Ethereum (ETH) is not just a cryptocurrency. It is the first in a new generation of distributed decentralized global computers. In this article, we’ll describe what the future looks like for Ethereum.
Is Ethereum the future of finance?
We’re all used to the idea of money. But what about programmable money? One of the most exciting developments in the blockchain and cryptocurrency space was the release of Ethereum on July 30, 2015. Ethereum move has ushered in a new generation of blockchains that do much more than just exchange tokens of value. They aim to be global distributed censorship proof computers.
Bitcoin (BTC) was built around a scripting language that organizes each transaction and allows users to place arbitrary data into the Bitcoin block time. But the Bitcoin “Scripting language” is limited. It can only perform a small number of functions.
On the other hand, Ethereum contains what we call a “Turing Complete” programming language. This is a programming language that can run any computable algorithm we can imagine. Given enough resources, Turing completeness is named after the English mathematician and computer scientist Alan Turing who is most famous for his work cracking the German Enigma machine in the second world war.
Let us skip a whole lot of technical detail and caveats, but in practice what Turing completeness means is we can build complex contracts and programs into a blockchain that will run automatically on that blockchain everywhere around the world.
Those contracts can’t be censored. They can’t be stopped. They will run as programmed everywhere. More than just the native internet currency, Ethereum wants to be a universal Internet computer. The potential applications that can be built on the Ethereum blockchain and other Turing complete blockchains are a focus of a lot of the innovation in the blockchain industry. Let’s start with smart contracts.
What are Smart Contracts?
Smart contracts are programmable contracts that execute on a blockchain. We can program complex financial agreements into a smart contract, escrow services, financial derivatives, auctions, and much more. This could, for example, replace algo affiliates and exchanges on the market. Using what we call Oracles, smart contracts can also be set to trigger if something happens in the real world.
For example, if the Dow Jones goes above 30,000 or if a physical sensor is triggered in the real world. More complex again or what we call Decentralized Autonomous Organizations (DAO). These DAO are webs of smart contracts that resemble nothing less than a decentralized company or firm. They’re an experimental new form of corporate organization that exists entirely on a blockchain. Now there’s a lot of experimentation to be done before we see DAO operating in the real economy.
And there have been some very notable DAO failures but they are potentially the first major change we’ve seen in corporate governance since the invention of the joint-stock company itself.
Just as interestingly we can build entirely new cryptocurrencies on top of the Ethereum blockchain. A lot of new coins and tokens we see in the crypto marketplace today are built on Ethereum. In fact, at the time of writing, there are over 90000 separate tokens built on top of the Ethereum blockchain. Moreover, Ethereum isn’t the only Turing complete or semi Turing complete blockchain out there.
But each of them has similar ambitions to create a decentralized global network of smart contracts and distribute out applications that will power the blockchain economy of the future.