What is Ethereum?

May 10, 2021 1 min read
What is Ethereum?

Ethereum is a cryptocurrency network that was launched in 2015. Its native currency is known as Ether (ETH) and, much like Bitcoin, the network was launched with a Proof of Work consensus algorithm. Ethereum has rapidly gained adoption across the globe due to its ability to host smart contracts, allowing for the development of decentralised applications.

Recently, Ethereum's popularity as the home of decentralised finance has caused it to outgrow its processing capabilities, rending it too expensive for many users. High demand, coupled with a limited number of transactions per second, has led to network congestion meaning users must pay high gas fees to have their transactions processed.

This congestion has led to a rise in the use of other blockchains, as well as extra layers on top of Ethereum's base network. Meanwhile, Ethereum is in the process of transitioning to a Proof of Stake consensus algorithm with the aim of increasing throughput and lowering fees.

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