster and cheaper.
- You control funds with a wallet and a seed phrase.
Ethereum in one paragraph
Ethereum is a decentralized platform that runs programs and stores value. No company owns the network. Many independent nodes keep the same ledger and code. Apps on Ethereum cannot be turned off by a single party.
Users send transactions that change balances or call programs. The rules are open and enforced by the network. Anyone can build and use these tools.
Core building blocks
Ethereum has two key layers that work together. The consensus layer organizes blocks and keeps the network secure. The execution layer runs the programs and tracks balances. Smart contracts are small apps that live on the chain.
Wallets create and sign transactions using private keys. Gas fees pay for the computing and prevent spam. Blocks include many transactions and are finalized quickly.
| Feature | Ethereum | Bitcoin | Traditional app stacks |
|---|---|---|---|
| Main purpose | Programmable value and apps | Digital money and settlement | Web apps on company servers |
| Who runs it | Many independent nodes | Many independent nodes | One firm or cloud provider |
| Programmability | Built-in smart contracts | Limited scripting | Full, but not trustless |
| Fees | Gas in ETH | Network fees in BTC | Hidden server and card fees |
| Censorship resistance | High by design | High by design | Depends on operator |
| Best for | DeFi, NFTs, on-chain logic | Hard money and payments | Conventional consumer apps |
Last updated: 2025-08-16
How a transaction actually works
A wallet creates a transaction with the action you want. You choose a gas limit and a fee. Your private key signs the transaction locally. The wallet sends it to the network for inclusion in a block.
Validators order transactions and propose a block. Nodes execute the code and update balances. The result is final after confirmations and checkpoints. Your wallet then shows the new state.
What people build on Ethereum
Decentralized finance apps let users trade, lend, and borrow without banks. NFT platforms help creators publish and sell digital items. Stablecoins enable faster transfers and lower volatility.
Gaming projects put items and logic on chain. Identity and access tools help accounts prove facts privately. Many of these apps move to layer-2 networks for lower fees and faster use.
Fees, gas, and layer-2 scaling
Gas is the unit that measures work on Ethereum. Each action costs a small amount of gas. You pay the total in ETH based on the gas price. When the network gets busy, fees can rise.
Layer-2 networks batch many transactions off-chain. They post proofs or data back to Ethereum. This lowers costs while keeping Ethereum security. Wallets can route to these networks automatically.
Security and decentralization
Many nodes verify blocks independently. That makes the network hard to cheat. Smart contracts are open code that anyone can inspect. Good apps get external audits and live reviews.
Users still need basic habits to stay safe. Protect your seed phrase and verify addresses. Use hardware wallets for savings. Only connect to apps from official links.
Limits, risks, and misconceptions
Smart contracts are only as safe as their code. A bug can lock or drain funds. Fees change with network demand and may spike. Market prices can be volatile and risky. Not every use case needs a blockchain. Pick Ethereum when you need shared trust and open access. Otherwise, a standard server may be simpler and cheaper.
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FAQ
Is Ethereum a company?
No. It is a public network run by many independent nodes worldwide. Anyone can join and verify.
Do I need ETH to use apps?
Yes. ETH pays for gas. On layer-2 networks, you often pay in that network’s ETH too.
What is a smart contract?
It is a program on the blockchain. It runs as written and keeps results on-chain.
Why are fees sometimes high?
Fees rise with demand. Consider layer-2 networks for cheaper, faster transactions.
Can I lose funds by mistake?
Yes. Sending to the wrong address or using unsafe apps can lose funds. Double-check every step.
How do I get started safely?
Use a reputable wallet, secure your seed, and start with tiny amounts. Learn before risking size.
Sources & references
- Ethereum.org — What is Ethereum?
- Ethereum.org — Gas and fees
- Ethereum.org — Layer-2 scaling
- Ethereum.org — Wallets, accounts, and keys
Important: The information on this page is for educational purposes only and does not constitute investment advice. The views expressed reflect the authors’ opinions. Always do your own research and make decisions based on your personal circumstances — you are solely responsible for your funds and risks. Act with caution and protect your capital.
