Why would you want any of this?
Now we will explore some of the differences between the Ethereum architecture, and the traditional architectures of computers.
In traditional systems, most of the logic you are interacting with, say if I go on Facebook and I type in my details and it spits out this feed; I don’t know what Facebook has done to generate this feed? To me, it is as if they have just got that information and given it back to me, and I don’t know what they have done with my information.
On Ethereum everything is auditable. All of the code that sits on the Ethereum computer, all of the programs on the Ethereum computer are by their nature open source. Not necessarily that you can see the source code, but you can see the bytecode. So you can follow the machine instructions and you should probably be able to presume that people will be able to reverse engineer it in the future. That’s pretty cool, that’s pretty interesting. So it means people cant really do ant sneaky things with your data.
In traditional systems, servers, or programs can just change their function without telling you. If you download a program onto your computer and it is permitted to install its automatic updates, next time it installs an update you’ve got no idea what’s changed. You can read the changelog and it might tell you, but you don’t actually know unless you read through all the source code.
On Ethereum that’s not possible. If I deploy a program to the Ethereum computer it sits there forever. Unless I program in a way to kill it or shut it off, it sits there forever and it can be used forever. Once installed it cannot be changed. You can’t go in an make an update, you can’t change any lines of code to make it do anything different. It’s not possible. All of the code that makes up your program sits there forever. The code can’t be changed. Of course, you could have some things that let you change variables, but the code itself says the same.
In traditional systems, you pay with your data, usually. Let’s go back to Facebook as an example; who do you know who pays money to use Facebook? Nobody, right? So how is Facebook making money? They are selling your data. You are the product.
In Ethereum, the users pay with ‘gas’ which is money. I’ll go over ‘gas’ in a little while. The users can’t change the state of the program unless they pay, they can still look at things, but they can’t interact any deeper than that without paying. This greatly reduces the likelihood of spam attacks and the like.
In traditional systems, interoperability is often quite awful. If you are a developer and have dealt with APIs before, you’ll no doubt agree. Multiple APIs in the same codebase is a pain because you have to get multiple API keys, you have to make sure they are all managed correctly, and all this kind of nonsense.
In Ethereum, that’s not the case. Integration is really really easy because as soon as you deploy a piece of code to the Ethereum blockchain, as soon as you deploy a program, people can just use it. There’s one standardized API, there are standard libraries you can use to interact with the Ethereum computer. Web 3, Ether’s Logies, and a whole other bunch of them which mean that writing programs that use other Ethereum programs is really easy, and I think more people should get into it because it’s super fun as well.
In traditional systems, most of the logic you are using is proprietary. So all of the algorithms that determine what you see on social media, or all of the search algorithms you use, they are all proprietary. You can’t see them, you don’t know what’s going on, you’ve got no idea of how they are getting the results they are getting. And that can be a good thing, in terms of intellectual property, but it can also be a bad thing because you’ve got no idea of where all this data is coming from, and why it is being shown to you specifically. It might be different for some other guy halfway across the world, but why is that, we don’t really know.
In Ethereum, that’s not the case. Everything is inherently open source. You cant give a different result to someone else by virtue of being in a different physical location.
So, why is all of that useful? We have explored why it’s different to traditional methodologies. Why is it useful and what makes it the kind of hype-machine that everyone is talking about, and going crazy about and throwing lots of money in?
Well, there are these things called DApps (Decentralized Apps). They are decentralized applications of which there are now an increasing number every day. To name a very select few, there is Golem which is a team from Europe who wants to build decentralized cloud computing. So, you donate a bunch of your spare processing cycles, and you get paid for it with the payment being sent out via the blockchain.
WeTrust is a company who want to build community finance applications on the Ethereum blockchain, taking informal social contracts where people put money into saving pools and then that money is used within the community to help it flourish.
WeTrust wants to take those informal rule sets and put them into smart contracts and put them on the blockchain. This will help develop credit scores for people who aren’t necessarily able to access banks.
Gnosis and Augur are two interesting teams wanting to build prediction markets. Prediction markets have a history of being extremely good at predicting future events, and the outcomes of future events.
As a result, a few of them have been shut down because they were so good at predicting the outcome of sporting events. Gnosis and Augur are planning to build decentralized ones that can’t be shut down because there is no off switch.
Iconomi and Melonport want to build index funds on the blockchain. Iconomi is one which is a big centralized index fund, you give your money to the company, Iconomi, and they put it into all sorts of different things, and then there is a calculation of value and a determination on how much you are entitled to. This will be distributed back to you via the blockchain.
Melonport is a bit different, so if you think of yourself as an up and coming Warren Buffett, you can create a portfolio where people can follow your trades and see what you are doing. So if you are making a profit, they are making a profit. I think that is pretty cool.
First Blood is a competitive online gaming platform where the results of matches are more or less ‘verified’ using the blockchain. It’s like using multisig technology to verify the results of games.
Aragon is a company that wants to build decentralized organizations. These days it is becoming more common for businesses to not have a traditionally solid management structure.
People tend to come and go more now than before, and there is a need to change how the recruitment industry responds to market needs which have given rise to smaller contract positions where comparatively smaller pieces of work are done when compared to a fulltime position. Aragon offers a way to manage that in a decentralized futuristic way, and give people appropriate incentives for working on your project, instead of someone else’s.
All of these things can work together. There is nothing stopping all of these projects from working together. As soon as these are released into the wild, there is nothing stopping another project from coming in and build on top of what is already there. This is because a lot f the logic in this is wrapped up in smart contracts.
You can dig even deeper through State of the DApps which shows all of the submitted DApps that are on the Ethereum computer currently. I recommend that you go to this site and have a browse around. There was one I showed a few people last time I was on here that was really cool, but you do need to beware of possibly dubious schemes also.
So, Ethereum is really good at removing the middleman, taking the middleman out of the transactions and having everything purely peer to peer. You don’t need an escrow agent to hold funds for a transaction between two parties as you can use a smart contract to do that. It’s a very simple rule set, such as “if he gives me the thing, give him the money” so you don’t need someone trusted to do that.
Ethereum smart contracts can act as trusted third parties. Well, it’s just code, right? So, goodbye jobs. Lawyers, Escrow Agents, other middleman entities are all exposed to the changes that this technology is introducing. And when you couple that with AI there is an exponential opportunity to see amazing things.
Take Airbnb and Uber as examples; with Ethereum you don’t really need companies like that in the middle of transactions. If I want to rent my house to somebody, I should just be able to do that in a peer to peer way, and with Ethereum contracts I could.
There is a company called Slock It based out of Europe who wants to build locks which listen to transactions on the Ethereum blockchain. Effectively, you can just put it on your house, somebody can come to your house, scan a QR code, pay for access to rent your house and the lock will respond to the transaction and let them into your house.
I know that sounds scary, but that’s basically what you do with Airbnb anyway. You put a key in a lockbox, issue the code to the person who is renting the house from you, and they get access to the house. So it’s really no different.
With Uber, all they do is just match Drivers to people. You could do that in a contract if you wanted to.