Perhaps BITCOIN’s greatest gift to the web is not the disruptive nature of a digital currency, but the platform used to build that distributed, worldwide, decentralized crypto-currency. BITCOIN’s platform, often referred to as a blockchain, uses an innovative approach to keep transactions secure, validate ownership and guarantee provenance.
A blockchain consists of a distributed cryptographic ledger shared amongst all nodes participating in the network, where every successfully performed transaction is recorded and shared. In other words, blockchains are proving to be a fully auditable, incorruptible database that can deny any known hack or attack.
Although the importance of the blockchain is often lost amongst the discussion of digital currency, blockchains have the potential to disrupt how the internet itself works. Simply put, there is a lot more to blockchains than just crypto-currency and monetary applications. Truth be told, a blockchain is a decentralized ledger protocol (and/or platform) that can govern both financial and non-financial types of application states.
A blockchain can be used to power decentralized business logic, which is contained in a cryptographic “element” that has intrinsic value and can only be unlocked if certain conditions are met. The business logic executes on a blockchain platform (a decentralized cloud service) once an automatic process validates that the terms and conditions set forth by participating parties are met.
Those concepts can be used to fuel the creation of P2P (peer-to-peer) or decentralized network solutions that allow virtual communities to create secure, auditable and hack proof services and applications.
Ultimately, blockchains may reign supreme in distributed, shared environments that are used by both open and closed digital communities – a concept that has been well vetted by BITCOIN as its secure methodology to handle currency.
However, that leaves one question – how does one build a blockchain and create a community that can use it?
One answer comes in the form of an open source platform that goes by the moniker of Ethereum, which is touted as a platform for decentralized applications, but in reality has become a catalyst for building blockchain based solutions. Etherium leverages the blockchain ideology by providing both the platform and the development tools to build blockchain based community solutions, which are decentralized in nature and highly resilient, while also being incorruptible.
However, the ideology of a crypto-currency still permeates the Ethereum platform, yet it does not have to have any monetary value. In Ethereum’s case, that crypto-currency is more appropriately referred to as a cryptofuel, which Ethereum has dubbed Ether. Ether is used to power transactions, pay for computational steps and democratize the distributed platform.
Without Ether, distributed applications could fall prey to infinite loops, excessive data consumption and many other problems that could effectively destroy a decentralized application and applications are the key component of a community.
However, to use Ether as a cryptofuel to power a creative process, one must embrace the Ethereum platform, which means there has to be much more to Ethereum than a blockchain and crytpofuel. To that end, Ethereum has created a development environment called ETH/DEV, which offers IDEs, tools and resources used to build decentralized applications. Those applications can be fueled by Ether and therein lies the most important element of the blockchain.
The blockchain itself keeps track of the fuel units (Ether), and transactions can be assigned a cost of ether units, or even Ether payments, making all interactions transaction based. Ether does not need to have a particular monetary value associated with it – Ether could be based upon reputation points earned, contributions to the community, or any other activity that adds or uses some type of value measurement.
For some community projects, content or code contributions may be the key element for earning Ether, which can then be used by the person earning the Ether to “purchase” other elements from the community or escalate content or reach out to new audiences. The blockchain comes into play be creating and maintaining the ledger of who has how much Ether and how that Ether was earned, spent or transferred. In short, the applicability of Ether is limitless.
The concept of using a crypto currency like Ether brings many possibilities to light – for example, digital contracts can be secured using Ether and then recorded in perpetuity via the blockchain. What’s more, Ether can be traded for services, software and other virtual elements, creating an economy based upon distributed applications.
One thing is certain, block chain technology is here to stay and organizations such as Ethereum are on the cusp of creating new decentralized solutions that eschew traditional borders and physical entities.