Ethereum and Blockchain Contracts
Over the last month there has been quite a stir in the cryptocurrency community over Ethereum. However, this network is not so much of a cryptocurrency as it is a cryptocommodity. Ether is the “fuel” of the network that is Ethereum. This network aims to give a viable, blockchain based solution to decentralized contracts. With Ether you can create contract tokens that can represent anything you can think of. These tokens correspond to shares or stake in a form of agreement that has been recorded on the Ethereum network. This creates the possibility for contracts that are public and fraud proof; with no limit to how many parties may be involved.
Naturally, being a hardcore Bitcoin user, I was highly interested in the potential of Ethereum. Not simply because Ether has high potential to be a valuable commodity, but because the Ethereum network has promise to revolutionize conventional contracts. I had seen people experimenting with using Bitcoin’s blockchain to register data and keep records and form a set of trusted data. One such experiment was the “blockchain passport/ID” project. The idea was to create a method by which someone’s identity could be verified by registering a piece of data on the blockchain that corresponded to a piece of paper that held data that could be re-verified to continue to prove the existence of the bearer. The Ethereum network would be a perfect platform for a similar voluntary, decentralized ID system.
In fact many services provided in a centralized way could be provided in a voluntary, peer-to-peer way. Government services even! Imagine using this network to lay claim to certain pre-purchased services or goods stipulated in a contract. Networks of individuals could develop their own solutions for providing “public” services in a private and localized way. Say a group of residents in an area could fund a school by selling shares of the school which would entitle the shareholders access to the school and the benefits of education while also subjecting them to the liabilities of maintenance and operation of the school. Using Ethereum is enabling the market to decide which models of business are best suited to different sectors. The platform makes it possible to break down the traditional top-down structure of businesses and restore more control to individuals over the contracts they enter.
The possibilities of this network seem to be endless. I plan to find a way to use Ethereum to create a contract which represents shares in my company. This will allow me and my partners to raise capital for the business in a much more efficient, secure, and responsible way. Ultimately Ethereum is ushering in an era of “smart contracts” that will radically influence how people develop webs of trust in the modern age. I can hardly wait to see what other people will use this network to do.
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