Ethereum — The Long Tail Crypto Dream
Part I of III
‘That which is gold is worth gold.’ So wrote George Herbert, an English poet known for his penchant for the metaphysical. This branch of philosophy, is perhaps an appropriate lens through which to look at the current crypto-craze. Metaphysics deals with such heady questions as existence, tangibility, cause and effect and possibility. It almost perfectly describes the current state of cryptocurrencies, assets that many view as nothing more than digital dust and what the CEO of JP Morgan recently described as a ‘fraud’.
Now, ‘fraud’ is a pretty big word, bigger even than (dare I say it), ‘fake’ — but if people think that Bitcoin is worth more than gold right now, then who is the CEO of JP Morgan to question that belief? God fairing citizens around the world base their entire value systems on faith in a metaphysical divine. If it’s a good enough reason to live a life, then surely it’s a good enough reason to invest their hard earned money?
At the church of the Bitcoin prophet
Bitcoin is an entity, that for many people right now is based solely on faith. For the layman, unable to grasp what the technology is exactly, it’s a somewhat blind faith stirred by the media and watercooler chat. Their participation in this new religion gives them a sliver of hope that they will eventually be able to transcend the grimey capitalist chains that shackle them. Now, stay with me here… I’m not about to launch into a jihad against the ideals of capitalism, nor am I trying to convert you… Bitcoin is arguably part of a new world religion right now. That is, enough people have faith in its transformative power, that the digital dust has ascended to an existential reality of sorts. It’s the prophet that tells of a new future (complete with a faceless mythological figure in the form of Satoshi Nakamoto) and like any good prophet, it also warns us not to repeat the sins of the past.
Unfortunately, human beings are not habitually good at avoiding past mistakes and despite Bitcoin’s noble intentions (clearly defined in the whitepaper that started it all in 2008), we have started to covet it. To be fair to the Bitcoin prophet, it never said “Thou shalt not covet” in it’s whitepaper commandments, but like actual religious prophets, we can’t help but project our own reality upon what it is and what it can do for us.
With prophets, come followers… and they came in their droves. Ethereum is one such follower, but whereas Bitcoin is the gilded prophet, Ethereum has the very real chance of becoming the bricks and mortar church in this story; the place where crypto worship becomes a tangible reality beneath the shadow (or light) of its progenitor.
Ethereum and the other followers grew largely from an interest in Bitcoin and more specifically, understanding the technology that powers it, curiously picking it apart. Unlike the inventor of Bitcoin (a faceless ‘he’, ‘she’ or ‘they’ under the moniker of Satoshi Nakamoto), the inventor of Ethereum is a real flesh and blood genius, a technological preacher if you will, pushing forward a new vision of what a blockchain can do. His name is Vitalk Buterin, he’s Russian (potentially a PR minus in the current climate), but moved to Canada when he was six… he’s 23 years old and is by all accounts really rather clever. But what does he preach? Well, he’s actually quite the evangelist and has said many things about what blockchain technology means for society. Vitalk Buterin, once said:
“Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.”
Okay, so now we’re getting down from our whitepaper lectern and it’s actually starting to sound a little political. Of course, that quote is completely out of context, but it makes blockchain sound noble at least, like all humans are created equal by technology.
But, what is a blockchain? In short a blockchain (at least in the context of Ethereum and Bitcoin) is a ledger, a chronological written record of all transactions. It’s written cryptographically and is in-theory, unhackable. The chain itself is (again, in theory) a source of truth and it’s public nature ensures that it becomes a trusted third party to the transactions that took place.
Adam Draper says, “The blockchain does one thing: It replaces third-party trust with mathematical proof that something happened.” If you can’t fiddle the books, it is an accurate ledger — and what more do you really need?
So… that sounds pretty handy for say, a digital currency. The Winklevoss twins have intentionally or unintentionally become poster children for Bitcoin. Famous for suing Mark Zuckerberg for stealing the idea for Facebook, they invested $11 million of their settlement into Bitcoin. In 2013, when the price they paid for the coin was likely to be around the $120 mark, it now hovers at at the $19,000 mark — that’s one hell of a return (assuming of course that they still have that much) and it makes them Bitcoin billionaires. A Bloomberg piece, posted just last week quotes them as saying:
“We think bitcoin is like gold 2.0,” Tyler Winklevoss said Tuesday. “So whatever your reasons for investing in gold — whether it’s scarce, durability, portability, fungibility — we think that bitcoin matches or beats gold across the board.”
