Ethereum Explained: The World's Programmable Blockchain

Ethereum is the second-largest cryptocurrency by market cap and the most widely used blockchain for decentralized applications. This guide covers everything you need to understand Ethereum in 2026.What is Ethereum?Created by Vitalik Buterin and launched in 2015, Ethereum extends Bitcoin's concept of decentralized money to decentralized computing. It's often called a "world computer" because:Anyone can deploy code that runs on the network Applications run exactly as programmed, without downtime or censorship Users interact with apps without trusting a central authority Smart Contracts: The Core InnovationSmart contracts are self-executing programs stored on the blockchain:``solidity // Simple smart contract example contract SimpleStorage { uint256 public value; function setValue(uint256 _value) public { value = _value; } } ``Key properties: Immutable: Once deployed, code cannot be changed Transparent: Anyone can read the code Trustless: Executes exactly as written Composable: Contracts can interact with each other The Ethereum Virtual Machine (EVM)The EVM is Ethereum's runtime environment:Executes smart contract bytecode Ensures consistent execution across all nodes Measures computational effort in "gas" Has been adopted by many other chains (Polygon, BSC, Arbitrum) Proof of Stake: The MergeIn September 2022, Ethereum transitioned from Proof of Work to Proof of Stake:AspectBefore (PoW)After (PoS) Energy Use~100 TWh/year~0.01 TWh/year SecurityMiningStaking Issuance~4.5M ETH/year~0.5M ETH/year Finality~15 minutes~15 minutes StakingYou can earn rewards by staking ETH: Solo Staking: Run your own validator (32 ETH minimum) Pooled Staking: Join a staking pool (Lido, Rocket Pool) Exchange Staking: Stake through Coinbase, Kraken, etc. Current APY: ~4-5%Layer 2 ScalingEthereum's base layer handles ~15-30 transactions per second. Layer 2 solutions scale this:Optimistic Rollups Arbitrum: Largest L2 by TVL Optimism: Powers the OP Stack ecosystem Base: Coinbase's L2 ZK Rollups zkSync Era: ZK-SNARK based Starknet: STARK proofs Polygon zkEVM: EVM-equivalent Scroll: Community-focused L2 Benefits 10-100x lower fees 100x+ higher throughput Security inherited from Ethereum The DeFi EcosystemEthereum hosts the largest DeFi ecosystem:Decentralized Exchanges (DEXs) Uniswap: Largest DEX, ~$1B+ daily volume Curve: Specialized for stablecoins Balancer: Weighted pools Lending Protocols Aave: Multi-asset lending Compound: Algorithmic interest rates MakerDAO: DAI stablecoin Liquid Staking Lido: stETH, largest protocol by TVL Rocket Pool: rETH, decentralized Coinbase: cbETH Total Value Locked (TVL) Ethereum and L2s combined: $50B+ (as of 2026)NFTs and Digital OwnershipEthereum pioneered NFTs (Non-Fungible Tokens):ERC-721: Standard for unique tokens ERC-1155: Multi-token standard Use cases: Art, gaming, music, identity, tickets Major marketplaces: OpenSea, Blur, Magic EdenHow to Use Ethereum1. Get a Wallet MetaMask: Most popular browser extension Rainbow: Mobile-focused Rabby: Multi-chain support Hardware: Ledger, Trezor for security 2. Buy ETH Purchase on an exchange and transfer to your wallet.3. Interact with dApps Connect your wallet to decentralized applications: Visit the dApp (e.g., uniswap.org) Click "Connect Wallet" Approve the connection Sign transactions as neededGas Fees Every transaction requires gas: Measured in Gwei (1 Gwei = 0.000000001 ETH) Higher gas = faster confirmation Use gas trackers to find optimal times ETH TokenomicsMetricValue Current Supply~120M ETH Max SupplyNo hard cap Issuance~0.5M/year (PoS) Burn RateVariable (EIP-1559) Net IssuanceOften negative (deflationary) EIP-1559 and Burning Since August 2021, base fees are burned: High activity = more ETH burned Can result in deflationary periods Over 4M ETH burned to date Ethereum RoadmapThe Ethereum Foundation's development roadmap:The Surge (Scaling) Danksharding for L2 data Target: 100,000+ TPS across L2s The Scourge (Censorship Resistance) MEV mitigation Proposer-builder separation The Verge (Verification) Verkle trees Stateless clients The Purge (Simplification) Remove technical debt Expire old state The Splurge (Improvements) Miscellaneous enhancements EVM improvements Risks and ConsiderationsSmart contract risk: Bugs can lead to losses Regulatory uncertainty: DeFi regulation evolving Competition: Alternative L1s compete for users Complexity: Steeper learning curve than Bitcoin Gas volatility: High demand = expensive transactions ConclusionEthereum has established itself as the foundation of decentralized applications. From DeFi to NFTs to DAOs, most crypto innovation happens on Ethereum or EVM-compatible chains. Understanding Ethereum is essential for participating in Web3.Follow Ethereum news on Free Crypto News.