# What is Ether and how does it differ from other cryptocurrencies?

Jessica Washington · August 4, 2026

> Ether (ETH) is the native cryptocurrency of the Ethereum network, which facilitates transactions and acts as “gas” for executing smart contracts...

Ether (ETH) is the native cryptocurrency of the Ethereum network, which facilitates transactions and acts as “gas” for executing smart contracts.

Unlike Bitcoin, which was primarily designed for peer-to-peer digital currency transactions, Ethereum was created to support decentralized applications (dApps) and smart contracts, enabling programmability and flexibility beyond mere transactions.

**Also worth reading:** [What are the potential risks and rewards of investing in Revolut Coin, and how does it compare to other established cryptocurrencies like Bitcoin and Ethereum?](https://cryptgo.co/knowledge/what_are_the_potential_risks_and_rewards_of_investing_in_revolut_coin_and_how_does_it_compare_to_other_established_cryptocurrencies_like_bitcoin_and_ethereum.php) · [What benefits do Xen crypto holders experience compared to other cryptocurrencies?](https://cryptgo.co/knowledge/what_benefits_do_xen_crypto_holders_experience_compared_to_other_cryptocurrencies.php) · [What are the best cryptocurrencies to include in my watchlist for 2023?](https://cryptgo.co/knowledge/what_are_the_best_cryptocurrencies_to_include_in_my_watchlist_for_2023.php)

Ethereum was conceived in 2013 by programmer Vitalik Buterin, with development supported by a group of co-founders including Gavin Wood and Joseph Lubin, and the network officially launched on July 30, 2015.

ETH is essential for accessing computational services on the Ethereum network; users must pay fees in ETH to process their transactions, which incentivizes validators to maintain the network.

The Ethereum blockchain is Turing complete, meaning it can execute any computational task given sufficient resources, allowing it to host complex applications compared to simpler blockchain systems.

To maintain network security and integrity, Ethereum transitioned from the energy-intensive Proof of Work (PoW) consensus mechanism to Proof of Stake (PoS) as of September 2022, significantly reducing energy consumption.

Smart contracts on Ethereum are self-executing agreements with the terms of the contract written into code, enabling trustless interaction between parties without intermediaries.

As of August 2024, Ethereum's network sustains about 1,700 new ETH being minted per day, with supply inflation adjusting dynamically based on network activity and conditions.

Ethereum supports a vibrant ecosystem of decentralized finance (DeFi) applications, allowing users to lend, borrow, and trade without traditional financial intermediaries, marking a significant innovation in finance.

The average transaction fee on the Ethereum network, often called gas fees, fluctuates based on network congestion; as of May 2024, fees can spike significantly during peak usage times.

Ethereum has introduced the concept of staking, allowing users to lock up their ETH in the network to earn rewards for validating transactions, which promotes network security and decentralization.

Unlike Bitcoin’s capped supply of 21 million coins, Ethereum does not have a fixed supply limit, which means its economics and monetary policy can evolve over time to address network needs.

Ethereum utilizes a unique programming language called Solidity, specifically designed for writing smart contracts, which allows developers to create complex programmable transactions.

The Ethereum community has established the Ethereum Improvement Proposal (EIP) process, enabling developers to propose and adopt changes to the network collaboratively, ensuring adaptability and growth.

As of 2024, Ethereum supports a robust environment for non-fungible tokens (NFTs), enabling unique digital assets to be created, bought, and sold, significantly impacting areas such as art and entertainment.

The transition of Ethereum to a PoS consensus mechanism has raised discussions about its impact on decentralization, as staking requires a level of economic resource accumulation that may concentrate power among wealthy participants.

The Ethereum network's decentralized structure relies on a global network of nodes that validate and store blockchain data, creating a resilient ecosystem resistant to single points of failure or censorship.

Scaling solutions, such as Layer 2 solutions like Optimistic Rollups and zk-Rollups, have been developed to enhance Ethereum’s transaction throughput and reduce gas fees while maintaining security.

Ethereum’s potential use cases extend into various fields beyond finance, including supply chain tracking, identity verification, healthcare, and voting systems, showcasing its versatility.

The shifts in Ethereum’s governance, particularly the involvement of stakeholders and developers in decision-making through decentralized autonomous organizations (DAOs), challenge traditional notions of centralized governance in software development.

Canonical: https://cryptgo.co/knowledge/what_is_ether_and_how_does_it_differ_from_other_cryptocurrencies.php
Markdown: https://cryptgo.co/knowledge/what_is_ether_and_how_does_it_differ_from_other_cryptocurrencies.php/index.md