By now, most individuals who follow the cryptocurrency industry have heard of ethereum. With a market capitalization that has risen over 500% in 2016, the ethereum platform is now more valuable than Ripple and Litecoin combined.
So what is driving this meteoric rise in value? Is this another speculative bubble forming in a 'hot' altcoin? What sets ethereum's protocol apart from other cryptocurrencies entering the cryptofinance space? These are questions I will attempt to answer for you today.
To me, two technical attributes differentiate the ethereum protocol from other cryptocurrencies in existence today. The creators of ethereum went beyond the idea of cryptocurrencies as a digital store of value and created a 'Turing complete' platform that supports smart contracts on a blockchain.
I know, I know... "Turing complete smart contracts on a blockchain" sounds bleeding-edge enough to throw your money at, but what does it really mean? Well after some research, I found that in a 'Turing complete' programming language a developer can create an algorithm to solve any system of rules, states and transitions and lock those rules / conditions into the distributed, trust-less blockchain. Therefore, ethereum essentially allows the creator of a smart contract to define any environment, solve any problem, and govern any community in a completely decentralized and trust-less manner.
The technological innovations available via the ethereum protocol have given rise to a new and innovative online business model coined the 'decentralized application' or Dapp for short. By paying ether to the network of ethereum miners, developers can record Turing complete smart contracts onto the ethereum blockchain. Then anyone can anonymously execute the developer's smart contract by paying the developer a small amount of ether. Complicated I know... but try to conceptualize a self-sustaining, profitable, and potentially artificially-intelligent Dapp existing in perpetuity on the ethereum blockchain.
For instance, imagine the Uber of today, but running autonomously on a distributed network where rules are determined by community consensus. Instead of a room full of eggheads centrally determining the multipliers on Uber rates out of a swanky office in San Francisco, the community of users (drivers and passengers) could determine rates based on supply and demand algorithms written into ethereum smart contracts. Users are then empowered with knowledge of the rules they are playing by, and can trust that their commands will be executed without interference, not a given in today's market economy.
This economic concept of the decentralized application can be applied to any industry that is realizing efficiencies through the internet today. Imagine developing a Dapp capable of independently performing a service / selling a good, governing its community of customers, and collecting payment. All of this without the possibility of ever being shut down. Crazy right?
Enough conceptualizing for now. To evidence the amazing solutions already being developed on the ethereum platform, I've provided a list of my favorite use cases below for your convenience. These Dapps are all currently in development on the ethereum network. I will likely speak on these platforms in greater depth at another date... so consider this your sneak peak.
The immediate launch of these disruptive decentralized applications via the ethereum protocol hints at the likely explosion of coming innovation. The more I research and learn, I truly believe that as the ethereum protocol is continually utilized to develop disruptive and autonomous Dapps, the world will begin to pay close attention to this revolutionary platform. This technology has the potential to empower entrepreneurial citizens across the globe and help society realize economic and social efficiencies never before imagined, similar to the opportunities presented by the internet in 1995.
Tyler Logsdon is a CPA and Registered Securities Representative located in Newport Beach, California. He is actively employed in the blockchain industry.
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