Ethereum

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= a initiative for trust transactions on the blockchain: Ethereum is a next-generation distributed cryptographic ledger that is designed to allow users to encode advanced transaction types, Smart Contracts and decentralized applications into the Blockchain.

URL = http://ethereum.org/


Definition

1.

"ethereum it is not another cryptocurrency. It is rather a P2P financial infrastructure able to support any kind of currency design, if expressed as a collective Smart Contract."


2.

"Ethereum is a community-driven project aiming to decentralize the internet and return it to its democratic roots. It is a platform for building and running applications which do not need to rely on trust and cannot be controlled by any central authority." [1]

Description

1.

"Ethereum is a next-generation distributed cryptographic ledger that is designed to allow users to encode advanced transaction types, smart contracts and decentralized applications into the blockchain. Ethereum will support custom currencies or "colored coins", financial derivatives, and much more, but unlike many previous networks that attempted to accomplish the same thing Ethereum does not attempt to constrain users into using specific "features"; instead, the ledger includes a built-in Turing-complete programming language that can be used to construct any kind of contract that can be mathematically defined."


2. by Nathan Schneider:

"In November, Buterin started to circulate a white paper describing a platform on which the whole breadth of new cryptocurrency applications could be built. He called it Ethereum. Rather than being a Swiss Army knife of separate tools, Ethereum would be simple: It would combine a bitcoin-like network with a universal programming language that would allow users to invent whatever tools they want. These tools would be able to interact with one another and conduct transactions with a common currency called ether. In the white paper, he described Ethereum as a “Lego of cryptofinance.” With it, all the imagined potential of bitcoin could be put to use in one place — plus a lot of the not-yet-imagined potential too.

Buterin expected that he’d get some useful feedback on the proposal, maybe spend a few weeks coding a prototype and then move on to something else. But now, at 20, he is seeing his idea catch on among fellow hackers around the world, and arrangements are being made to incorporate a nonprofit for Ethereum in the legal free-for-all of Switzerland." (http://america.aljazeera.com/articles/2014/4/7/code-your-own-utopiameetethereumbitcoinasmostambitioussuccessor.html)


3. Stephan Tual:

"Ethereum is a platform that makes it possible for any developer to write and distribute next-generation decentralized applications. Borrowing the concept of distributed consensus and cryptographic proof that makes cryptocurrencies such as Bitcoin so effective in trustless payments, Ethereum extends the use of these technologies to trustless agreements. This allows developers to easily build innovative new products on a censorship and collusion-resistant foundation.

The fundamental building block in Ethereum is a contract, a program that lives on the Ethereum network and follows a series of steps every time it receives a transaction. Contracts can store data, send and receive transactions and even interact with other contracts holding third party data. They are maintained by the network, without any central ownership or control. Contracts are written in a language instantly familiar to any programmer and powered by Ether, the base unit of Ethereum cryptocurrency (put differently, its cryptofuel).

Ethereum can therefore be thought of as a programmable distributed network. This has implications going far beyond the seemingly obvious applications such as financing agreements. The fact that Ethereum, is, by its very design, resistant to tampering and fraud, also permits a range of other solutions to everyday problems regarding identity and verification which are currently solved at great expense. Voting machines, healthcare software, registration of legal documents such as wills, transfer of title to goods and land, reputation systems, and even traffic navigations systems or social networks can be build on a network where users stay in control of their personal information — and funds — at all times." (https://medium.com/p/4790bf5f7743)

Discussion

1. Primavera Di Filippi:

"These algorithmical entities are both autonomous and self-sufficient: they charge users from the services they provide so as to pay others for the resources they need (e.g. bandwidth, cpu). Thus, once they have been created and deployed onto the blockchain, they no longer need (nor heed) their creators. But if DAOs are independently operated — neither owned nor controlled by any given entity — who is actually in charge, responsible for, or accountable for their operations? And if their resources cannot be seized (because DAOs have full sovereignty over them), how can they be required to pay damages for their torts?" (http://cyber.law.harvard.edu/events/luncheon/2014/04/difilippi)


2. Rachel O'Dwyer:

"The Ethereum project really illustrates this possibility to abstract the blockchain from a specifically monetary context to one in which we’re thinking about decentralised economies and services more generally. In short, it extends the decentralised capabilities of Bitcoin beyond financial transactions. Bitcoin involves two parameters: a trustless database (more on this later) and a transactions system capable of sending value from place to place. In order to do this, Bitcoin implements a simple scripting language. But this scripting language is limited in terms of what it can do.[1] Bitcoin’s scripting language lacks certain fine-grained controls and nuances that might be necessary to provision other services. To do more complicated things, the expectation was that you needed to create an entire meta-protocol layer or even a new blockchain. Ethereum developers recognised that these functions could be implemented and scaled if there was a stronger foundational layer with a powerful scripting language for these protocols to be built on. Ethereum builds a generalised framework that extends the capabilities of the blockchain to allow developers to write new consensus applications. This is a blockchain with a built in Turing-complete programming language, allowing anyone to create applications and rules to support them. In this way, we move beyond monetary transactions towards any number of foreseeable applications." (https://www.academia.edu/11627298/The_Revolution_Will_not_be_Decentralised_Blockchain-based_Technologies_and_the_Commons)


