Ethereum quietly runs more of the digital economy than most people notice. Dollar-pegged tokens, lending markets, payment rails, tokenized funds: a large share of them settle on this one network. If your business accepts crypto, or plans to, knowing what Ethereum is has stopped being optional.
What is Ethereum?
Ethereum is a decentralized blockchain that lets anyone build and run software with no company or bank sitting in the middle. Launched on 30 July 2015 by Vitalik Buterin and a group of co-founders, it pairs a digital currency called ether (ETH) with a global computer that executes programs known as smart contracts.
That second half is what separates it from an ordinary cryptocurrency. Bitcoin moves value. Ethereum moves value and runs code at the same time: contracts that hold funds, release them when conditions are met, and settle on their own. As of June 2026, ETH ranks as the second-largest cryptocurrency by market value, somewhere around $217–233 billion according to Fortune and major market trackers, trailing only Bitcoin.
The native token earns its keep. ETH pays for computation, secures the chain through staking, and acts as collateral across hundreds of applications. Its price tells its own story: an all-time high near $4,946 in August 2025, then a long slide to roughly $1,750–1,800 by mid-June 2026.
How does Ethereum actually work?
Picture Ethereum as one shared computer that thousands of machines keep in sync. Every transaction updates a single global state, and the network agrees on that state through proof of stake, a system where validators lock up ETH to win the right to confirm blocks.
The move to proof of stake happened in September 2022, an event the community calls The Merge. It cut Ethereum’s energy use by more than 99% and swapped miners for validators. The network has shipped upgrades on a roughly twice-yearly cadence ever since; the full roadmap lives on ethereum.org.
A few milestones are worth carrying in your head:
- The Merge (2022) moved Ethereum from proof of work to proof of stake and ended energy-hungry mining.
- Dencun (March 2024) introduced “blobs,” a cheaper way to store data that pushed transaction costs down sharply on Layer 2 networks.
- Pectra (May 2025) improved account flexibility and the economics of running a validator.
- Fusaka (3 December 2025) added PeerDAS, a data-availability technique that scales the chain’s rollups while keeping decentralization intact.
The next named upgrade, Glamsterdam, is expected during 2026 and aims at validator fairness and base-layer performance. Developers have already sketched a later fork called Hegota. That tells you how deliberate this roadmap has become.
What is Ethereum used for?
Ethereum is used for far more than holding or trading a coin. It serves as the settlement layer for decentralized finance, the home base for most stablecoins, and the platform where tokenized assets, NFTs, and on-chain payments live.
Stablecoins come first, because for businesses they carry the most weight. Dollar-pegged tokens such as USDT and USDC issue their flagship versions as ERC-20 tokens on Ethereum. As of mid-June 2026, the network held roughly $156 billion in USD stablecoins, with USDT near $80 billion and USDC around $48 billion on-chain, per Blockchain Magazine data drawn from on-chain sources. Ethereum alone carries more than half of every stablecoin in circulation across all chains.
Then there is DeFi: lending, borrowing, trading, and earning yield, all executed by smart contracts in place of brokers. Ethereum holds the deepest pool of locked capital in the sector, tens of billions of dollars depending on the week, which is why institutions treat it as the deposit ledger of crypto. You can watch those figures move in real time on DefiLlama.
Other common uses include:
- Payments and payouts. Merchants take ETH and ERC-20 stablecoins for goods, services, salaries, and supplier invoices that clear in seconds rather than days.
- NFTs and digital ownership. Art, tickets, memberships, in-game items: each one recorded as a unique token with a verifiable owner.
- Tokenized real-world assets. Money-market funds and treasuries from large issuers now sit on-chain, parked next to the dollar liquidity that already lives there.
One thread ties all of it together: programmable money that follows rules without a referee.
Ethereum vs Bitcoin: what is the difference?
Here is the difference in a sentence. Bitcoin was built to be money; Ethereum was built to be a platform that money runs on. Bitcoin secures a single scarce asset capped forever at 21 million coins. Ethereum offers a flexible environment where developers deploy applications and ETH fuels them.
The concrete contrasts:
- Purpose. Bitcoin works mainly as a store of value and a payment asset. Ethereum hosts smart contracts, stablecoins, and whole financial applications.
- Consensus. Bitcoin still leans on proof-of-work mining. Ethereum switched to proof of stake in 2022 and now runs on validators.
- Supply. Bitcoin’s cap is fixed for good. Ethereum’s supply flexes with demand; during busy stretches the network burns more ETH than it issues, which can turn the asset deflationary.
