Blockchains as Currency – The Next Generation of Applications

SOURCE: Ethereum

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.

The Next Generation of Blockchains: Incorruptible Currency

Although the novelty of the blockchain is often lost amongst the discussion of digital currency, blockchain 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. Blockchains can 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.

Blockchains can reign supreme in distributed, shared environments that are used by both open and closed digital communities, and blockchains have already been proven as a secure methodology to handle currency. However, that leaves one question – how does one build a blockchain and create a community that can use it?

Ethereum and Ether Fuel

One answer comes in the form of Ethereum, touted as a platform for decentralized applications. Ethereum fully embraces 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 being incorruptible.

To accomplish that, Ethereum has developed what could be referred to as a cryptofuel called 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.

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. Now, 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.

The concept of using 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, blockchain 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.

About Ethereum

Founded in 2013, Ethereum is an open source project that utilizes a blockchain – software that’s controlled by a worldwide network of machines and not by centralized servers. In 2014, the group completed a pre-sale of Ether – a necessary element for running decentralized applications on the Ethereum network – totaling over $18 million. The Ethereum Foundation, a non-profit organization, was later founded with the purpose of managing the funds that were raised from the Ether Sale in order to best serve the Ethereum and decentralized technology ecosystem. Ethereum has active communities world-wide (http://ethereum.meetup.com/). For more information visit: http://www.ethereum.org