What Is Ethereum?

Ethereum is a decentralised blockchain platform for smart contracts and decentralised applications (dapps). Learn how it works and compares with Bitcoin, plus what the latest upgrades entail.

Introduction to Ethereum

Ethereum was developed in 2013 by its founders Vitalik Buterin and Gavin Wood. Along with the network’s co-founders, Charles Hoskinson and Anthony Di Iorio, they launched the Ethereum network in 2015 with the aim of building a platform that goes beyond the capabilities of Bitcoin.

The primary goal of Ethereum is to provide a decentralised computing network built on blockchain technology that allows developers to create and manage smart contracts and decentralised apps (dapps) without the need for a central authority.

Ethereum is the second-largest cryptocurrency by market capitalisation after Bitcoin, and its ecosystem is home to many popular altcoin projects in the cryptocurrency space.

What Is Ethereum, and How Does It Work?

Ethereum is a global, decentralised blockchain platform for digital money, smart contracts, and applications. Unlike Bitcoin, which primarily functions as a digital currency, Ethereum integrates a Turing-complete programming language into its blockchain, allowing for the development of self-executing code.

Ethereum supports a broad range of functions, including storing data, processing complex financial operations, and hosting decentralised governance systems (i.e., DAOs). Thousands of applications, tokens, games, non-fungible tokens (NFTs), developer tools, and even other cryptocurrencies operate on Ethereum.

The platform’s native cryptocurrency, Ether (ETH), is used to secure the network and pay for transaction fees (gas). It also serves as a key asset within the Ethereum-based financial ecosystem.

Ethereum’s Blockchain Network and Smart Contracts

Ethereum operates through a decentralised distributed ledger that records all transactions and smart contract interactions. It is publicly available to network participants. This ledger is replicated across thousands of global nodes, which verify data and maintain the network’s state.

Smart contracts are immutable, self-executing pieces of code that trigger when specific conditions are met. These contracts eliminate the need for intermediaries and are essential to the functioning of most dapps on Ethereum.

Gas Fees on Ethereum

All transactions on the Ethereum blockchain are powered by gas and subject to gas fees, which help ensure they are processed securely and efficiently. The gas fee is the amount of gas used to perform an operation, multiplied by the cost per unit gas. Gas fees are paid using ETH, the native token of the Ethereum network, regardless of whether the transaction succeeds or fails. 

On Ethereum, gas prices are quoted in Gwei, which represent fractional pieces of gas; one Gwei is equal to 0.000000001 ETH. The term is a contraction of ‘giga-wei’, meaning ‘billion wei’, with ‘Wei’ the smallest denomination of Ether (one Gwei equaling one billion ‘wei’).

The price of gas depends on the type of transaction and level of congestion on the blockchain network while the transaction is processing. The more users trying to complete transactions at the same time, the higher the cost of gas.

Benefits of Ethereum

Ethereum offers several advantages for both developers and users:

• Strong developer community: Ethereum has the  largest pool of blockchain developers and an extensive ecosystem of tools and applications.
  
• Programmability: Developers can write smart contracts and deploy complex applications tailored to many industries.
  
• High liquidity: As the second-largest cryptocurrency by market cap, ETH is widely accessible by way of centralised and decentralised exchanges (DEXs), trading platforms, crypto wallets, and brokerages. It is also highly liquid.
  
• Interoperability: Standards like ERC-20 and ERC-721 make it easy for different apps and tokens to interact.

Disadvantages of Ethereum

Despite its popularity, Ethereum is not without drawbacks:

• Scalability: As adoption has grown, the network has become congested. Solutions like rollups and Layer-2 chains have emerged to address this.
  
• Gas fees: Transaction costs can be unpredictable and high during peak demand.
  
• Centralisation risks: Ethereum’s transition to Proof of Stake (PoS) raised concerns about validator concentration amongst a few large entities.

Ethereum’s roadmap includes ongoing efforts to mitigate centralisation risks amongst validators, such as encouraging decentralised staking solutions and further protocol upgrades to enhance network security and resilience.

Ethereum vs Bitcoin: How They Differ

Although Bitcoin and Ethereum are both blockchain-based and decentralised, they were built for different purposes. Here’s how they compare:

Ethereum’s Transition to Proof of Stake (PoS)

Ethereum completed ‘The Merge’ in September 2022, transitioning from Proof of Work to Proof of Stake. This drastically reduced the network’s energy use and enabled ETH holders to stake their assets to validate transactions and earn rewards.

The term ‘Ethereum 2.0’ is no longer in official use, as the changes are part of an ongoing upgrade path rather than a brand-new network. The Merge is one milestone on Ethereum’s multi-year roadmap to improve scalability, security, and efficiency.

The Shanghai Upgrade: Unlocking Staked ETH

The Shanghai hard fork, launched in April 2023, marked Ethereum’s first major update after ‘The Merge’. Its most notable feature was EIP-4895, which enabled validators to withdraw staked ETH from the Beacon Chain, which had been locked since staking began in 2020.

This upgrade gave validators the flexibility to exit the network or access accrued rewards, which significantly increased interest in staking and reshaped Ethereum’s validator dynamics.

Read our full guide to the Shanghai Upgrade and what it changed.

The 2024 Dencun Upgrade and Danksharding

The Ethereum Dencun upgrade, also known as EIP-4844, was a highly anticipated development in the Ethereum network in March 2024, addressing one of the key obstacles to Ethereum’s mass adoption: high gas fees. 

The Dencun upgrade introduced Proto-Danksharding, a method to decrease transaction costs and increase transaction throughput in effort to make significant improvements in Ethereum’s scalability.

