Press ESC to close

Introduction to Ethereum

Hey there! Some links on this page are affiliate links which means that, if you choose to make a purchase, I may earn a small commission at no extra cost to you. I greatly appreciate your support!

The article titled “Introduction to Ethereum” provides an overview of the concept of ether, the unit of currency used in the Ethereum network. The article explains that ether is necessary for carrying out any meaningful activities on the Ethereum network, such as transferring funds between users. It also discusses the importance of ether for developers who create and deploy smart contracts on the network. The article touches upon the process of converting ether to smaller units called wei and highlights that mining is how new ether is created and distributed within the network. Overall, this introductory article aims to provide a fundamental understanding of ether and its significance within the Ethereum ecosystem.

Please note that the provided content is an extract of a longer article and has been truncated to meet the specified paragraph length requirement.

Ethereum’s Unit of Currency: Ether

What is ether?

Ether is the unit of currency used within the Ethereum network, a decentralized, open-source blockchain platform. It holds both practical and speculative value, serving as a means of exchange and store of value within the Ethereum ecosystem. Ether is the native cryptocurrency of the Ethereum platform and is commonly abbreviated as ETH.

The need for ether on the network

Ether plays a crucial role in facilitating transactions, smart contracts, and decentralized applications (Dapps) on the Ethereum network. It acts as the fuel that powers the execution of operations and computations within the platform. By requiring users to hold and use ether for transactions, Ethereum aims to create an economic ecosystem that supports and incentivizes the network’s participants.

Transferring ether from one user to another

Transferring ether from one user to another is a straightforward process on the Ethereum network. Users can utilize their Ethereum wallets to send ether to another user’s wallet address. This transaction, recorded on the Ethereum blockchain, verifies the sender’s ownership of the specified amount of ether and transfers it to the recipient’s wallet. The speed and cost of ether transactions can vary depending on network congestion and the gas price set by the sender.

Fees associated with ether transactions

To send ether or interact with smart contracts on the Ethereum network, users must pay transaction fees in the form of gas. Gas represents the computational effort required to execute a given operation or smart contract on the Ethereum network. The gas fee is paid in ether and serves two purposes: incentivizing miners and preventing spam or malicious activity. Miners receive the gas fee as a reward for including the transaction in a block and confirming its validity.

Terminology: Ethereum vs Ether

It is essential to distinguish between the terms “Ethereum” and “ether.” Ethereum refers to the decentralized blockchain platform itself, which is capable of executing smart contracts and hosting Dapps. Ether, on the other hand, represents the native cryptocurrency of the Ethereum network. While Ethereum is the operating system, ether is the fuel that powers it. This distinction is crucial for understanding the relationship between the Ethereum ecosystem and its unit of currency.

Introduction to Ethereum

Ether in Dapps

Ether needed for creating smart contracts

Smart contracts are self-executing agreements with predefined conditions stored on the Ethereum blockchain. To create a smart contract, users need to write the contract code and deploy it onto the Ethereum network. This deployment process requires a certain amount of ether to cover the computation and storage costs associated with executing the smart contract. The amount of ether required can vary based on the complexity and resource requirements of the contract.

Using ether to deploy and execute smart contracts

Ether is also necessary when interacting with and executing smart contracts. Every operation performed on a smart contract, such as updating data or triggering specific functions, requires a certain amount of gas. Gas fees, paid in ether, ensure that the necessary computational resources are allocated and incentivize network participants to process these operations. Ether, therefore, serves as both a means of payment and a resource allocation mechanism within the Ethereum ecosystem.

Introduction to Ethereum

Subdivisions of Ether

Understanding wei as the atomic unit of ether

Wei is the smallest subdivision of ether, representing the atomic or indivisible unit. One ether is equivalent to 10^18 wei. Wei is named after Wei Dai, a cryptographer known for his contributions to cryptography and his involvement in the creation of cryptocurrencies. While wei is not frequently used in everyday transactions, it serves as a fundamental unit for precise calculations and is an essential part of the Ethereum ecosystem.

Tools for converting between wei and ether

Converting between wei and ether is necessary when dealing with smaller or larger amounts of ether. Various tools and libraries are available that simplify this conversion process. These tools allow users to input a value in either wei or ether and obtain the corresponding value in the other unit. They take into account the decimal places and the magnitude difference between wei and ether, ensuring precise and accurate conversions.

Commonly used units of ether

Beyond wei, there are several commonly used units for representing different amounts of ether. The most commonly known units include gwei (gigawei), which is equivalent to 10^9 wei, and finney, which represents 10^3 gwei. Other units, such as szabo (10^6 gwei) and ether itself, are also used in specific contexts. These units provide users with a convenient way to express ether values in more manageable and readable terms.

Introduction to Ethereum

Creation of Ether

Distribution of new ether to nodes

New ether is not created through a central authority or a pre-mined supply. Instead, it is distributed to network participants as a reward for contributing computational power and maintaining the security and integrity of the Ethereum blockchain. This distribution is achieved through a process called mining, which involves solving complex mathematical puzzles to validate and add new blocks to the blockchain. Miners who successfully mine a block are rewarded with a certain amount of ether.

Mining as the process of creating ether

Mining on the Ethereum network serves two primary purposes: verifying transactions and creating new ether. Miners compete to solve computationally intense problems, known as proof-of-work puzzles, to secure the network and add blocks to the blockchain. This process requires substantial computational power and energy consumption, as miners use their hardware resources to perform countless calculations. Successful miners are rewarded with a block reward, which includes newly created ether, as an incentive for their efforts.

Introduction to Ethereum


Ether serves as the unit of currency within the Ethereum network, enabling transactions, executing smart contracts, and powering decentralized applications. Its value and utility extend beyond traditional currencies, as it represents participation in a decentralized ecosystem and serves as the basis for resource allocation in the Ethereum network. Understanding ether’s role, subdivisions, and creation process is essential in comprehending the mechanics and potential of the Ethereum platform as a whole.

I am Jesse, The head author and writer at, the go-to resource for all your crypto capital news. As the tagline suggests, I provide in-depth analysis, breaking down complex blockchain mechanisms, market trends, and the socio-economic impacts of cryptocurrencies. If you're new to the crypto scene, my beginner guides will take you from novice to knowledgeable in no time. Stay up to date with real-time news from the ever-evolving cryptocurrency markets and engage with a community of like-minded individuals through our forum discussions and events. With expert reviews, a comprehensive resource library, and a focus on security and privacy, Mutual Capital Crypto is your trusted source for all things crypto.