What is Ethereum? A Beginner's Guide to ETH

Of all the blockchains to follow Bitcoin, none have quite matched the scale and ambition of Ethereum. Founded by Vitalik Buterin (et al.) in 2015, 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 ($249 billion), and it currently trades around $2,100–$2,300 (March 2026). Co-founders of Ethereum include Charles Hoskinson (founder of Cardano), Gavin Wood, Joseph Lubin, Anthony Di Loria, Miha Alisie and Amir Chetrit.

If Bitcoin proved that decentralised money could work, Ethereum asked what else the blockchain could do. While Bitcoin's key function is as a store of value, the main function of Ethereum is to execute smart contracts and support dApps – many of which have real-world applications (supply chain management, digital identity, lending and gaming, to name a few).

Ethereum and NFTs

Ethereum was the engine that drove the non-fungible token (NFT) boom of 2021, making it significantly easier to store, create and trade tokens than ever before. Although the market has since cooled off, Ethereum is still the home of the blue chip NFT, powering around 62% of all NFT contracts globally, with the deepest pool of high-value collectors and established projects. The market has matured considerably since the 2021 peak, and 2026 is best understood as a "K-shaped" market: a top tier of blue-chip collections with strong trading and cultural weight, and a lower tier of copycat projects fading into obscurity.

The collections still leading the charge include CryptoPunks and Bored Ape Yacht Club. Pudgy Penguins have also had a remarkable run, with their physical toy line and mainstream retail partnerships bringing non-crypto-native collectors into the ecosystem. Meanwhile, real-world asset (RWA) NFTs – tokens representing fractional ownership of physical assets like real estate, commodities, and corporate bonds – have emerged as one of the most resilient and fastest-growing corners of the market.

Beyond The Merge: Pectra, Fusaka and the road to Glamsterdam

You're probably already familiar with The Merge, Ethereum's landmark 2022 transition from proof-of-work to proof-of-stake, which cut the network's energy consumption by 99.95%. But Ethereum hasn't stopped there.

In May 2025, the network activated its biggest upgrade since the Merge: Pectra, a combined Prague-Electra hard fork that implemented 11 Ethereum Improvement Proposals, making it the largest bundle of enhancements in Ethereum's history. Key wins included doubling Layer-2 blob capacity to reduce congestion and fees, enabling account abstraction (so users can pay gas fees in tokens like USDC instead of ETH), and increasing the maximum validator staking limit from 32 ETH to 2,048 ETH, reducing operational overheads.

Hot on its heels, the Fusaka upgrade followed in December 2025, dramatically increasing the network's capacity to process transactions and slashing costs for users on Layer-2 networks.

The next upgrade is Glamsterdam, tentatively slated for June 2026. If it lands as planned, it will mark the completion of "The Surge" – Ethereum's long-running mission to scale the network to over 100,000 transactions per second without sacrificing decentralisation.

Ethereum price history

Like all assets, the price of Ether is driven by supply and demand. Unlike Bitcoin, there is no hard cap on the total supply of ETH, but the volume of Ether issued daily has dropped significantly since The Merge.

ETH hit an all-time high of nearly $5,000 in August 2025 before pulling back sharply. Early 2026 saw a steep decline for several reasons, from recession fears to co-founder Vitalik Buterin selling many millions of dollars worth of ETH.

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 and DeFi activity.
• Institutional demand, including via spot ETH ETFs. BlackRock's staked ETHB ETF launched on Nasdaq in March 2026, attracting $155 million in inflows within its first 24 hours.
• Regulations and macroeconomic factors, which apply to all tradable assets.

Advantages of Ethereum

Aside from holding value as the second largest cryptocurrency, Ethereum is an extremely versatile decentralised network with applications spanning DeFi, gaming, social media, supply chain management and more. Relative to other smart contract networks, the Ethereum mainnet itself is large and battle-tested, with one of the deepest developer ecosystems in the blockchain space. And with Pectra, Fusaka and Glamsterdam all landing in quick succession, the network's upgrade pace has never been faster.

Layer-2 networks built on top of Ethereum (Arbitrum, Optimism and Base, for instance) have also matured into serious infrastructure in their own right, now handling nearly 90% of all L2 transaction activity. For most users, this means the days of eye-watering gas fees are largely behind them, without sacrificing any of Ethereum's underlying security.

Disadvantages of Ethereum

Ethereum mainnet gas fees can still spike significantly during periods of high demand, and while L2s have softened the blow for most users, it remains a friction point compared to cheaper chains like Solana.

Competition has also intensified. Ethereum is no longer the only serious smart contract platform, and rivals have made meaningful inroads, particularly for high-frequency trading and gaming, where speed and low fees matter most.

Finally, unlike Bitcoin, there is no hard cap on the supply of ether. Fee-burning mechanisms introduced in EIP-1559 help offset new issuance, but the lack of a fixed supply ceiling remains a point of concern for some investors.

Where can I buy ETH?

ETH is a CoinMarketCap top 5 cryptocurrency and is available to purchase on all major exchanges including Binance, Coinbase, OKX, Kraken, Bybit and more. You can now also gain exposure without directly holding Ether via spot ETH ETFs on traditional brokerages. To buy ETH directly, you'll need to create an account on one of the listed exchanges, verify your identity, and deposit your local currency.

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 (non-custodial, cold wallet)
• Exodus (non-custodial, beginner-friendly)