- Scale. Bitcoin’s market value sat near $1.33 trillion in June 2026, well ahead of Ethereum’s roughly $220 billion.
Neither one replaces the other. Plenty of treasuries hold both, for different jobs.
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Contact UsEthereum vs Solana: which one wins?
The honest answer: the question is dated. Two years ago Ethereum and Solana looked like rivals racing for the same crown. In 2026 they have split the work between them, with Ethereum keeping the capital and the trust while Solana owns raw speed.
The numbers carry the argument. Solana settles transactions in roughly 100–150 milliseconds at a cost near $0.00025, and its real-world throughput runs into the thousands of transactions per second against a theoretical ceiling of 65,000, per CoinLaw and exchange research from 2026. Ethereum’s base layer processes far fewer transactions and needs minutes for full finality; most of its execution has moved out to Layer 2 rollups such as Arbitrum, Base, and Optimism.
Where Ethereum keeps the edge:
- Capital. Ethereum’s DeFi value locked dwarfs Solana’s, holding the majority of the sector against Solana’s single-digit billions.
- Developers. Roughly 31,869 active developers build on Ethereum versus 17,708 on Solana, by Electric Capital’s count cited across 2026 reporting.
- Reliability. Ethereum’s Layer 1 has never suffered unplanned downtime; Solana’s last major outage landed in February 2024.
The trade-off is real, so the choice is practical. Reach for Solana when you need high-frequency, consumer-facing speed; reach for Ethereum when settlement security and deep liquidity outweigh a few hundred milliseconds.
Why are Ethereum fees so high?
Ethereum fees climb when demand for block space runs past supply. Each block holds only so much computation, so when a crowd wants in at once, the price of getting in rises. Token launches, NFT mints, and market volatility are the usual triggers.
The mechanism has a name: EIP-1559, introduced in the London upgrade of August 2021. Every transaction pays a base fee set automatically by the protocol, plus an optional tip to the validator. The base fee moves up or down by as much as 12.5% per block depending on how full the last one was, and then it gets burned, removed from circulation for good.
Now the part most explanations skip. Mainnet gas fees in 2026 swing across a wide band: often a dollar or two during calm stretches, occasionally past $50 when activity floods the network, according to Nullstack analysis. On a quiet day, though, base fees have dropped below 0.1 gwei, because everyday activity has migrated to Layer 2.
That migration is the real fix. Rollups bundle hundreds of transactions and post compressed data back to Ethereum, splitting the base-layer cost across all of them. After the Fusaka upgrade, Layer 2 fees fell an estimated 40–60% in the first month, with deeper cuts expected as blob capacity expands through 2026. For most users and merchants, paying with Ethereum no longer means paying mainnet prices.
How to pay with Ethereum
Paying with Ethereum takes three things: a wallet, some ETH or an ERC-20 token, and the recipient’s address. Once it is set up the flow is quick, and on Layer 2 networks the cost is usually cents.
Step by step:
- Set up a wallet such as MetaMask, Trust Wallet, or a hardware device, then store your recovery phrase offline.
- Fund it with ETH to cover gas, plus whatever you mean to send, whether that is ETH itself or a stablecoin like USDC.
- Choose the network. Sending on Ethereum mainnet costs more; sending the same token on Arbitrum, Base, or Optimism usually costs a fraction.
- Paste the recipient address, check the amount and fee, confirm. The transaction clears in seconds to a couple of minutes.
One habit saves a lot of grief: send a tiny test amount first when you pay a new address. Blockchain transactions do not reverse.
How to accept Ethereum payments
The cleanest way to accept Ethereum payments as a business is through a crypto payment gateway that handles wallets, conversion, and compliance for you. Speend does precisely that, settling ETH and ERC-20 stablecoins for merchants without forcing you to run on-chain infrastructure yourself.
Why Speend fits businesses accepting Ethereum:
- Broad coverage. Support for 300+ coins across 18 networks, so ETH, USDT, USDC, and the rest of the ERC-20 stack are all in scope.
- Low, transparent fees. Processing from 0.5% on mono-currency flows and from 1% with conversion, with volume-tier pricing from 0.2% for high-turnover sectors.
- Fast onboarding. KYB-only merchant verification gets a business live without lengthy personal checks.
- Real support. A dedicated manager reachable 24/7 over Telegram instead of a ticket queue.
For an online store, a SaaS platform, or a payouts operation, this lifts the technical weight of running your own node and wallet stack off your shoulders. You accept Ethereum; Speend handles settlement.
