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Fox Periodical
Glossary

Ethereum

Plain-language definition

Ethereum is a leading smart-contract platform, launched in 2015. Where Bitcoin focuses on being digital money, Ethereum is a programmable blockchain on which developers deploy smart contracts and decentralized applications.

How it works

Ethereum runs a shared virtual machine that executes contract code identically on every node. Using the network — sending transactions or running contracts — requires paying gas fees in its native asset, ether. In 2022 Ethereum switched its consensus from proof of work to proof of stake, sharply reducing its energy use.

Why it matters

Most of decentralized finance, NFTs, stablecoins and DAOs were pioneered on Ethereum, and its token standards became industry defaults. To handle demand at lower cost, much activity now happens on Layer 2 networks that settle back to Ethereum.

Example

An ERC-20 token and most NFTs are created by smart contracts deployed on Ethereum or on chains compatible with it.

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