Ethereum made the blockchain programmable. How Ethereum differs from Bitcoin, and why the network has become so important.
Ethereum launched in 2015, based on an idea from programmer Vitalik Buterin. Where Bitcoin is first and foremost digital money, Ethereum is a blockchain where anyone can run their own programs.
These programs are called smart contracts. They made it possible to build financial services, tokens and applications directly on the blockchain.
Ethereum's own currency is called ether, abbreviated ETH. It is used to pay for everything that happens on the network, and as collateral for those who validate transactions.
The distinction is the same as for Bitcoin: Ethereum is the network, ether is the currency.
Ethereum has become the most important platform for decentralized finance, stablecoins and tokenized securities. Most large stablecoins exist on Ethereum, and major asset managers have put tokenized funds on the network.
Many other blockchains are built to be compatible with Ethereum, so that they can run the same programs. That makes Ethereum a kind of industry standard.
Success has come at a price. In periods of heavy demand, fees have been high and the network has been slow.
The answer has been a series of upgrades, such as the move to proof of stake and layer 2 solutions on top of the main chain. They are explained in separate articles in this category.