Definition
Ethereum is a decentralized computing platform and blockchain that executes arbitrary programs—called smart contracts—on a global network of validator nodes. Proposed by Vitalik Buterin in 2013 and launched in 2015, Ethereum extended Bitcoin’s ledger model from simple value transfers to programmable transactions, enabling an ecosystem of decentralized applications (dApps), decentralized finance (DeFi), non-fungible tokens (NFTs), decentralized autonomous organizations, and identity systems.
Ethereum transitioned from proof-of-work to proof-of-stake consensus in September 2022 (“The Merge”), reducing the network’s energy consumption by approximately 99.95%. Under proof-of-stake, validators stake a minimum of 32 ETH (approximately $96,000 at March 2026 prices) as collateral, and are selected to propose and attest blocks based on the size and duration of their stake.
Why It Matters
Ethereum is the most widely used smart contract platform by a significant margin. As of early 2026, Ethereum hosts over $50 billion in total value locked (TVL) in DeFi protocols (DefiLlama), processes approximately 1.1 million transactions per day on Layer 1, and secures more than 900,000 active validators. The Ethereum Virtual Machine (EVM) has become the de facto standard for smart contract execution, with over 20 other blockchains (Polygon, Arbitrum, Optimism, BNB Chain, Avalanche) implementing EVM compatibility.
For identity and authentication, Ethereum’s significance extends far beyond financial transactions. The EIP-4361 standard—Sign-In with Ethereum (SIWE)—defines a protocol for using an Ethereum wallet to authenticate to any web application, replacing email-and-password login with a cryptographic signature. This creates a universal, self-sovereign identity layer: the user controls a private key, the application verifies a signature, and no centralized identity provider is involved.
The Ethereum address (derived from the public key via Keccak-256 hash) serves as a pseudonymous identifier that can interact with any SIWE-compatible application without creating accounts, providing emails, or trusting intermediaries.
How It Works
Ethereum operates through several interconnected systems:
Accounts: Ethereum has two account types. Externally Owned Accounts (EOAs) are controlled by private keys held by users. Contract accounts are controlled by smart contract code. Each account has an address, a balance, and (for contracts) executable code.
Transactions: Users create transactions that transfer ETH, deploy contracts, or call contract functions. Transactions are signed with the sender’s private key, broadcast to the network, and included in blocks by validators.
Ethereum Virtual Machine (EVM): Smart contracts compile to EVM bytecode and execute deterministically on every validator. The EVM is a stack-based virtual machine that guarantees identical execution across all nodes, regardless of hardware.
Gas fees: Every computation on the EVM costs gas—a unit of computational effort. Users specify a gas price and gas limit; validators prioritize transactions with higher gas prices. This mechanism prevents infinite loops and allocates scarce block space.
Consensus: Under proof-of-stake, each slot (12 seconds) has a randomly selected block proposer and a committee of attesters. Finality is achieved after two epochs (approximately 12.8 minutes), after which a block cannot be reverted without at least one-third of all staked ETH being slashed.
Layer 2 scaling: To address throughput limitations (~15 TPS on Layer 1), Ethereum relies on rollups (Optimistic and ZK) that execute transactions off-chain and post compressed proofs to Layer 1, achieving thousands of TPS while inheriting Ethereum’s security.
Stealth Cloud Relevance
Ethereum is the identity layer of Stealth Cloud. Ghost Chat users authenticate via Sign-In with Ethereum (SIWE), connecting their wallet (MetaMask, WalletConnect, Coinbase Wallet, Rainbow) and signing a challenge message to prove control of their address. No email. No password. No phone number.
Stealth Cloud stores only a hash of the wallet address—not the address itself—meaning that even the pseudonymous identifier is one-way transformed. The wallet serves as both authentication credential and governance identity: as Stealth Cloud progresses toward DAO governance, the same wallet used to manifest into Ghost Chat will be used to vote on protocol decisions.
Related Terms
The Stealth Cloud Perspective
Ethereum gave the web a native identity layer that no corporation controls. Stealth Cloud builds on that layer because the only authentication model compatible with zero-knowledge infrastructure is one where the identity provider is a private key, the verification method is mathematics, and no intermediary ever learns who is on the other side.