Do you want to know how to build a better democracy in under a 100 lines of code? Or what about building your own transparent bank on the blockchain? Well, Ethereum might just be the thing you’re looking for.
And no, it’s not the title of an awful sci-fi novel.
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Ethereum goes under a lot of monikers. Some dub it the “world computer” or a “decentralised app network“. Others simply refer to it as “Bitcoin 2.0“. Whatever it’s called, this exciting online experiment is as thought-provoking as it is ambitious. While still in its infancy, Ethereum is changing the way applications are built and therefore, how organisations operate.
The idea behind Ethereum was initially conceptualised by programmer and co-founder of Bitcoin Magazine Vitalik Buterin in 2013 when he was 18. Unbeknownst to many, Ethereum then quickly became the fourth highest funded crowdfunding projects to date, with opportunists having committed over US$18-million to help bring it to life.
The open-source platform went on to launch in July this year with curious hackers and exciting startups tinkering away with it ever since. New York-based ConsenSys (or Consensus Systems) is one of these companies committing to building decentralised applications.
Asked how he’d explain Ethereum to his grandma, Simon de la Rouviere, who is Engineer of Societies at ConsenSys, says:
Ethereum is a world computer owned by everyone! Anyone can use it by paying a small fee to run their software applications on it.
The small fee he refers to is called ether which, like Bitcoin, is a cryptocurrency used to pay the network for the resources programmes consume. Volunteers earn this ether by validating transactions, securing the network.
The geekier explanation of Ethereum goes as follows:
Ethereum is a decentralised application platform run on blockchain technology. With smart contracts, it allows developers to build applications that run exactly as programmed without downtime, censorship, fraud or third party interference.
But to really understand Ethereum, one has to know the fundamentals of Bitcoin, specifically the blockchain — an open, distributed database which records transactional data.
Read more: How bitcoin is fixing some of the web’s biggest problems
When the digital currency network was first introduced back in 2009, and then popularised in 2013, it triggered two things: firstly, it reinvigorated technical concepts like peer-to-peer, open source and currency or value exchange. Secondly, it readdressed philosophical concepts around organisation such as distributed networks, communities and value. This is where Ethereum comes in. Blockchain technology and decentralised apps have the ability to decentralise power from existing authorities in business, law, and technology to a broad set of stakeholders.
While Bitcoin and Ethereum share some similarities, de la Rouviere points out that their fundamental goals are different. “Bitcoin is supposed to be digital cash,” he explains. “Ethereum is a decentralised application platform.”
“Fundamentally what is happening here is that Ethereum is creating the first decentralised computing infrastructure,” says de la Rouviere. “Ethereum allows the possibility to create smart contracts to disintermediate a lot of other institutions: from local rights organisations to even states.”
“This has massive potential to change a lot about society. It can be very empowering,” he says.
Read more: Could Stellar be the answer to enable financial inclusion around the globe?
Earlier this year, ConsenSys hosted a hackathon where enthusiasts built applications like a censorship-resistant version of Twitter to an easily distributable smart contract system and even a decentralised horse registry.
“For now, a lot of the fundamental building blocks are being taken care of,” says de la Rouviere. “At first, it won’t look that much different to normal web applications. Except you will start being able to use new applications that weren’t possible before.”
De la Rouviere is involved with Ujo, which is a decentralised rights management prototype. Essentially, the system seeks to boost transparency, fairness and profitability within the music industry. This is done by recording all transactions permanently on the blockchain when a song is bought.
Other interesting applications that are currently in the works include peer-to-peer storage platforms which enable you to rent out space on your hard drive in exchange for cash.
Naturally, Bitcoin has received loads of criticisms, ranging from its role in enabling unethical trades to containing an unreliable infrastructure and, of course, the currency’s volatility. At the same time, it’s being rated as one of the highest valued tech industries and the fastest growing. What the future holds for Ethereum, however, remains to be seen. But folks like de la Rouviere remain optimistic. “There’s also been a lot of scepticism if whether Ethereum will actually work. It does, and hopefully, it will continue to do so in the future.”
