What is Ether (ETH)?
Ether (ETH) is the native coin of Ethereum, a public blockchain that anyone can use without asking a company or government for permission. The network keeps a shared record of balances and program code, and ether is the unit that moves through that record. People often say "Ethereum" when they mean the coin, but the two are different things.
The idea for Ethereum was set out in a whitepaper published on November 27, 2013, by Vitalik Buterin. The network went live on July 30, 2015, in a launch stage called Frontier. Ether was first sold to the public in a crowd sale that began on July 22, 2014, according to the history page on ethereum.org.
On the network, every action has a cost, and ether is how that cost is paid. Sending value, using an application and running code all need ETH. This gives the coin a built-in job that does not depend on any single app.
Ether vs Ethereum: what is the difference?
Ethereum is the network: the software, the validators who run it, and the applications built on top. Ether is the coin that lives on that network. A simple comparison is a country and its currency, although the comparison is not exact.
The mix-up is common because most exchanges and news sites list the coin under the name "Ethereum" and the ticker ETH. When you read "I paid with Ethereum" or "I staked Ethereum", the writer usually means the coin. In careful writing, "Ethereum" refers to the blockchain and "ether" or "ETH" refers to the coin.
| Term | What it is | Example use |
|---|---|---|
| Ethereum | The blockchain network and its software | Running apps and recording transactions |
| Ether (ETH) | The network's native coin | Paying gas, staking, holding as collateral |
| Other tokens | Separate assets built on Ethereum | Stablecoins or governance tokens |
Many other assets run on Ethereum without being ether. They are created with code and are not the network's native coin. The next section shows where ether itself fits in.
What ETH is used for (gas fees, staking, collateral, payments)
Gas fees
Every transaction and every call to a program on Ethereum needs computation, and that work is paid for in ETH. The price of this work is called Gas (Gas Fees & Gas Limit). Fees are not paid to a company: part is burned and part goes to the validator who includes the transaction.
Staking
ETH can be locked as a deposit to help secure the network. This process is called Staking, and the validators who do it can earn rewards in ETH. The same deposit can be reduced if a validator breaks the rules.
Collateral
Lending and trading applications often accept ETH as collateral, meaning value set aside to back a loan or a position. This is one reason ETH appears in so much of DeFi (Decentralized Finance). Many protocols also quote prices in ETH or pair other tokens against it.
ETH itself does not follow the ERC-20 token standard, because it is the native coin and not a token created by a program. A wrapped version, WETH, is an ERC-20 token that represents ETH so that apps built for tokens can handle it in the same way.
Payments and apps
ETH can be sent from one address to another, so it can be used for payments between people who both accept it. Developers also pay ETH to deploy a Smart Contract, which is a program stored on the blockchain that runs as written. Ethereum.org also lists NFT purchases as a common use.
How ETH is created and its supply (issuance, fee burn)
New ETH is created as rewards for validators who stake ETH to secure the network. This is called issuance. Ethereum moved to Proof of Stake (PoS) in an upgrade known as The Merge, on September 15, 2022. Under Proof of Stake, ethereum.org says issuance is drastically lower than it was under the earlier mining system.
Since the London upgrade on August 5, 2021, part of every transaction fee is also destroyed. This is the "base fee" from a change called EIP-1559. Burned ETH is removed from circulation for good. The tip that users add on top goes to the validator instead.
Is the supply fixed?
No. Unlike Bitcoin, which has a hard limit of 21 million coins, Ethereum has no fixed maximum supply. Ethereum.org states that future supply depends on several variables, including how much ETH is staked, how busy the network is, and future protocol upgrades.
When the amount burned is higher than the amount issued, the total supply falls. When activity is quiet, issuance can be higher than the burn and the supply grows. For live figures, ethereum.org points readers to trackers such as Ultrasound Money and Etherscan, because the numbers change every day.
The ether sale in 2014 and the initial allocation at launch are sometimes called a "premine". This means a share of coins existed before the network started running, and critics and supporters have long debated what that means. The facts of the sale are public, and readers can check the history pages on ethereum.org.
ETH supply is not fixed. It rises with staking rewards and falls with fee burns, so the direction depends on how busy the network is.
Staking ETH and validator rewards
To run a validator on Ethereum, a person deposits ETH into the official deposit contract. The long-standing minimum for a validator is 32 ETH. In the Pectra upgrade, which went live on May 7, 2025, the maximum balance counted for one validator was raised to 2,048 ETH, so a single validator can now hold anywhere from 32 to 2,048 ETH.
Validators propose and check blocks. In return they earn rewards paid in ETH, which come from new issuance and from transaction tips. The reward rate is not fixed. It depends on how many validators are active and on network conditions, so no figure can be promised.
Staked ETH could not be withdrawn at first. Withdrawals were turned on in the Shapella upgrade on April 12, 2023. Today a staker can exit, but exits can take time and may be queued.
Ways people stake
- Solo staking: running your own validator with your own ETH and your own hardware.
- Pooled or service staking: depositing through a provider that runs validators for you, usually for a fee.
- Liquid staking: receiving a separate token that represents your staked ETH, which adds another layer of risk.
Staking carries risk. A validator can lose part of its deposit through penalties or slashing for breaking protocol rules, and providers add their own counterparty and software risks. Rewards are not guaranteed and are not a fixed interest rate.
