When everyone is on the blockchain – Decentralize Today
When everyone is on the blockchain
Blockchains can be a little breathtaking for those of us that aren’t cryptography nerds, so this article is assembled approximately as goes after and you are encouraged the hop in wherever you feel convenient.
- A brief history of cryptocurrencies
- An explanation of blockchain and its incentive structures
- Ethereum and the cool things it can do
- Why everyone is about to get involved
A brief history of cryptocurrencies
Decentralized (meaning non-centrally-controlled) currency has been a concept at least since Wei Dai’s “B-Money” paper in one thousand nine hundred ninety eight — it’s motivations and concepts (no threat of violence, no government control) are still relevant today. Cryptocurrencies didn’t indeed reach prominence until two thousand nine when Bitcoin was released by its mysterious creator, who has since been exposed. It’s early applications were often less than unspoiled, but that has switched quickly. Prices fluctuated a lot in the early years, mostly driven by incompetent exchanges and fears of regulation, but it’s growing prominence has lead to more investment and decreased volatility.
Venture capital firms have put more than $1B into cryptocurrency companies since 2012, and hefty companies like IBM and Nasdaq are displaying superb interest.
What is the blockchain?
Whenever a transaction occurs on the block chain, a group of participants called “miners” each maintain the entire history of transactions and utilize that history to confirm or reject the transaction so no one can double-spend or overdraw. The cryptography aspect of these systems makes this process computationally complicated and verifiably correct. When a knot has finished the work to verify a set of transactions (a “block”), it announces that to the network. When a majority of knots agree it is correct (a much more computationally plain process), that block is added to the block chain and the knot that very first verified the block is awarded in some amount of cryptocurrency for doing the work.
This system incentivizes a decentralized network that provides a secure, decentralized, immutable ledger. The applications of which extend well-beyond currency transactions.
A lot more applications have been opened up by a fresh cryptocurrency called Ethereum that features Turing Accomplish contracts.
What is Ethereum?
A brief history
The Ethereum documentation marks the release of their yellow paper in 2014, with a pre-sale in July of that year. Since then, the Ethereum network itself has overtaken Bitcoin in the number of knots (Bitcoin 5154, Ethereum 6415), but is still trailing Bitcoin by about a factor of ten in volume and market capitalization (as of Sept 2016).
The power of programmable contracts
When your transaction can be roped by any arbitrary rules, these network can be utilized to fairly enforce any logic you want. This effectively liquidates the need for trust in most transactions. We can essentially codify any legal terms for things like micro-payments, escrow, lotteries, voting, prediction markets, auctions, gambling, or pyramid schemes. Those are just the elementary examples (here are a bunch more).
Elaborate examples of “distributed apps” enabled by the block chain would be:
The developer support behind Ethereum is getting noticed, and recently Coinbase (one of the leading cryptocurrency exchanges) added Ethereum support.
Why am I not using this already?
Early days for the community
There are a few teams like the Ethereum foundation sponsoring development and ConsenSys who is blogging a ton and building contraptions like Truffle to develop the ecosystem, but it’s undoubtedly still pretty youthful.
The community is mostly cryptographically oriented tech people, so to a layperson, there’s lots of unintelligible jargon out there.
Participation in the network presently requires you to run complicated software, not yet suitable for non-servers. Network knots also need to maintain the entire block chain, which is approaching 90Gb, so network knots presently need to have fairly substantial compute and storage capabilities.
Good news, It’s about to become effortless
Blockchain technology will soon become available on any networked device. It will be built into your browser, your phone, and many more devices like brainy meters. This is all being enabled by the development of a “light client” (thank you Zsolt Felföldi)!
Ethereum based contracts will be everywhere and agreeing to them will be a breeze. Real micro-payments will become a reality and they will be embedded in everything. Instead of paying Two.9% + 30¢, a monetary transaction will cost a fraction of a penny. You’ll be able to pay $0.Ten to read an article on The Wall Street Journal or to witness another cat movie on YouTube without commercials. The coffee shop wifi will charge you for your bandwidth usage. Spotify will suggest a pay as you go plan, and bill you a variable rate for every song. Taco trucks will accept cryptocurrencies from your phone.
The technology isn’t fairly there yet, but it’s super close.
Must Win spent the last duo of weeks working on a plain clever contract enabled micropayment solution proof of concept. It’s called TinyPay. We learned a lot while building it and are excited to share what we learned. Feel free to play with it, or view the source.
Thanks to Decentralize.today, ConsenSys for continuing your work on building the ecosystem.
Must Win would love to help develop your next “DApp”. If you’re looking for help understanding or utilizing block chain tech, reach out to firstname.lastname@example.org and reference this post.
Mike is an accomplished in a broad array of technologies and has geysers of practice managing fast-moving dev teams, designing systems, and scaling large applications. When not on the job, he can be found cooking delicious meals on ski slopes in exotic locales.