Travis Patron is a digital money researcher and instructor of the Ethereum Technology Course. Here he explains why he believes the smart contracting innovation enabled by Ethereum could unlock a new frontier in Internet innovation.
Since the beginning of 2016, those with a pulse on the digital currency industry have eagerly watched the development of next-generation cryptocurrency platform Ethereum.
As a relatively new development utilizing bitcoin technology, Ethereum aims to implement a globally decentralized, un-ownable, digital computer for executing peer-to-peer contracts. Put more simply, Ethereum is a world computer you can't shut down.
This combination of cryptographic architecture and Turing completeness could enable entirely new industries to spawn. In turn, traditional business models, occupying the role of middleman, could increasingly feel the pressure to innovate or face irrelevance.
Such an innovation, proponents say, could eliminate censorship, fraud, and the role of the third party in online collaboration.
The Ethereum virtual machine
The Ethereum virtual machine (EVM) refers to part of the protocol that handles internal state and computation. It is often referred to as the project's defining innovation over other blockchain-based systems.
By taking the cryptographic payment structure of bitcoin and adding a Turing complete scripting language, Ethereum is attempting to create the most viable tool for executing smart contracts using blockchain technology.
The term "Turing complete" here means a system capable of performing any logical step of the computational function.
What differentiates Ethereum from bitcoin is that it doesn't stand first to be a payment system, but rather a computing platform.
The cryptocurrency that runs Ethereum's blockchain, ether, acts as a sort of fuel to power the engine of this computing platform. Ether is consumed by miners for accessing resources of the network.
The more ether a user holds, the more "gas" they can pump into the computational engine of the Ethereum virtual machine.
One of the defining features of the 21st century corporation is populating the role of the employee with machines rather than humans.
Bitcoin is one of the first models of such a corporation. The miners of the bitcoin network can be seen as employees rather than as humans were in the traditional corporate model.
Ethereum takes this development one step further. Interestingly, the role of the customer (which is currently populated by humans) stands to be overtaken by machine functionality as smart contracting systems enable end-to-end payments without requiring a human initiator.
What Ethereum will help facilitate is an economy of interconnected devices where machines can transmit money and data in a manner dwarfing the efficiency of human input. Businesses which overlook this trend will pay dearly due to new supply channels which disintermediate the old world's third party infrastructure.
In a business landscape where corporations run autonomously, analog money will continue to be dumped in favor of digitized money.
The consumer of today has come to expect instantaneous, global, and friction-free payments. Nearly half of millennials are anticipating tech startups to disrupt the legacy banking sector, and although there remains much progress to be made, advances in cryptocurrency (and smart contracting) will enable a velocity of money which moves toward the esteemed ideal of conducting business at the speed of thought.
Ethereum today is where bitcoin was in 2010 – raw infrastructure, lack of developers, and plenty of skeptics. Competitors, such as Rootstock, add legitimacy to the use case Ethereum is attempting to bring to market.
From trustless crowdsales to democratic organizations, smart contracting platforms could unlock a new frontier in Internet-enabled innovation.
Image via Ethereum