Ethereum is a foundational blockchain platform, and its native currency, Ether (ETH), is used to pay for transaction fees, known as gas, when interacting with the network. Developers build decentralized applications (DApps) and tokens on Ethereum. Although Vitalik Buterin published the Ethereum whitepaper in late 2013, the blockchain launched in 2015 through the collaboration of multiple co-founders. Since then, the price of ETH has seen significant growth.
How Ethereum Works
Ethereum initially operated on a Proof-of-Work (PoW) consensus mechanism, relying on miners to produce blocks. Miners used computing power to solve complex puzzles, and the winner would add a new block to the blockchain, earning block rewards and transaction fees.
In 2020, Ethereum began transitioning to Ethereum 2.0 (Eth2), a multi-phase upgrade aimed at improving scalability and shifting to a Proof-of-Stake (PoS) model. In PoS, validators stake a minimum of 32 ETH to help secure the network and validate transactions.
Ethereum is also known for its smart contract functionality. Smart contracts are self-executing agreements that run automatically when predefined conditions are met. Developers use them to build DApps—applications that run on the blockchain with user-friendly interfaces for activities like asset trading. Behind the scenes, these DApps operate via smart contracts on Ethereum.
Additionally, developers can create various tokens on Ethereum, such as ERC-20 tokens for fungible assets and ERC-721 tokens for non-fungible tokens (NFTs). These tokens operate on the Ethereum blockchain but represent distinct assets.
Thanks to its decentralized nature—operated by participants worldwide without a central authority—Ethereum is generally considered secure compared to traditional centralized systems.
Ethereum Price Dynamics
Ethereum conducted its initial coin offering (ICO) in 2014, and the blockchain went live in 2015. In its early years, ETH sometimes traded below $10. The value of ETH surged over time, reaching an all-time high above $4,500 in 2021. However, like other cryptocurrencies, Ethereum's price has shown considerable volatility.
Another cost factor is Ethereum gas fees, which became notably high during periods of network congestion in 2020 and 2021. These fees are paid to validators (or miners, in PoW) for processing transactions and executing contracts.
Ethereum Supply and Demand
Unlike Bitcoin, which has a fixed supply cap of 21 million coins, Ethereum does not have a hard supply limit. Although Vitalik Buterin once proposed capping the total supply at 120 million ETH, this was not implemented. Instead, Ethereum has an annual issuance limit.
According to the Ethereum Foundation, ETH is "issued at a constant linear annual rate through the block mining process," based on 0.3 times the amount of ETH sold in the 2014 crowdfunding campaign. With roughly 60 million ETH issued in the presale, no more than 18 million new ETH can be created each year. This issuance can continue indefinitely.
However, because the annual issuance is fixed, the rate of supply growth decreases over time, making ETH a disinflationary asset. This means its inflation rate will gradually decline.
The London upgrade in 2021 introduced a mechanism to burn a portion of ETH from transactions, further affecting supply dynamics.
How to Buy Ethereum
There are several ways to acquire ETH. Users can buy it from friends in person for cash, but it's essential to research and comply with local regulations and tax requirements.
For most people, purchasing ETH through a reputable cryptocurrency exchange is the simplest method. These platforms offer secure onboarding, multiple payment options, and real-time price data.
To check the latest ETH prices, refer to the live price chart at the top of this page, which also displays market capitalization and other key metrics. For historical price data, review the Ethereum price chart (ETH chart) above. For the latest news and updates, follow trusted cryptocurrency news sources.
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Frequently Asked Questions
What is the current price of Ethereum?
The price of Ethereum fluctuates constantly due to market demand. Check the live price widget at the top of this article for real-time ETH to EUR or ETH to USD conversions.
How does Proof-of-Stake differ from Proof-of-Work?
Proof-of-Stake relies on validators who stake coins to secure the network, while Proof-of-Work requires miners to solve computational puzzles. PoS is more energy-efficient and scalable.
What are Ethereum gas fees?
Gas fees are payments made to network validators for processing transactions and executing smart contracts. Fees vary based on network congestion.
Can Ethereum supply exceed 120 million?
Yes, Ethereum does not have a fixed supply cap. Although annual issuance is limited, the total supply can continue growing over time.
Is Ethereum a good investment?
Like all cryptocurrencies, Ethereum carries risks due to volatility. Potential investors should conduct thorough research and consider their financial goals and risk tolerance.
How can I store Ethereum securely?
ETH can be stored in hardware wallets, software wallets, or custodial accounts offered by exchanges. For large amounts, hardware wallets are generally recommended for enhanced security.