Ethereum Self-Crowdfunded $21 Million in Less than a Month — What Is It and Why Should We Care?

By Aug 28, 2014 1:12 PM EDT

NEW YORK (InsideBitcoins) – Ethereum is quite a phenomenon. Since its inception just over one month ago, the platform has sold more than $21 million in “ether” tokens to people interested in accessing the technology in order to build “decentralized apps.” Inside Bitcoins’ Darnell Jackson spoke with Stephan Tual, the project’s chief communications officer. — Editor

Stephan Tual

Stephan Tual

Tual joined the Ethereum project In January of this year. His current focus is on smart contracts/smart property and the development of decentralized applications deployed on top of a blockchain infrastructure.

If a consumer remembers one thing about Ethereum what should it be?

“I suppose, the most important thing to keep in mind is that the purpose of Ethereum is ultimately to make it trivial to build applications that leverage blockchain technology or the so-called decentralized consensus.

“What that actually means in practice is that for an end user, let’s take say my mother, who’s really a “technophobe” right, for her using Ethereum — she wouldn’t even know she’s using Ethereum because Ethereum is a bit like TCP/IP (the address protocol used by the Internet), you use it every day when you go on Facebook to look at funny pictures of cats but you don’t need to know, and why should you?

“I think Ethereum is going that way. It’s a protocol more than anything else. The people who are going to dig deep into its insides are going to be the developers — consumers will be presented with an interface which we call the Ether browser.

“It’s like a web browser. In fact technologically it is a web browser. It’s just that it speaks the Ethereum protocol so it gives you access to a new type of web applications that we call DAPS — decentralized applications. Applications that don’t have a middle man; that contract you without your express permission so applications that give you a lot more freedom over your funds and your personal information.

Give me an example of something that’s being done today and how it could be changed with Ethereum.

“The typical example that everybody seems to quite like is this idea of a decentralized Dropbox. Today we all know what Dropbox is — we all love it, I use it but here’s the thing about Dropbox: it’s centralized so there’s a corporation that can decide all of a sudden that, well maybe they’re going out of business so they fold and all your data is lost — or maybe they could collaborate with governmental services. I’m not saying they are by the way, I’m just saying that we’ve seen with the NSA revelation and the Snowden files that this type of stuff was indeed taking place, it’s a fact.

“So, are you comfortable with having your private information, maybe your kids pictures, your accounting files on Dropbox? I personally sync up everything to Dropbox — potentially accessed by third parties that you didn’t know existed and you didn’t know had an interest in your stuff.

“So there’s a point of civil liberties here and personal freedom and then there’s also the fact that when you’re centralized, you basically expose a very, very small surface of attack and that’s why hackers are able to do things link DDoS (denial of service attacks) because there’s only one in point into Dropbox.

“And also, bugs. If you take Dropbox, for example, you have to trust that the 250 developers they have in-house wake up and they don’t make any mistakes.

“So that’s four different points here that are addressed by this concept of decentralized applications.

“On a decentralized Dropbox, there is no central authority that can sell your information to a third party, or distribute it to the government, or be vulnerable to hackers.

“The way it works, quite simply, a decentralized Dropbox is a bunch a people around the Ethereum network that make part of their hard drive available for a small fee, which if you add it all up is considerably cheaper than something like Dropbox would cost.

How could Ethereum impact Cryptocurrency volatility?

“Well, there’s an argument out there, I’m not a finance person, but there’s an argument out there that says that if you have very liquid options markets, future markets, derivatives basically — you create stability over time.

“Now, what we’re finding is that in the centralized world we’re not seeing many of those derivative markets quite simply because they are heavily regulated and the cost to do business in that space is far beyond what a group of guys can afford. They would need extensive investment to “pay their lawyer,” so to speak.

“On Ethereum you can build these decentralized markets now. As an aside, jurisdiction still applies, so if you’re building a business that trades securities you probably want to make sure that you operate in a jurisdiction that allows this to happen. Ethereum is not above the law, so to speak. But it makes it trivial to build these [derivative] markets. And people will build these markets and some of them will do it legally — some of them, maybe less — and the market will decide as to what’s sustainable and acceptable.

“So in that sense, I think it will affect it but it might have greater consequences on metacoins — altcoins so to speak.

What has been the industry response to the contract technology — what about lawyers?

“This I literally an accident, this is not by design. Contracts are called contracts because we thought it was a nickname for them and nothing more — something simple that people could understand as being those entities that live in the blockchain.

“Obviously what happens is lawyers come in and they say, “Hey, what is this? A new way to do the law perhaps?” We have a community of lawyers and people of the kind which have been interacting with us.

“Once recently, Primavera De Filippi, who’s part of the Harvard Berkman [Center] luncheon introduced it and I think people were a little bit surprised. “What is this? Is this cyber tyranny? Are we going to be out of a job?” There’s  a lot of questions.

“With regards to that, I think it has tremendous potential because what we’re seeing is initially there was a bit like, well, you’re trying to get our jobs and no one likes this, but now it’s time to realize: Actually this technology could genuinely bring value to my vertical. The legal profession, by trivializing basic stuff like escrow and transfer of deeds — the stuff that actually lawyers don’t really make that much money on — and they can then focus on the higher level stuff that still requires humans to interact between Fortune 500 companies.

“We’re also seeing big interest from the energy industry. I’ve been contacted by several energy companies. They were very curious as to the issuance of the metacoins per the production of ‘X’ megawatts of clean electricity.

“Also, loyalty markets. Retailers that are issuing loyalty coins — and right now loyalty coins are still vouchers — you can’t trade them, you can’t really do anything. If they were digital and issued as metacoins on a platform that can’t be corrupted and can’t be censored, then obviously that would give them a chance to have those metacoins traded on a market.

“So, say I win 30 points at Safeway I could exchange it for air miles.”

Ethereum’s chief technology officer Gavin Wood will be a keynote speaker at the Inside Bitcoins London conference next month.

Interview by Darnell Jackson

Ethereum

Ethereum dashboard screenshot