How an ETH transaction works and what it costs
An Ethereum transaction is a signed message that asks the network to do something, such as moving ETH or calling a program. The sender signs it with a private key, which proves ownership without revealing the key. The signed transaction is sent to the network, where validators pick it up.
- You create a transaction with a recipient, an amount and a fee, and sign it with your wallet.
- The wallet broadcasts it to nodes on the network, and it waits in a pool of pending transactions.
- A validator selected for the next slot includes it in a block, usually within seconds to a few minutes depending on the fee offered.
- Other validators check the block, and after more blocks are added the transaction becomes final.
The fee is calculated in gas units. A basic ETH transfer uses 21,000 units of gas. The total fee is the gas used times the sum of the base fee and the priority fee. Both are quoted in Gwei, where one gwei is one-billionth of an ether.
Ethereum.org gives this example: a transfer of 21,000 gas with a 10 gwei base fee and a 2 gwei tip costs 21,000 x (10 + 2) = 252,000 gwei, which is 0.000252 ETH. Real fees change with demand, so this is an illustration and not a current price.
Fees are lower when the network is quiet and higher when many people use it at once. Ethereum.org also notes that Layer 2 networks, which batch activity and settle on Ethereum, generally charge much less for transfers than the main network. Once a transaction is final, it cannot be reversed, so check the address before you send.
ETH vs Bitcoin (BTC)
Ether and Bitcoin are the two largest crypto assets by name recognition, but they were designed for different goals. Bitcoin was built mainly as digital money and a store of value. Ethereum was built as a platform where programs can run, and ether is the coin that powers it.
| Feature | Ether (ETH) | Bitcoin (BTC) |
|---|---|---|
| Main purpose | Powers a programmable network | Digital money, store of value |
| Consensus | Proof of Stake since 2022 | Proof of Work (mining) |
| Supply | No fixed cap; issuance and burn | Fixed cap of 21 million |
| Smart contracts | Core feature, widely used | Limited scripting |
| Fees | Paid in ETH; base fee burned | Paid in BTC to miners |
| Launched | 2015 | 2009 |
These are design differences, not a ranking. Neither is better in every case, and each has its own community, risks and trade-offs. Learning how each one works is a better starting point than comparing prices.
Risks and volatility
The price of ETH can move sharply in a short time. Large daily and yearly swings have happened many times, and the past is not a guide to the future. Anyone holding ETH should expect that the value can fall as well as rise, and that a loss of the full amount is possible.
- Market risk: prices depend on demand, news and the wider crypto market, and can change quickly.
- Smart contract risk: the apps that use ETH run on code, and bugs or exploits have caused losses in the past.
- Custody risk: if you lose your private key or recovery phrase, nobody can restore access. Exchanges can also fail or be hacked.
- Scam risk: fake "upgrade" or "giveaway" offers target ETH holders. Ethereum.org warns that anyone asking you to upgrade your ETH is likely a scammer.
- Regulatory and tax risk: rules differ by country and can change.
This page is for education only. It is not investment, tax or legal advice. In Türkiye, check the current rules and the CMB (SPK) list of entities operating in the crypto asset market, which does not mean any entity is licensed or authorized, and speak with a qualified adviser before making decisions.
Frequently asked questions
What is ether?
Ether (ETH) is the native coin of the Ethereum blockchain. It is used to pay transaction fees, known as gas, and to secure the network through staking. Ethereum is the network and ether is its currency. People also use ETH as collateral in lending apps and as a base pair on trading platforms.
What is the difference between Ether and Ethereum?
Ethereum is the blockchain network, including its software, validators and applications. Ether is the coin used on that network to pay fees and to stake. Many people use "Ethereum" to mean the coin, but in careful writing the network is Ethereum and the coin is ether or ETH.
What is ETH used for?
ETH is used to pay gas fees for transactions and for programs that run on Ethereum. It is also staked by validators to help secure the network, used as collateral in decentralized finance, sent as a payment between users, and spent by developers to deploy smart contracts. Many people also hold it as an asset, which carries risk.
Who created Ethereum?
Ethereum was first described by Vitalik Buterin in a whitepaper published on November 27, 2013. A team of co-founders and developers then built it, and an ether crowd sale in 2014 helped fund the work. The network launched on July 30, 2015. Today it is maintained by many independent developers and teams.
How does an Ethereum transaction work?
You sign a transaction with your wallet and broadcast it to the network. A validator includes it in a block, other validators check that block, and after more blocks are added the transaction becomes final. You pay a fee in ETH, made up of a base fee that is burned and an optional tip for the validator.
Is ETH deflationary?
Sometimes, but not always. Part of every fee is burned, and new ETH is issued as staking rewards. When more ETH is burned than issued, the supply shrinks. When the network is quiet, issuance can be higher and the supply grows. Ethereum has no fixed supply cap, so the direction changes over time.
Related terms
- Vitalik Buterin
- Gas (Gas Fees & Gas Limit)
- Staking
- Smart Contract
- ERC-20
- Gwei
- Proof of Stake (PoS)
- DeFi (Decentralized Finance)
Sources
- ETH (what is ether) ethereum.org
- ETH supply ethereum.org
- The history of Ethereum ethereum.org
- Gas and fees ethereum.org
- Pectra upgrade ethereum.org
This glossary entry is for general information and education only. It is not investment, tax or legal advice. Crypto assets are high-risk; check official sources before you act.