What Is Sharding?

Sharding is a method used to enhance the capacity and performance of a blockchain network. It achieves this by partitioning the network into smaller units, called ‘shards’, which are capable of independently processing transactions. 

This parallel processing significantly boosts the network’s efficiency, lowering congestion and subsequently reducing gas fees. Sharding is a critical step towards making the Ethereum network more scalable and accessible.

What Is Danksharding?

Danksharding utilises Binary Large Objects (‘blobs’) — large amounts of data that help to further increase transaction throughput — and is designed to help lower transaction costs on the Ethereum network. Often referred to as the ‘scalability killer’, Danksharding potentially enables tens of thousands of transactions per second, depending on future network optimisations and Layer-2 adoption. It serves as the full realisation of how Ethereum rollups achieve scalability.

Proto-Danksharding, the focus of the Ethereum Dencun upgrade, is a transitional phase towards full Danksharding. By introducing a new transaction type that accepts ‘data blobs’, Proto-Danksharding aims to prepare the Ethereum network for full Danksharding in the future. 

Get the full scope on the Dencun upgrade.

Post-Dencun

After the Dencun upgrade in March 2024, which introduced Proto-Danksharding and reduced Layer-2 fees, Ethereum’s focus shifted to the Pectra upgrade, with the aim to further improve scalability, staking flexibility, and wallet usability, setting the stage for future innovations like a full danksharding.

The Pectra Upgrade

The Pectra upgrade took place on 7 May 2025, and it is Ethereum’s most comprehensive update since ‘The Merge’. It combines execution-layer and consensus-layer improvements under one umbrella. 

The pack of EIPs include:

• EIP-7702 (Account Abstraction): Allows externally owned accounts (EOAs) to function like smart contracts, improving wallet usability and programmability.
• EIP-7251: Increases the maximum validator effective balance from 32 to 2,048 ETH, streamlining staking operations for large validators.
• EIP-7691: Increases blob throughput, further reducing Layer-2 transaction costs and improving scalability.
  

These upgrades aim to power smart account functionality, build a stronger foundation for future scalability, and improve validator efficiency.

Get the full scoop on Ethereum’s Pectra upgrade.

How to Buy Ethereum on Crypto.com

Note that many conflate Ethereum (the decentralised platform) with Ether (the cryptocurrency powering the network). When users say they’re buying ‘Ethereum’, they mean to buy ‘Ether’ (ETH). 

Crypto.com offers a user-friendly platform to buy ETH and engage with the Ethereum ecosystem. Follow these steps to buy ETH on Crypto.com:

• Download the Crypto.com App and create an account.
• Complete the necessary verification process to unlock full access to the platform.
• Deposit funds into the Crypto.com account; users can utilise fiat currency or other cryptocurrencies to fund their accounts. It’ll take one to three days to clear.
• Navigate to the ‘Buy’ section of the App and search for ETH.
• Specify the amount of ETH to acquire and review the transaction details.
• Confirm the transaction and wait for the order to be executed.
• Monitor ETH holdings in the Crypto.com App, which doubles as a wallet.

Crypto.com provides a secure and reliable trading environment, ensuring that users can trade ETH with confidence. Take advantage of the platform’s intuitive interface, advanced trading features, and competitive fees to make the most of the ETH token trading experience.

Check out more details in our step-by-step guide to buying cryptocurrencies.

Staking on Ethereum

To become a validator on Ethereum, a minimum deposit of 32 ETH is still required. Following the Pectra upgrade in May 2025, while the minimum deposit to become a validator remains 32 ETH, the maximum effective balance per validator has increased to 2,048 ETH, allowing larger operators to consolidate their stakes.

For those who don’t have 32 ETH or prefer a hands-off approach, pooled staking services offer an alternative; users can stake small amounts of ETH by combining deposits into a shared validator set.

After depositing ETH into the official deposit contract, prospective validators enter an activation queue managed by the protocol. This queue is governed by the churn limit, which controls how many validators can join or exit during each epoch (approximately 6.4 minutes) to maintain network stability. The time to become active varies based on queue length and network demand. A validator must wait for at least four epochs before activation to mitigate any potential manipulation of the randomness beacon used to select validator duties.

How to Stake ETH With Crypto.com

When staking with Crypto.com, users can circumvent the steep minimum deposit of 32 ETH and stake from as little as 0.00000001 ETH. 

To stake ETH on-chain with Crypto.com, users need to make a request either via the Crypto.com App or Exchange. Prior to the staking request, users can view the estimated activation period, which can range from a few hours to a few weeks depending on the queue length. This correlates with Ethereum’s own validator queue, which has become increasingly longer since the Shanghai Upgrade. 

Once the staking request status has passed the activation period and changes to ‘Staked’, users can start receiving rewards for their participation. Crypto.com provides an estimate on the first reward date when users enter into staking. When unstaking, Crypto.com processes the request as quickly as possible; however, most protocols impose an unbonding period when users unstake. 

Read more about on-chain staking with Crypto.com and how it works here.

Conclusion

Ethereum continues to lead the evolution of decentralised applications. Its smart contract capabilities, vibrant ecosystem, and continuous upgrades make it a foundational platform in the Web3 space. Comprehensive upgrades in ‘The Merge’ and Pectra have further enhanced Ethereum’s scalability, user experience, and staking efficiency, solidifying its role in the future of blockchain technology.

As with any other cryptocurrencies, buying into ETH requires due diligence and a strong understanding of the risks involved. But for users, developers, and innovators, Ethereum remains one of the most recognised platforms in the decentralised world.

Due Diligence and Do Your Own Research

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