Ethereum- Coded for Human Error
With the advent of Bitcoin, the world has begun to see the potential for a new form of decentralized currency, devoid of any reliance on banks. Now monetary transactions can be conducted via peer-to-peer sharing along the Bitcoin block chain and the intermediaries and middlemen have effectively been taken out of the picture.
This new technology has the effect of disrupting established financial markets because banks become an inessential piece of the equation that function only to draw money away from the individual by way of fees charged for the services provided by another.
Imagine what this open source technology could do if it were applied to areas outside of the financial markets. Think of block chain technology like you would the Internet, email is like Bitcoin in the sense that it is only one of many applications that run on top of the network. The possibilities are endless.
After studying the Bitcoin platform and publishing many articles on the topic, Vitalik Buterin came up with this idea that the block chain might be used to run a number of different applications. Then take out the profiteering middlemen, and run the operation away from a centralized control unit.
Late in 2013, Buterin released the white papers describing his ideas for such a program. This new program was called Ethereum, and following the release several other programmers joined the team and launched the most successful crowd funding campaign to date in July 2014, raising some $18 million to create the Ethereum platform.
On this new platform programmers can create decentralized applications or DAPPs for a variety of functions that range from the financial, similar to Bitcoin’s digitalized cash exchange, all the way into real estate and insurance.
The Ethereum technology is unique in that it has the ability to run numerous DAPPs along the same block chain instead of having to create a new block chain for each new application.
The benefits of these applications being created on the Ethereum block chain are that they cannot be changed by any third party once the code has been written, they cannot be censored because they operate on an open source network formed around the idea of consensus, they are protected by cryptography with no central source of control giving them protection from potential hackers, so they never shut down or go offline.
The one major problem with DAPPs, however, is that a human programmer is responsible for creating each individual application. As is the case with any creation of mankind, there is the space for human error, regardless of whether or not the best intentions are in place.
It is in this way that hackers or those with malicious intent are able to find holes within the source code to be able to bypass the rules written into the smart contract. A smart contract is a contract that can be written by anyone on the Ethereum platform that, once written, will execute along the parameters that were outlined in the original creation without the need for any external influence.
One of the foundational points of Ethereum is that it cannot be changed, so once a contract is created, if there are oversights or bugs written into the code that surface later down the line, they cannot be changed or “fixed” by a third party. They will continue to exist, flaws and all, and if any executive changes are made to address the issues, it raises some serious questions as to the true nature of decentralization, another foundational point of Ethereum.
Ethereum has a lot of potential to change the way that we deal with the world in regards to our finances, real estate, and insurance, but until the bugs are worked out, we will continue to see the platform’s instability reflected in the sharp gains and tremendous drops of Ether on the stock market.
Veritaseum is one of the new Crypto Currencies utilizing the Ethereum Block Chain in order to execute its smart Contracts.