Ethereum is a smart contract network that supports decentralised apps (Dapps), NFTs, decentralised games, DeFi (decentralised finance) and more. Ethereum’s native cryptocurrency, ether (ETH), is the second largest by market cap, and it currently trades at $1,676. The platform was built by Vitalik Buterin, a Russian-Canadian developer, alongside Charles Hoskinson (founder of Cardano), Gavin Wood, Joseph Lubin, Anthony Di Loria, Miha Alisie and Amir Chetrit.
If Bitcoin laid the foundations for blockchain technology, Ethereum built the house on top. While Bitcoin’s key function is as a store of value, Ethereum’s key function is to execute smart contracts and support Dapps (decentralised applications). Ether is a valuable asset, but the Ethereum network is used for much more than crypto trading: Ethereum Dapps support supply chain management, digital identity, gaming, finance, DeFi, NFTs, real-estate and more.
Ethereum and NFTs
The first non-fungible token (NFT) was minted in 2014 on Namecoin. Several other NFT projects like Spells of Genesis (the first blockchain game) and Rare Pepes came shortly after, but they were difficult to trade. The Ethereum network made it significantly easier to create, store and trade tokens, inviting a much wider demographic of traders to the space.
The first Ethereum NFTs landed in 2017, and by 2021, the industry had boomed, inaugurating a new era in the crypto world.
Ethereum is the home of the blue chip NFT.
A blue chip NFT is one that is expected to hold stable, long-term value. Blue chip NFTs tend to have a high floor price, utility, renowned branding and celebrity endorsements. Some of the biggest blue chip NFT projects on Ethereum as of 2022 were:
- Bored Ape Yacht Club – $1.57 billion
- Otherdeed – $1.1 billion
- Mutant Ape Yacht Club – $1.14 billion
- Azuki – $849.9 million
- CryptoPunks – $575.2 million
Ethereum 2.0: The Merge
Prior to 2022, Ethereum was a proof-of-work blockchain that relied on energy-intensive crypto mining to verify transactions. On 6th September 2022, Ethereum made the enormous leap to proof-of-stake by merging with a separate blockchain called the Beacon Chain. This transition enabled the network to reduce its energy consumption by 99.95%.
In a proof-of-stake consensus mechanism, validators stake and hold their capital in a smart contract to earn rewards (in Ethereum’s case, in the form of transaction fees). To become a fully-activated block validator on Ethereum, an ETH holder must stake 32 ETH. There are however liquid staking options that enable users to participate in validator pools by committing any amount of ERC-20 if they do not hold or do not wish to commit the large sum of 32 ETH.
Ethereum price history
Supply and demand impacts the price of ether. Unlike Bitcoin, Ethereum has unlimited supply, but the volume of ether issued daily sits around 1,700 ETH (it was 13,000 ETH before The Merge). Other factors that impact the price of Ethereum include:
- The price of Bitcoin (when Bitcoin rises, the rest of the market tends to follow).
- The NFT market.
- Regulations (for example, when the European Investment Bank (EIB) announced its plans to offer a digital bond on Ethereum, the price increased).
- Macroeconomic factors, which applies to all tradable assets.
Like most cryptocurrencies, ether has had a volatile price history, but as a legacy currency, it has effectively stabilised post-pandemic. The highest recorded price of ETH stood at $4,815 on November 9, 2021.
Advantages of Ethereum
- Ethereum is much more than a cryptocurrency – it’s an extremely versatile decentralised network that has a huge range of applications from DeFi, gaming, social media, supply chain management and more.
- The Ethereum mainnet network is large, consisting of 12,700 nodes alongside millions of users. It has also been around a lot longer than many other blockchains and has a robust community and ecosystem.
- Ethereum is always seeking innovation, epitomised best in the move from a proof-of-work to proof-of-stake consensus.
Disadvantages of Ethereum
- Ethereum is known for its high transaction fees (“gas”), which can be off-putting to users when there are cheaper alternatives such as Algorand and Solana.
- Ethereum is more scalable than Bitcoin (particularly since The Merge), but it doesn’t have the scalability of blockchains like Tezos and Cardano.
- Ethereum could be impacted by inflation since there is no cap on the lifetime supply of ether.
Where can I buy ETH?
ETH is a CoinMarketCap top 10 cryptocurrency and is available to purchase on most major exchanges including Binance, Coinbase Pro, Kucoin, OKX, Kraken, Bybit and more. It’s also available on decentralised exchanges such as Uniswap. You can read a full list of exchanges that list ETH here.
To buy ETH, you will need to create an account on one of the listed exchanges. You will then need to verify your identity and deposit your local currency into your account to purchase the token. You will also need a wallet that supports ETH, such as MetaMask, Binance, Trust Wallet, Coinbase or Crypto.com.
If you purchase ETH through an exchange such as Binance, the token will be automatically stored in your Binance wallet. If you purchase a large sum, it’s best to transfer your funds to a non-custodial wallet such as MetaMask, or a cold wallet such as Ledger.
Our top 3 Ethereum wallets are:
- MetaMask (non-custodial, multi-platform)
- Ledger Nano X (non-custodial, cold wallet)
- Exodus (non-custodial, beginner-friendly)