Digital assets
Ethereum: ether, contracts and gas
Ether is the native asset of the Ethereum network. Tokens issued by contracts on that network are different assets. Holding ether is not a share of the applications people build, and it is not a bank deposit.
- Asset
- Ether is native to Ethereum. Contract tokens are separate.
- Consensus
- Proof of stake since the Merge in September 2022.
- Gas
- The fee for computation. The base fee is burned. A tip can go to the validator.
- Supply
- No 21 million cap. Issuance and the burn both move the outstanding amount.
- Staking
- Locked ether supports validation. A quoted reward is not interest.
- Risk
- Price, contract bugs, bridges, slashing and custody are different risks.
The network, the coin and the tokens
Ethereum is a network whose rules let accounts and programs hold and move assets. Ether is the coin that network uses to pay for that work. A token is usually issued by a program, a smart contract, on Ethereum or on another network. Stablecoins, governance tokens and tokenised claims are examples of that second group. They are not ether, even when a wallet shows them on the same screen.
The coin-or-token split on the crypto markets page is a practical description. It is not a legal classification. Ether is in the coin column because it is native to Ethereum. A token in the other column depends on a host network staying available and on the contract behaving as written.
Accounts and smart contracts
Ethereum uses accounts. A transaction can move ether between accounts or call a contract. A contract is code stored on the network. It can hold assets and release them when its conditions are met. The code does what it does, including when that differs from the description on a website. There is no protocol-level help desk that unwinds a call you signed.
Bitcoin, by contrast, is built around spending outputs rather than around general programs. That is why ether and bitcoin are both called coins and still do different jobs.
How gas is charged
Gas measures how much computation and storage a transaction asks for. The fee has two ideas that matter. A base fee, introduced with the fee-market change in 2021, is burned: it is destroyed rather than paid to a miner or validator. A priority tip can be paid to the validator who includes the transaction. Both respond to demand. A busy period can make a simple transfer expensive. The fee is denominated in ether and is separate from an exchange’s commission.
This page does not quote a live gas price. A number on a wallet is a quote for that moment, on that route, and it can change before the transaction is included.
Base fee
Set by demand for block space and burned. It is not income to a validator.
Priority tip
An optional payment to be included sooner. It is part of the cost, not a feature of the asset.
Exchange fee
A platform’s trading or withdrawal charge. It can sit on top of gas when you move funds.
Proof of stake and the Merge
Until September 2022, Ethereum ordered blocks with proof of work, as Bitcoin still does. The Merge switched Ethereum’s consensus to proof of stake. Validators lock ether and take part in proposing and attesting to blocks. Some rule-breaking can be penalised by reducing that stake, which the protocol calls slashing. A 2023 upgrade opened withdrawals of staked ether. A withdrawal is a protocol process with a queue. It is not the same as selling on an exchange, and it is not instant in every case.
A staking reward is defined by the protocol or by a firm’s programme. It can change. It is not interest on a deposit, and a quoted figure is not income you are owed. Locking ether means you may not be able to sell it at the moment you want.
Issuance and the burn
Ether does not have a 21 million cap. The protocol issues new ether to validators. It also burns the base fee. When the burn is larger than issuance, the outstanding supply falls. When issuance is larger, supply rises. Which of those happens depends on network use. It is not a permanent feature, and it does not set the next price. This page does not state a live circulating supply.
Tokens that depend on Ethereum
A contract can issue a fungible token, a common pattern being the interface often called ERC-20, or a non-fungible token. The token’s rules are the contract’s rules: who can mint, pause, or upgrade. Ether pays the gas. The token is the asset the contract accounts for. A fiat-referenced stablecoin, a governance token and a tokenised claim can all sit in this group. Their legal rights, if any, come from the issuer and the law, not from the fact they are visible in an Ethereum wallet.
Owning the token does not mean you own ether, and owning ether does not mean you own the applications people use it to pay for.
Mainnet, rollups and bridges
People also use other systems that post data or proofs back to Ethereum, often called rollups or layer 2. A balance on one of those systems is not the same operational object as ether on Ethereum mainnet. Moving between them usually means a bridge or a native exit. Bridges have been a common point of loss. A familiar logo on a bridge is not a check of the contracts.
Who can move the ether
The same custody split as bitcoin applies, with an extra layer. Self-custody means you sign. An exchange balance is a claim on the firm. A staking service or a liquid staking token adds another contract and another party. A liquid staking token is not ether. It is a claim on a staking arrangement, and the contract can fail, pause, or trade away from the ether it refers to.
Owning ether and trading a price
Direct ether, an exchange balance, a staking position, a token that represents a staking position, an exchange-traded product, a future and a CFD are different claims. Some countries restrict which of these can be sold to retail customers. The UK FCA has restricted the sale of crypto-asset derivatives, including CFDs, to retail consumers. A website that loads is not permission in your country.
You hold the keys to an Ethereum account. You pay gas to move it. A signed call to a contract can also move other tokens in that wallet. Read what you are signing.
Risks, kept in separate lists
Ether’s price can fall sharply. Separately, a contract can be buggy, an oracle can be wrong, a bridge can be drained, a validator can be slashed, and a staking queue can stop you exiting when you want. An exchange can fail. A derivative can be leveraged and closed. None of these is cured by activity on the network. Usage is not an investment value.
