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Monday, December 17, 2018
Saturday, December 1, 2018
Conscious computing
Tuesday, May 23, 2017
Etherium
Special Report: The Ethereum Revolution
Ether is the cryptocurrency, and Ethereum is the system on which it runs.
It’s also a powerful system with a world of flexibility.
This is what makes Ether superior to Bitcoin in the eyes of many analysts, technophiles, and investors.
Bitcoin was the original cryptocurrency. It came out of nowhere, popping up on a niche mailing list of cryptography nerds.
“I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party,” a newcomer, calling himself “Satoshi Nakamoto,” said on the thread. The post included a brief description and link to a nine-page academic paper that explains Bitcoin.
To this day, the identity of Satoshi Nakamoto is unknown. But his mark on global finance has been historic.
Beyond Bitcoin itself, Nakamoto’s most crucial contribution was “blockchain” technology.
Blockchain consists of a series of linked blocks or lists. Each block contains a record of time-stamped transactions — who paid whom, how much, and when. These blocks are all mirrored publicly across an open network so anyone can see them.
This new data system allows for transparency since blockchains store transactions and data without any central authority or repository. It’s open to everyone. It’s also failsafe because any one node could explode, but the system — and its data — would remain intact.
But the problem with Bitcoin is that it’s too rigid and limited. The network is capable of processing only seven transactions per second. That may work when there are only a few thousand users but not millions. For the sake of comparison, Visa processes thousands of transactions per second.
Furthermore, developers can’t build apps on Bitcoin. The system’s primary role is to safely transfer value — not to create software or add functions. This is intentional. Bitcoin was deliberately constrained to make it more secure.
Ethereum is somewhat less safe but more flexible.
In addition to creating and housing its rival cryptocurrency, Ether, Ethereum also offers a way to create online markets and programmable transactions known as “smart contracts.”
Ethereum’s Secret Weapon: Smart Contracts
Smart contracts function like software programs that use business logic. Meaning, rules about money transfers, stocks, interest payments, debt, and more. Ethereum also has a built-in programming language that lets anyone build apps on top of it easily.
Dozens of functioning applications have already been built on Ethereum, and hundreds more are being developed.
One app lets farmers sell their produce directly to consumers. Another offers crop insurance that pays farmers if bad weather damages their harvests.
There’s an app for flight insurance. You send Ether to a smart contract and if your flight is delayed, you receive an automatic payout in return. There are games and lotteries, as well. Sports fans can bet on games directly with Ether automatically paid out to the winner as soon as the final score is reported.
There's an app that enables music distribution. And another that allows for a new kind of financial auditing.
Ethereum’s wide-open world of limitless possibilities has caught the attention of Fortune 500 companies like IBM, Microsoft, Wells Fargo, UBS, Samsung, and more.
Samsung and IBM have launched a project to make Ethereum the nexus of the “smart home,” or what’s often called "The Internet of Things.” They’re trying to coordinate all internet-connected devices, like washing machines, televisions, lights, heating, and more over an Ethereum-based network.
The end goal is for devices to maintain themselves autonomously. Home appliances could signal operational problems and retrieve software updates on their own. They could communicate with other nearby devices to facilitate “power bartering” and increase energy efficiency. They could even take over mundane tasks, freeing up more time for people.
For example: According to the company’s research, a Samsung washing machine could recognize it’s low on detergent, order new supplies from a retailer, and use Ethereum smart contracts to pay for it.
Imagine that for a second. You get home from work one day and there’s a package of detergent waiting on your doorstep because your smart washing machine recognized you were out, ordered some more, and paid for it on its own. The same might also be true of the dishwasher or an electronic pet feeder.
That’s the kind of future Ethereum makes possible, and it’s just the tip of the iceberg.
Banks are interested in using blockchain technology to make trading and money transfers faster, safer, and more efficient.
They’re also exploring ways they can use Ethereum to create, manage, and sell new financial products. Bitcoin is simply Bitcoin. But Ethereum could accommodate a vast array of financial derivatives.
Eleven of the world’s biggest banks ran a financial services pilot program last year using Ethereum.
Tech companies are pushing forward with their own Ethereum initiatives, too. Microsoft has been working on several projects that use Ethereum on its Azure computing cloud.
“Ethereum is a general platform where you can solve problems in many industries using a fairly elegant solution — the most elegant solution we have seen to date,” Marley Gray, a director of business development and strategy at Microsoft, tells The New York Times.
Where Did Ethereum Come From?
While no one knows who invented Bitcoin, there’s a face behind Ethereum.
It’s the brainchild of a young, brilliant, and very real programmer by the name of Vitalik Buterin.
Buterin is a 23-year-old coder — a vagabond who lives out of a backpack and crashes on couches wherever he happens to be coding.
He isn’t backed by VC money, and he’s not looking for an overnight windfall. Rather than set himself up for an IPO, he structured his “startup” as a nonprofit foundation based in Zug, Switzerland.
As a teenager, Buterin first wrote blog posts about Bitcoin for a meager sum of five Bitcoins per piece — about $4 per post at the time. When the site went belly up, he started posting teaser paragraphs of new articles in Bitcoin forums, soliciting contributions to finish his post. And in 2011, at the age of 17, he co-founded Bitcoin Magazine with a fellow programmer.
In the years since, the print and online publication has accumulated 1.5 million readers with Buterin writing most of the articles.
All this work came to fruition last year when Buterin released Ether, his cryptocurrency competitor to Bitcoin.
The currency immediately made waves. The value of an individual unit of Ether has soared as high as $12 from around $1. That’s brought the value of all existing Ether to over $1 billion at times, significantly more than any virtual currency other than Bitcoin, which has over $6 billion in value outstanding.
Gaining the attention of technophiles and entrepreneurs, Buterin partnered with Joseph Lubin, a software expert and former hedge fund manager.
Lubin was crucial in helping get Ethereum off the ground, providing much of the initial funding. Now, he runs ConsenSys, a Brooklyn-based incubator that builds Ethereum applications. The group has already hired more than 50 developers and produced hundreds of apps. And ConsenSys is still recruiting programmers to reinvent every major industry from finance, to energy, to healthcare.
Ethereum’s boosters believe the network could someday power a host censorship-free social networks, public utilities, ride-hailing apps, crowd-sourced prediction markets and investment firms, and even governments.
The only thing standing in the way is skepticism.
“The main advantage of blockchain technology is supposed to be that it’s more secure, but new technologies are generally hard for people to trust, and this paradox can’t really be avoided,” Buterin wrote in an email to Fortune. “We have to just live through it.”
It may take some time for Ethereum to gain mainstream acceptance and fulfill its potential. But investors who get in early could reap a substantial windfall.
Call it like you see it,
Nick Hodge
Founder and Publisher
The Outsider Club
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