Ethereum could transform entire industries

October 15, 2016 by

Ether, the system’s currency unit, once hyped to a value of $1bn (though it has stooped down slightly from this figure). But its uses are widespread when compared to Bitcoin’s, and potentially world-changing.

Let’s first peep into a little history: cryptocurrencies basically showcase the fact that a digital ledger of payments, or “blockchain”, can play the role of middlemen in financial transactions instead of a bank. The ledger is checked and updated by its users, is free of cost, has no alliance with a specific country or government, and cannot be censored or mismanaged. In 2013 Vitalik Buterin, a 19-year-old Russian programmer, posted the first proposal for Ethereum on GitHub, a website usually used as a repository for code. He was fascinated by the concept of cryptocurrencies and consequently founded the magazine Bitcoin in 2011 – but now, he claimed that the “distributed consensus” proposed by blockchains can achieve a level beyond currency.

Ken Kappler, who worked at Ethereum in 2015 and current head of business development at Ethcore, informs that the founders’ early speculation began in the world of “altcoins” and cryptocurrency but paced forward. “It gave way to how generically useful the technology could become. Currency is just one thing we no longer have to rely on central record-keeping for.”

On GitHub, Buterin put forward a “Next-Generation Smart Contract and Decentralised Application Platform”, which would make use of blockchain technology to verify and monitor legal contracts, land registries and everything else that would need an objective, third-party record system. Gavin Wood, the system’s co-creator, has described Ethereum as “one computer for the entire planet”. This is because, unlike other systems, it does not operate from a single server and is not localised. Further, it’s so secure that you can’t turn it off, or change the transactional data that has been stored.

It’s a deeply abstract concept, and the aftermaths of this system are not crisp and clear, not even to the developers. When Wood spoke to the first Ethereum developer conference in London last year, he said: “What is Ethereum? We just don’t know.”

Since its launch, Ethereum has been best known for its currency but it is beginning to pave ways into the vast industrial systems. Though in some cases this has been taken up by industry itself; for instance, Microsoft now offers the Ethereum software on its cloud service for use by enterprises and developers. The singer Imogen Heap also released a song that can be purchased using Ether, and has said she hopes that this service of hers will decentralise the music industry and help in modernization involving use of smart contracts and payments.

The best perspective to visualize the concept of Ethereum, and blockchain technology in general, is as a kind of crypto-law, which can help us overlook the processes we have trusted upon since ages. It can be objectified as “disruptive” in a sense that it has the capacity to replace the industries we use to oversee finance, many aspects of law, and the vending and sale of products.

And yet, as with Bitcoin, Ethereum’s potential is tied to uptake among users. A 2015 Coindesk survey of roughly 4,000 Bitcoin users found that they were overridingly male, 25-34 years old, and living in the US or Europe. This says that new, challenging technologies can be slow to become mainstream.

Blockchain technology completely depends on customer trust. Both Bitcoin and Ethereum want us to trust them more than the manpowered institutions we have been using till date, because this technology is free from all sorts of human errors, biasness or corruption. Yet it may be some time before the average person is willing to take this as gospel truth.

Consequently, integration into highly reputed companies of today may be the easiest way forward for Ethereum. Its uptake by Microsoft, as an example, has already had a positive impact elsewhere and, has crucially increased its overall value. Ironically, for a radically decentralised system that could overturn modern capitalism, Ethereum may find that its early integration into society a little complex and topsy-turvy.

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