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Crypto

What is Ethereum and how is it different from Bitcoin?

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Short answer

Ethereum is a public blockchain that runs programs called smart contracts, which power stablecoins, decentralised exchanges, NFTs and other apps. Its currency, ether (ETH), pays the network's fees. Launched in 2015, Ethereum switched from mining to proof of stake in September 2022. Unlike Bitcoin's fixed 21 million cap, ETH has no hard supply limit; its supply depends on issuance and fees burned.

Ethereum vs Bitcoin

BitcoinEthereum
Main purposeDigital money / store of valuePlatform for smart contracts and apps
Launched20092015
ConsensusProof of work (mining)Proof of stake since Sept 2022
SupplyCapped at 21 millionNo hard cap; some fees are burned
Block timeAbout 10 minutesAbout 12 seconds

What smart contracts do

  • Stablecoins such as USDT and USDC exist largely as Ethereum tokens.
  • Decentralised exchanges let users swap tokens without a company in the middle.
  • Lending and borrowing protocols (DeFi) — often interest-based, which raises Shariah concerns.
  • NFTs and tokenised real-world assets.
  • Layer-2 networks build on Ethereum to make transactions cheaper.

Proof of stake and staking

Since "the Merge" in September 2022, validators lock up ETH as collateral to propose and confirm blocks instead of using mining hardware, cutting Ethereum's energy use dramatically. Holders can "stake" ETH to earn rewards. Many scholars object to staking products that promise a fixed yield, and exchange staking adds custody risk.

Risks

  • Price volatility: ETH has fallen more than 70% from peaks in past cycles.
  • Smart-contract bugs and hacks: billions of dollars have been lost through exploited code.
  • Scam tokens: anyone can create a token; fake projects and "airdrops" are common.
  • Fees: network fees rise sharply when demand is high.
  • Custody: lost private keys or exchange failures cannot be reversed.

Ethereum in Pakistan

As with other crypto, owning ETH is not illegal in Pakistan; firms serving Pakistanis need PVARA approval, gains are taxable income, and the rupee is the only legal tender. The June 2026 Darul Uloom Karachi fatwa covered blockchain-based tokens including Ethereum, while other scholars permit spot holdings. PVARA's chairman has asked for separate Shariah assessments of different blockchain products.

Buying and holding ETH safely

  1. Buy through an exchange that holds a PVARA NOC or licence, paying only from accounts in your own name.
  2. Withdraw long-term holdings to a wallet you control and back up its seed phrase offline.
  3. Before sending, confirm the network: ETH on Ethereum mainnet is different from ETH on layer-2 networks or other chains.
  4. Avoid unknown tokens that appear in your wallet — interacting with them can trigger malicious approvals.
  5. Record the rupee value of each purchase for tax.

Roman Urdu mein jawab

Ethereum kya hai?

Ethereum public blockchain hai jis par smart contracts chalte hain — stablecoins, decentralized exchanges, NFTs. Is ki currency ether (ETH) network ki fees deti hai. 2015 mein launch hua aur September 2022 se mining ke bajaye proof of stake par hai. Bitcoin ki tarah 21 million ki had nahi.

Frequently asked questions

What is gas on Ethereum?

Gas is the fee paid in ETH to process a transaction or run a smart contract. It rises when the network is busy.

Can I mine Ethereum?

No. Since September 2022 Ethereum uses proof of stake, so ETH is no longer mined; validators stake ETH instead.

Is Ethereum a better investment than Bitcoin?

They are different bets: Bitcoin on scarce digital money, Ethereum on a platform for applications. Both are highly volatile; neither suits money you cannot afford to lose.

What is an ERC-20 token?

A standard for tokens on Ethereum. USDT on Ethereum is an ERC-20 token; it can only be sent to wallets that support that network.

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Sources

  1. ethereum.org — The Merge
  2. ethereum.org — What is Ethereum?
  3. ThePrint — Taqi Usmani's cryptocurrency fatwa

This article is general education, not financial, legal or religious advice. Rules change; check the linked primary sources and consult a qualified adviser or scholar before acting. Trading can lose you more than you expect.