The asset
Price, liquidity and the chance of a long drawdown.
The contracts
Bugs, admin keys, upgrades, oracles and bridges. These attach to applications and to many tokens.
The wrapper
Custody, staking terms, fund structure and leverage. Read which one the document creates.
Ether beside bitcoin
Both are native coins of their own networks. Bitcoin’s design is a transfer ledger secured by proof of work, with a hard issuance cap. Ethereum’s design is a shared computer secured, since 2022, by proof of stake, with issuance and a burn that can move supply either way. Choosing between them is not a task this page will do. The table is the distinction.
| Question | Bitcoin | Ether |
|---|---|---|
| What it is | The native asset of the Bitcoin network. | The native asset of the Ethereum network. Tokens issued by contracts are separate assets. |
| What the asset pays for | Space in a Bitcoin block, as a transaction fee. | Computation and storage on Ethereum, called gas. |
| Consensus | Proof of work. Miners expend computation to propose blocks. | Proof of stake since the Merge in September 2022. Validators lock ether. |
| Supply rule | A cap of 21 million. The block subsidy halves every 210,000 blocks. | No fixed cap of that kind. New ether is issued to validators. The base fee is burned. |
| Ledger shape | Unspent outputs. A transaction spends old outputs and creates new ones. | Accounts. A transaction changes account balances or calls a contract. |
| Other assets on the chain | The protocol accounts for bitcoin. A fork can create a different asset. | Contracts can issue tokens. Those tokens depend on Ethereum and are not ether. |
Questions before treating the name as the holding
- Is this ether, a token on Ethereum, or a product that only refers to a price?
- Who can sign today, and which network is the withdrawal actually on?
- If a contract is involved, who can upgrade or pause it?
- Is any quoted reward a protocol figure, a firm’s programme, or a number that can change?
- What is locked, and how does an exit work?
- Which fee is gas, and which fee is the platform’s?
- Could the price go to zero? Treat that as possible until a document gives you a claim that survives it.
Working through the list does not make an asset or a provider suitable. It separates the network from the product in front of it.
Questions
What is Ethereum?
Ethereum is a network that records accounts and programs. Those programs, called smart contracts, can hold and move assets when their conditions are met. The network’s native asset is ether.
What is ether?
Ether is the coin used to pay for computation on Ethereum. It is not a share of the people who build applications, and it is not a token those applications issue. The market price is what a buyer will pay on a given venue.
How is ether different from a token?
Ether is native to Ethereum. A token is issued by a contract and follows that contract’s rules. A stablecoin or a governance token can be transferred on Ethereum and still be a different asset, with a different issuer and different failure modes.
What is gas?
Gas is the fee for the work a transaction asks the network to do. Part of it, the base fee, is burned. A tip can go to the validator who includes the transaction. The amount changes with demand and is separate from an exchange commission.
What changed in the Merge?
In September 2022 Ethereum stopped using proof of work and began ordering blocks with proof of stake. Validators lock ether instead of miners expending computation. The change did not turn ether into a deposit or a share.
What is staking?
Staking locks ether so a validator can take part in consensus. The protocol can pay a variable reward and can reduce the stake for some failures. A firm’s staking programme adds that firm’s terms. The figure is not interest.
Can staked ether be withdrawn?
A 2023 upgrade opened protocol withdrawals. They go through a queue. That is different from selling ether on an exchange, and a staking token may add its own delay or a market price of its own.
Does ether have a fixed supply?
No cap comparable to bitcoin’s 21 million is part of the protocol. New ether is issued to validators and the base fee is burned. Outstanding supply can rise or fall with use. Neither direction is a forecast, and neither sets the price.
What is a rollup?
A rollup is a separate system that posts data or proofs to Ethereum. A balance there is not the same as ether on mainnet until it is withdrawn through that system’s process. Bridges between systems have failed.
How is Ethereum different from Bitcoin?
Bitcoin is a proof-of-work transfer ledger with a hard issuance cap. Ethereum is a proof-of-stake network for accounts and contracts, and ether pays for their execution. Both prices can fall. The technology does not rank them.
What happens if a contract fails?
Assets the contract holds can be lost, frozen or redirected if the code allows it. That risk attaches to the contract and to tokens it controls. It is separate from the market price of ether, and the protocol does not refund it.
Are Ethereum products available everywhere?
No. Spot access, staking services, funds and derivatives each depend on the country and the legal entity. The UK restricts the sale of crypto derivatives to retail consumers. A visible site is not a local permission.
Related
Sources and review
Written by: WiT Markets Editorial. Writes and structures WiT Markets pages. Separates a sourced fact from a cell that is Not confirmed.
Review: Editorially reviewed. This is not a qualified specialist review and it is not a legal sign-off.
Last reviewed: . Next review due . The date is an editorial pass. It is not a live check of every third-party fee.
Regulatory and official sources
- Financial Conduct Authority — checked 13 October 2026
- U.S. Securities and Exchange Commission — checked 13 October 2026
- Investor.gov — checked 13 October 2026
- European Commission — crypto-assets and MiCA — checked 15 October 2026
- European Securities and Markets Authority — checked 13 October 2026
- U.S. Commodity Futures Trading Commission — checked 14 October 2026
Methodology. Editorial policy. Corrections. Report an error.