Gold 2.0 doesn’t sound exciting though. I don’t want a digital bar of gold if I can’t actually have it. What will blockchain give me that completes me — that gives me purpose?
Let’s look at a bit of scripture now… but don’t worry, we’re nearly through with the religious analogy — we’re moving onto a subject that’s much more universal.
“In the beginning was the Internet, and the Internet was with Cats, and the Internet was Cats.”
Okay, so I’m paraphrasing here… actually I’m really taking liberties (sorry John 1:1), but the sheer ubiquity of cats on the internet has made them an unofficial mascot of sorts and (faux scripture aside) their pop persona has soared as a result. Grumpy Cat, Lolcat, Stampy Cat… if you haven’t seen a cat on your Facebook feed today you’re probably an algorithmic anomaly, a cat hating freak of nature.
And just as the internet grew up on a daily diet of cats, the crypto-craze was recently introduced to a future of cats — and if you look closely enough, these cats are a cut above your average kitty fare.
CryptoKitties — The Oh So Cute Herald of The Crypto-age
A game about breeding large eyed cartoon cats… it’s hardly a revolution and what’s the point of a game changing technology quite frankly, if all we’re going to get are cat games and gimmicks? But beneath the cuddly exterior of this seemingly innocuous game, hides a technology demonstration of exactly what blockchain can do, a tangible taste of it’s secret sauce.
CryptoKitties was born, not of Bitcoin, but of Ethereum. It is not possible to build what has been built here with Bitcoin as a platform right now, and that’s because Ethereum, unlike Bitcoin, is (even in it’s infancy) a set of tools, software, a programming language, upon which we can have not just coins, but digital contracts and a world of new possibilities. It also makes a series of old-school possibilities more susceptible to the modern software model.
But let’s not get bogged down in that right now… forget the possibilities for a second and let’s take a look at exactly what CryptoKitties is doing with blockchain.
So, the game is basically this: a user (or player) collects and breeds digital cats, like a blockchain Tamagotchi only more expensive; you pay for the privilege to play with these cats and in some cases, quite a lot of money too, but economics aside, let’s get to the exciting part… all of the cats are an implementation of a smart-contract. Impressed? No..? Smart contract didn’t do it for you? Okay, so that doesn’t sound exciting, but what is exciting is what these smart-contracts are used for here. The blockchain has become a programmatic genome of a cat in this instance, cryptographic genes that you can splice (only through breeding — there is no God mode yet) with other kitties in the hopes of breeding an expensive rarity — or as their website puts it, “unlock rare cattributes” — so that your carefully bred, cuddly and unique (in the crypto-genetic sense) cat, hits an internet zenith of popular appeal where others will covet your kitty. To quote their infinitely quotable (and quite brilliant) web copy, “The future is meow.”
It sounds ridiculous, but beyond the cute, this blockchain app demonstrates the exciting possibilities of cryptographic uniqueness, scarcity and the fact that you can own something that others perceive as being unfairly cool, oh, and incidentally… they can covet it and buy it in equal measure.
Gold might be tangible, but in an economy that is increasingly switching to hot IP, the intangible can be just as real and if it’s tangible in digital form, then it’s not just dust, but something really quite valuable both as an investment (scarcity matters) and more crucially, as a social tool to democratize what was once a global way of life without options.
In Part II of this article, we’ll be looking at the kind of applications a blockchain technology like Ethereum could be used for and in Part III, we’ll throw a proverbial spanner in the works, considering the potential challenges to adoption that lie ahead.
I’ve sourced the references, but I’d thoroughly recommend reading the White Pa-Purr below:
https://www.dropbox.com/s/a5h3zso545wuqkm/CryptoKitties_WhitePapurr_V2.pdf?dl=0
