What is Ethereum? Ethereum is a decentralised platform that lets developers build and run applications without any central authority controlling them. Launched in 2015 by Vitalik Buterin and a team of co-founders, Ethereum introduced the concept of “smart contracts” to the blockchain world, programs that automatically execute when certain conditions are met, without needing a middleman.
While Bitcoin was designed primarily as digital money, Ethereum was built as a programmable blockchain. Think of it as the foundation layer that thousands of other projects are built on top of, from decentralised finance (DeFi) platforms to digital art marketplaces (NFTs) to gaming applications.
Ether (ETH) is the cryptocurrency that powers the Ethereum network. When people say they’re “buying Ethereum,” they’re technically buying ETH. It’s currently the second-largest cryptocurrency by market capitalisation, behind only Bitcoin.
Ethereum at a glance (last updated April 2026)
Price: ~$3,360 AUD | Market cap: ~$402 billion AUD | Circulating supply: ~120 million of 120 million total
How Does Ethereum Work?
Ethereum shares some fundamentals with Bitcoin, both use blockchain technology, but it goes much further by being programmable.
The blockchain. Like Bitcoin, Ethereum uses a blockchain to record every transaction. But Ethereum’s blockchain can also store and execute code, which makes it far more versatile than a simple payment ledger.
Smart contracts. This is what makes Ethereum special. A smart contract is a program stored on the blockchain that runs automatically when predefined conditions are met. Imagine a vending machine: you put in the right amount, and the product comes out automatically. No shop assistant needed. Smart contracts work the same way but for financial transactions, agreements, insurance payouts, and much more.
The Ethereum Virtual Machine (EVM). Every Ethereum node runs software called the EVM, which processes smart contracts. This means the entire network acts as one massive, decentralised computer that anyone can use but no single entity controls.
Gas fees. Every action on Ethereum costs a small fee called “gas.” Gas fees compensate the validators who process and verify transactions. When the network is busy, gas fees go up. When it’s quiet, they drop. Think of it like surge pricing for a ride-share service.
Proof of Stake. Since “The Merge” in September 2022, Ethereum uses Proof of Stake (PoS) to secure the network. Instead of miners using energy-intensive computers (like Bitcoin), Ethereum validators lock up (or “stake”) their ETH as collateral. This reduced Ethereum’s energy consumption by over 99%.
A Brief History of Ethereum
Ethereum’s evolution from a whitepaper idea to the world’s most-used blockchain has been defined by constant innovation.
2013: The whitepaper. Vitalik Buterin, then just 19 years old, published the Ethereum whitepaper proposing a blockchain that could run any program, not just process payments. It was a radical idea that attracted developers and investors worldwide.
2014: The crowdfund. Ethereum raised about $18 million in a public crowdsale, one of the earliest and largest token sales in crypto history. Development began in earnest with a global team of co-founders including Gavin Wood, Joseph Lubin, and Charles Hoskinson.
2015: Ethereum goes live. The Ethereum mainnet launched on 30 July 2015. For the first time, developers could deploy smart contracts on a public blockchain, opening the door to an entirely new category of applications.
2017: The ICO boom. Ethereum became the platform of choice for Initial Coin Offerings (ICOs), where new projects raised funds by issuing tokens on the Ethereum blockchain. This drove massive adoption and pushed ETH above US$1,000 for the first time.
2020: DeFi summer. Decentralised finance applications exploded on Ethereum, letting people lend, borrow, trade, and earn interest without banks. Total Value Locked (TVL) in DeFi protocols surged from under US$1 billion to over $15 billion in months.
2021: NFTs go mainstream. Non-fungible tokens captured global attention, with digital art selling for millions. Platforms like OpenSea, built on Ethereum, became household names. ETH reached an all-time high above US$4,800.
2022: The Merge. On 15 September 2022, Ethereum completed “The Merge,” transitioning from Proof of Work to Proof of Stake. This was one of the most ambitious upgrades in blockchain history, reducing the network’s energy usage by over 99% overnight.
2024: Dencun upgrade and spot ETFs. The Dencun upgrade in March 2024 introduced “blob” transactions, dramatically reducing costs for Layer 2 networks built on Ethereum. The SEC also approved spot Ethereum ETFs, giving traditional investors a regulated way to gain exposure to ETH.
2025: Pectra and Fusaka upgrades. In May 2025, the Pectra upgrade brought account abstraction (making wallets smarter and easier to use), raised the maximum validator stake to 2,048 ETH, and expanded blob throughput for Layer 2 scaling. In December 2025, the Fusaka upgrade further boosted scalability by expanding blob capacity and increasing the block gas limit.
Where things stand today. Ethereum remains the dominant smart contract platform, hosting the vast majority of DeFi applications, NFT marketplaces, and Layer 2 networks. With a market cap exceeding US$264 billion, it continues to evolve through regular protocol upgrades.
Why Do People Buy Ethereum?
People invest in Ethereum for reasons that go beyond simply holding a digital currency.
The platform behind the ecosystem. Ethereum isn’t just a coin, it’s the foundation that thousands of applications are built on. When those applications grow, demand for ETH grows with them, because ETH is required to pay for every transaction on the network. It’s like owning the land that an entire city is built on.
