Ethereum: More Than Just A Currency

Please note: this article was originally published on 2017-07-06. We are in the process of adding our historical content to Steemit to ensure that it is as complete as our official blog and Medium.

Welcome to the Blockmason blog! Over the next several weeks, we will be rolling out a series of articles and applications explaining our view of the Ethereum ecosystem, and examining the ways in which we believe we can leverage blockchain technology to improve our daily lives, address societal inefficiencies, and foster global change.

Now, to the content!

These days, everyone and your mother are talking about Ethereum, but why?

If you’re new to Ethereum, then you likely came across the platform because of the staggering returns on investment in the network’s eponymous cryptocurrency, Ether. Over the last year, the dollar value of Ether has increased almost 2000%, even after a significant devaluation last week. Due to this enormous jump in value, media coverage of Ethereum’s development has largely focused on the financial implications of its currency, associating Ether with other prominent cryptocurrencies such as Bitcoin, Litecoin, and Monero. Because the monetary conversion rates of such currencies are inherently volatile, the coins are particularly attractive for daytrading on exchange platforms like Poloniux, Kraken, and GDAX (a subsidiary of Coinbase)

However, it is important to remember that Ethereum is a network with capabilities far greater in scope than the simple exchange of currency.

Yes, a sudden interest in cryptocurrencies has driven up their value. For those who began mining popular cryptocurrencies before the recent boom, the last year has been a windfall, dragging more than one introverted computer geek from his mother’s basement to the tumultuous throes of wealth.

The question is, what happens to those new-money-nerds now? Everyone can daydream about such fantastic turns of fortune, but Ethereum is more than just a lottery ticket; it is a system by which a colossal array of transactions can be executed in a decentralized and secure fashion. Such a network can potentially transform industries from banking and finance to medicine, insurance, governance, and the arts. Rather than just sit on their sudden riches, those who become involved with Ethereum now have the opportunity to help build what is potentially one of the most revolutionary systems of the early 21st century. The tremendous implications of a fully realized Ethereum Network are quite literally not yet imagined.

What are Ethereum’s possibilities, and what is its current functionality?

At the moment, the Ethereum Network’s functionality is quite limited. It is for this reason, perhaps, that so many news outlets focus on Ethereum’s relationship to finance and cryptocurrency in general. There just aren’t many usable applications running on the network, and even fewer relevant to the world beyond our computer screens. For now, the burgeoning market for Ethereum-based companies and decentralized applications (DApps) utilizing Ethereum has largely revolved around user interface, security, finance, and the functionality of the network as whole. These DApps facilitate transactions or create scaffolding for the relatively unstructured network, which right now resembles the lawless adventurism of the Wild West.

One prominent example is Oraclize, which facilitates the movement of information between the internet and the blockchain, providing data for “smart contracts” via nodes known as oracles. Another, Digix.io, has created a digital token linked to physical gold bullion, allowing the secure, instantaneous, and transparent exchange of material assets in a digital marketplace. Most recently, application developers Status raised over $100 million during their Initial Coin Offering (ICO) on the wings of a functional mobile browser to interact with DApps on smartphones. Few of these projects are sexy, but all are integral to the long-term development of the Ethereum ecosystem.

Soon, however, we will see DApps with far greater potential for fostering long-term social change. A good bet would be that such protocols could revolve around issues of identity, verification, reputation, and information sharing. This is due to the odd coupling of the internet’s inherent anonymity with Ethereum’s enabling transactions that move very large sums of money — two very strange bedfellows. It’s not that the Wild West is going to disappear — but we’ll shortly have a much better understanding of who is shooting which six-shooters and why.

This has a number of fascinating implications, which up to now have been only lightly explored, like a dark river carrying digital frontiersmen into the blockchain jungle. Transparent, manipulation-proof reputation lines may establish systems of global credit, allowing individuals to borrow from non-trusted parties using only the credit lines of confirmed friends and business partners. Identity verification could develop liar-proof social networks and dating applications — a man claims to be an environmental activist, but you can see he’s verified driving a gas-guzzler. Democratization of secure information sharing could revolutionize international collaboration in scientific research, allowing researchers to cooperate without the risk of losing credit for discovering otherwise proprietary information. Whatever the applications, Ethereum is likely to dramatically alter the way we conceptualize economics in the digital age.

“The Future is Now,” but not quite.

In our next article, we will discuss why useful applications such as those mentioned above haven’t yet been developed, and what problems stand in the way of the Ethereum Network realizing its full and significant potential. A number of technical hurdles still await system developers, but the most important question is if and when Ethereum will achieve wide-enough adoption to make feasible applications that require a large number of participants for viability.

In the coming weeks, we will begin to publish regular “Pie-in-the-Sky” articles, which explore the radical possibilities of Ethereum to change our world for the better. Potential avenues include decentralized medical records that enable safe world travel, global social security and insurance that more efficiently distributes risk, and democratized, crowd-funded “treaties” that allow everyday citizens to form large-scale coalitions in support of agreements like the Paris Accord, with or without government support

Certainly, there exist previous technologies touted as “world-changing” that have failed to deliver on their promise. Ethereum’s success is not guaranteed. It is, however, one of the most significant technological developments of the last ten years — a network that dangles utopian dreams before us like a tantalizing fruit. Now, it is up to us to seize them.