When Bitcoin burst onto the scene in 2009, it challenged preconceived notions about the limitations of transactions. Fast-forward 8 years, and another platform is dominating the headlines. Ethereum has built on Bitcoin’s potential and is driving a revolution in financial transactions.
Ethereum is an open-source platform that facilitates the development of next-generation decentralized applications. It was conceptualized in 2013 by Vitalik Buterin, who at the time was conducting research within the Bitcoin community. Since Buterin’s initial ideation, Ethereum has grown in interest and scale; today it is poised to overhaul open-source development.
Bitcoin opened the world to the possibilities of shared ledgers, and now Ethereum is expanding on that potential. According to Buterin, “Ethereum uses many of the same systems (such as blockchains and peer-to-peer networking) in order to generate a shared-world computing platform that can flexibly but securely run any application users want to code (shared ledgers like Bitcoin included).”
Since Bitcoin’s debut on the world stage, many developers have sought to apply the ideology to new systems similarly underpinned by blockchain technology. However, these iterations failed to impact the tech and financial-services communities because they were limited to a few functionalities.
The intent of Ethereum is to transcend those limitations by creating a blockchain protocol with its own native programming language, which enables any application to be written on top. This structure supports all existing and future applications and lends itself to an environment of constant and immediate development innovation.
Although Bitcoin birthed Ethereum, in the past year, Ethereum has eclipsed its predecessor in terms of future promise. In March 2017, Ethereum’s digital currency, Ether, reached an all-time high of $30, boosting the market cap of Ethereum to $2.57 billion.
Another facet that sets Ethereum apart from Bitcoin is the support Ethereum continues to receive from the financial and technological communities. Companies have recognized the immense power of blockchain technology and cryptocurrency to boost security and efficiency, and they are joining the party. Institutions like Microsoft and JPMorgan have pledged their support to the development of Ethereum through the formation of the Enterprise Ethereum Alliance. The purpose of the alliance is to ensure the potential of Ethereum is realized across industries.
Companies involved in the alliance are working toward creating a standard, open-source version of Ethereum, which will serve as a blueprint for all adaptations. JPMorgan is already working on implementing its own Ethereum-based system to facilitate the seamless transfer of funds between global JPMorgan branches.
Although many organizations are invested in leveraging Ethereum to serve as a basis for privatized versions, the overarching goal is that one day, each institution’s private networks will be connected to the global Ethereum blockchain. This will establish a new universal benchmark for information transactions.
Although Ethereum has enormous potential to create a more secure and streamlined global transactional system, to concentrate on what is yet to come is to overlook the changes Ethereum is already enacting. Early Ethereum adaptors are driving innovation through decentralization. Here are some of the ways today’s cutting-edge businesses are applying Ethereum to solve existing problems and create future solutions.
Increase Protective Measures around Online Consumer Data
Identity theft is a constant concern across today’s global landscape. Organizations and individuals are increasingly aware of impending threats to digital security.
One company, KYC-Chain, is tapping into Ethereum to help businesses safely onboard new customers, blending simple identification processes and know-your-customer regulations. KYC-Chain’s solution empowers customers to manage their own identities by sharing only necessary information.
KYC-Chain protects user data on the platform through a series of cryptographic protocols. The platform allocates responsibilities to “trusted gatekeepers” who have been given clearance to retrieve and authenticate customer documents.
Enhancing Crowdfunding Capabilities and Transparency<
Business development has changed drastically over the past decade. No longer are businesses and entrepreneurs relegated to raising funds through VC’s and private investor relations; today, hopeful entrepreneurs are finding public support through crowdfunding. Platforms like Kickstarter and GoFundMe have opened conversations and opportunities around business development.
Organizations like Weifund are looking to expound on the public’s growing affinity for crowdfunding through blockchain implementation. Weifund’s platform utilizes Ethereum’s Smart Contract capabilities to offer customizable solutions to contributors.
Standard crowdfunding platforms generally issue basic refunds if project goals are not met; thanks to Ethereum’s Smart Contracts, project organizers can establish customized agreements, or “hooks,” as Weifund calls them. Smart Contracts expand the ways in which individuals can contribute to development, while ensuring complete transparency and strict adherence to contract boundaries.
Smart Contracts are a way of transporting anything of value — money, shares or data — without an intermediary, and Ethereum technology makes this possible. It used to be that you’d have to make a request to receive something of value, and wait for an intermediary to facilitate that request. Smart Contracts are immediate. Another benefit of Smart Contracts is that the rules and regulations associated with the contract are automatically enforced.
Making a Decentralized Global Workforce a Reality
Buterin and Ethereum supporters believe in complete decentralization; they envision a system that puts users in complete control and allows them to innovate in any direction.
Ethereum can also help budding entrepreneurs build the right teams. An Ethereum-run organization is based on democratic shareholder voting, which means every backer or contractor has access to your latest updates and initiatives based on the contracts you’ve drawn up. Ethereum takes the pain out of managing an organization and answering to shareholders, because all of those initiatives are automatically executed within the contract.
Colony is one platform leveraging Ethereum to drive decentralized, global work organizations. Colony strips away organizational hierarchy and simplifies the management of a distributed workforce. Based on principles of meritocracy, Colony encourages people to invest their time, unique expertise, feedback and ideas in global projects.
The system, run on Ethereum, assesses users and the value they contribute to Colonies on the platform. Users are awarded tokens based on completed tasks and weighted value. Automated cryptocurrency payments are facilitated through Stripe to ensure that all contributors are adequately compensated based on value.
Colony envisions a democratized working future; one in which individuals are not limited by their location. Though it is still in beta, Colony is hopeful that its collaborative network will drive the future of workforce management.
One of Ethereum’s often cited benefits is the reduction of operational fees. Ethereum eliminates intermediaries, thus decreasing transactional fees and increasing the speed and efficiency of transactions. Every industry stands to benefit from improvements in efficiency and reductions in cost, but this innovation is especially exciting for organizations in developing economies.
Many people in developing economies are subject to complicated remittance processes, exorbitant online payment fees and high currency exchanges. Everex, a FinTech company, is leveraging Ethereum to help people in developing nations with limited access to banks and global financial systems. Everex’s Cryptocash solution enables simple cross-border transactions.
Everex’s comprehensive solution not only enables people around the world to employ more agency in managing personal finances; it also provides them with more global investment opportunities.
The actualization of Ethereum is nowhere near complete; however, the technology has already managed to set in motion decentralized solutions that were once deemed impossible. Recently it has been lauded as the future of cryptocurrency, but Ethereum’s potential outstrips even those accolades.
The mounting support for the development of Ethereum and rapid adoption among emerging organizations are changing how we think about digital safety, crowdfunding, workforce management and economic development.
Featured Image: Bryce Durbin/TechCrunch