Ethereum (ETH)
Ethereum is a blockchain for smart contracts and apps, and ETH is its native coin. ETH pays for gas (network fees) and is locked in staking to secure the network.
How it works
Bitcoin mostly moves coins. Ethereum was built to do more: it runs programs called smart contracts. Tokens, decentralized exchanges, lending protocols and NFTs all run on them. The network launched in July 2015, and Vitalik Buterin was one of its founders.
Every action on the network costs gas, a fee paid in ETH. So to send even a token, such as USDT on Ethereum, your wallet needs a little ETH. Small units of ether are called gwei (one billionth of an ETH), and gas prices are usually shown in them.
In September 2022 an upgrade called The Merge moved Ethereum from mining (PoW) to Proof of Stake. Blocks are now produced by validators who lock 32 ETH each. There is no hard cap on ETH supply, but since 2021 part of every fee is burned, which slows supply growth.
You want to send 100 USDT on Ethereum. Your wallet holds 100 USDT but 0 ETH. The transfer fails, because gas is paid only in ETH. Top up a little ETH first, for example $3–5 worth when the network is quiet.
Gas price is 20 gwei, and a simple ETH transfer uses 21,000 gas. Fee = 21,000 × 20 gwei = 420,000 gwei = 0.00042 ETH. At $3,000 per ETH that is about $1.26.
A common mistake is mixing up Ethereum with other networks that also show "ETH" or ERC-20 style tokens, and sending coins to the wrong network. When withdrawing, always check which network the exchange uses and which one the recipient supports, and send a small test amount first.
Questions and answers
What is Ethereum in simple terms?
It is a blockchain that runs programs, not just coin transfers. ETH is its coin, and it pays for every action on the network.
How is Ethereum different from Bitcoin?
Bitcoin is mainly digital money with a 21 million coin cap. Ethereum is a platform for apps with no supply cap, and validators rather than miners produce its blocks.
Why do I need ETH if I only want tokens?
Fees on Ethereum are paid in ETH. Without it you cannot send or swap tokens on that network.
Related terms
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Updated: 2026-10-19