Why Ethereum Matters

Imagine you, a dog, and myself are on a fishing trip deep in the woods for a week in November. It just so happens we fell into a lake and all our cell phones and ways of communicating with the outside world are destroyed. We come out of the woods the day after the presidential election and both are eager to find out who the new president of the United States is. On our walk to the car we find 100 people waiting for us in a big circle and yell to them a simple question: “Did Donald Trump win the election?” In response, we hear people saying both yes and no. We stare at them perplexed, whom should we believe?

We decide to believe what ever the majority of the people say, yes or no. Of course we could still be wrong if a majority of the responders are lying because, well, humans can lie. But what if humans couldn’t lie? What if you could always believe a majority vote? This idea would be particularly helpful in software because you could assure trust inside a platform and store data in a decentralized (more on that later) and resilient way.

This is what a technology called the blockchain allows you to accomplish. The blockchain is a public ledger of all transactions conducted on a network, which is stored on many machines around the world. If one network endpoint goes down the entire platform is unaffected and no data is lost. Also, if someone attempts to inject a false transaction into the system (representing the liars in our previous example) the other endpoints in the network will overrule the false transaction by a majority vote.

An emerging platform that uses this technology, called Ethereum, allows developers to build applications that incorporate blockchain technology. Ethereum is different than Bitcoin because, while Bitcoin also uses blockchain technology, acts as a store of value only. Ethereum allows developers to write “smart contracts” that allow programs to make decisions using the blockchain voting system described above.

“All the above is great right but why does it matter? I’m not a nerd.”

What matters about Ethereum the most developer friendly platform that can be used to build consumer and business software incorporating the features of the blockchain. This means that you the consumer will be using it in the near future. Applications that could be created would revolutionize security of financial transactions, transparency of healthcare records, and efficiency of elections in a way previously thought impossible. This matters to you as a user because your data will be more secure than ever and transactions you attempt (buying stock for example) could be executed much quicker. Imagine if all healthcare data was stored in one spot that could be accessed instantly. No more forms in the waiting room. Need to poll employees at a global company and a server goes down? No worries. All your data is safe and your Ethereum program isn’t affected.

The last thing you need to know about Ethereum is that running an application on the network isn’t free. A developer who writes an Ethereum program must buy Ether (Ethereum’s currency) in order to use the global blockchain that can be purchased on exchanges like Coinbase. Even if you have no intentions of writing a program or using the service you might want to purchase some: the value has skyrocketed since it was released. Microsoft has put into place tools for its cloud computing platform (Azure) customers to develop Ethereum applications. If Microsoft is on board (and other organizations such as the South African banking system are exploring the technology) Ethereum isn’t a joke. And with more interest just means more demand for Ether.

Especially in technology, we need revolutionary change, not incremental change. — Larry Page