Staking rewards. Since the move to Proof of Stake, ETH holders can “stake” their tokens to help secure the network and earn rewards in return, similar to earning interest on a savings account. Current staking yields typically range from 3-5% annually.
Deflationary mechanics. Since the EIP-1559 upgrade in 2021, a portion of every gas fee is permanently “burned” (destroyed). During periods of high network activity, more ETH can be burned than is created, making ETH deflationary. This is sometimes referred to as “ultrasound money.”
Growing institutional interest. The approval of spot Ethereum ETFs in 2024 opened the door to institutional capital. Asset managers, superannuation funds, and publicly listed companies can now hold ETH through regulated financial products, adding legitimacy and increasing demand.
Smart contract dominance. Despite competition from newer blockchains, Ethereum still hosts the largest developer community and the most Total Value Locked in DeFi. Network effects are powerful in crypto, and Ethereum’s first-mover advantage in smart contracts has proven difficult to replicate.
Accessibility. Like Bitcoin, you don’t need to buy a whole ETH. You can purchase a fraction, even just $10 worth, through an Australian exchange like Digital Surge.
Is Ethereum Safe?
The Ethereum network is battle-tested. It has been running since 2015 and processes millions of transactions daily. The Proof of Stake consensus mechanism requires attackers to control a massive amount of staked ETH to compromise the network, making attacks economically impractical.
Smart contract risks are real. While the Ethereum network itself is secure, individual smart contracts (the apps built on top) can have bugs or vulnerabilities. This is why it’s important to use well-audited, established applications and never invest more than you can afford to lose in DeFi protocols.
Use a reputable exchange. Buying and holding ETH on a trusted Australian exchange like Digital Surge, which is registered with AUSTRAC and offers two-factor authentication (2FA) and cold storage, is the safest approach for beginners.
Volatility applies. Like all cryptocurrencies, ETH’s price can be volatile. Consider a long-term perspective and only invest what you’re comfortable holding through market cycles.
Ethereum and Tax in Australia
In Australia, the ATO treats Ethereum and other cryptocurrencies as property for tax purposes, not currency. This means:
Capital gains tax (CGT) applies when you sell, trade, or exchange ETH. If you hold for more than 12 months, you may be eligible for a 50% CGT discount.
Staking rewards are taxable income. If you earn ETH through staking, those rewards are considered ordinary income at the time you receive them, valued at the market price on the day of receipt.
Buying and holding is not a taxable event. You only trigger a tax obligation when you dispose of your ETH.
Keep records. Track your purchase price, date, sale price, and any fees. Digital Surge provides transaction history that makes this easier, and you can connect your account to crypto tax tools like CoinTrack to automate the process.
How to Buy Ethereum in Australia
Buying Ethereum in Australia is straightforward with the right platform. Here’s how it works on Digital Surge:
1. Sign up. Create your free account in minutes. You’ll need to verify your identity (a standard KYC requirement under Australian law). It’s quick and secure.
2. Deposit AUD. Transfer Australian dollars to your account via bank transfer, PayID, or other supported payment methods. There are no deposit fees on Digital Surge.
3. Buy Ethereum. Search for ETH, enter the amount you’d like to buy and confirm your purchase. You can buy as little as $10 worth.
4. Hold or transfer. Your Ethereum is safely stored in your Digital Surge account, or you can transfer it to your own personal wallet if you prefer to self-custody.
Creating an account only takes a few minutes, claim your bonus ETH here
Frequently Asked Questions
Is Ethereum the same as Ether?
Not exactly. Ethereum is the name of the blockchain platform. Ether (ETH) is the cryptocurrency that runs on it. In everyday conversation, people use “Ethereum” to refer to both, but technically Ethereum is the network and ETH is the token.
What’s the difference between Bitcoin and Ethereum?
Bitcoin was designed primarily as digital money, a store of value and medium of exchange. Ethereum was designed as a programmable platform for building decentralised applications. Bitcoin has a fixed supply of 21 million coins. Ethereum has no hard cap but has deflationary mechanics that can reduce supply over time. Both are valuable for different reasons.
What are smart contracts?
Smart contracts are self-executing programs stored on the Ethereum blockchain. They automatically carry out actions when specific conditions are met, without needing a middleman. For example, a smart contract could automatically release payment to a freelancer once both parties confirm the work is complete.
What is staking?
Staking means locking up your ETH to help validate transactions on the Ethereum network. In return, you earn rewards (similar to interest). It’s how Ethereum’s Proof of Stake system keeps the network secure without energy-intensive mining.
Can I lose money with Ethereum?
Yes. ETH’s price is volatile and can go down as well as up. Additionally, interacting with DeFi protocols or unaudited smart contracts carries its own risks. Only invest what you’re comfortable potentially losing and stick with reputable platforms.
What are Layer 2 networks?
Layer 2s are separate blockchains built on top of Ethereum that process transactions faster and cheaper, then settle back to Ethereum for security. Popular examples include Arbitrum, Optimism, and Base. They benefit from Ethereum’s security while offering lower fees for everyday use.
DISCLAIMER: The information in this blog is for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser. No material contained within this website should be construed or relied upon as providing recommendations in relation to any legal or financial product.