What you could do with Ethereum

by Nathan Schneider:

"What bitcoin is for money, Ethereum is for contracts, and contracts are part of what undergirds any relationship or organization or political order. As enthusiasts attach their own ambitions to the Ethereum concept, Buterin has found that his “Lego of cryptofinance” could have an impact far beyond finance. “When other people came along and started bringing their ideas in,” he says, “I realized having a more efficient and powerful form of money is almost the least interesting part.” A group called BitCongress, for instance, is already using Ethereum as the basis for a cryptography-created legislation toolbox that would make polls easy and verifiable without the need for a trusted authority to count the votes.

With Ethereum, one could code a constitution for a nongeographic country that people can choose to join, pay taxes to, receive benefits from and cast votes in — and whose rules they would then have to obey. One could design a transnational microlending program or a scheme for universal basic income or a new kind of credit score. In one online video two Ethereum pioneers demonstrate how to code a simple marriage contract. The world’s next social contracts, the successors to the Declaration of the Rights of Man and the U.S. Constitution, could be written in Ethereum’s programming language.

What makes much of this possible is also perhaps the creepiest outgrowth of cryptocurrency 2.0: distributed autonomous organizations, or DAOs. Based on charters taking the form of code on a peer-to-peer network, these are entities that could automate many of the tasks of a conventional organization with varying levels of human input. For instance, a DAO could act democratically, based on the votes of its members, or it could conduct activities on the network without consulting human users at all. In his talks, Buterin sometimes makes a passing reference to Skynet, the computer network in the “Terminator” movies that mobilizes robots in a war of extermination against human beings. “Nothing is stopping you with Ethereum at your fingertips,” he claimed in the original white paper. He has felt the need to produce a series of posts on the Ethereum blog titled “DAOs are not scary,” which are only marginally reassuring." (http://america.aljazeera.com/articles/2014/4/7/code-your-own-utopiameetethereumbitcoinasmostambitioussuccessor.html)


Potentially Oppressive Aspects

Nathan Schneider:

"Primavera De Filippi, a researcher at Harvard’s Berkman Center for Internet and Society who studies the legal implications of decentralized networks, takes such dystopic possibilities seriously. In Ethereum “everything is dictated by the code,” she says. “Anything that is completely computer-operated is a potentially oppressive system.”

Before the code takes charge, however, its inventors carry the responsibility for making Ethereum useful, fair and secure. “Ultimately it depends on Vitalik being a benevolent philosopher-king,” says Joel Dietz, a cryptocurrency entrepreneur in Silicon Valley. But the Ethereum community expresses little hesitation in vesting so much responsibility in someone who was, until a few weeks ago, still a teenager, albeit a supersmart one. Quite the opposite, in fact. Ethereum has released a video, modeled on Apple’s famous “The Crazy Ones” commercial, that places Buterin at the end of a sequence of computer innovators, including Alan Turing and Steve Jobs.

Hype comes easily to those in the tech community, but De Filippi believes Ethereum is poised to have real-world impact. “Bitcoin has created precedents that have shown this is not so crazy,” she says of the project’s transformative potential. De Filippi has made Ethereum a major focus of her research, and she says that cryptocurrency investors are starting to do the same. “They are really, really excited, and they will invest a lot of money in Ethereum, which didn’t happen at the beginning of bitcoin.” (http://america.aljazeera.com/articles/2014/4/7/code-your-own-utopiameetethereumbitcoinasmostambitioussuccessor.html)

Unbreakable Contracts may be an illusion

Stephen Palley:

"Another post on Ethereum says that in the future we will be able to use the platform build "unbreakable contracts." I immediately thought back ten years to the notion that investment bankers had figured out how to take risk out of investment. We're still cleaning up that mess. I don't think that there is an ounce of malevolence in the brilliant inventors behind Ethereum. This is fabulously creative and innovative technology. I'd personally like to be part of making it better and accessible for non-technically minded lawyers. Its creators can't be faulted for not knowing what they don't know and in getting caught up in the moment. It's the fault of lawyers -- and that's because (in part) there aren't enough lawyers who actually (1) are willing to understand the technology at a granular level and (2) can support innovation while providing the right guidance.

Why is the notion of an unbreakable contract problematic? It assumes that software can create perfect understanding between people, and that all terms in a contract can be described in code (which is language, still). There's a difference between a payment guarantee (like a letter of credit, for example, in old world terms,) which is triggered if and when a specify event happens. Can you automate that using crypto-currency and do it better? Maybe. But selecting which events are important to specify is one thing ("completion", "substantial completion", "delivery" etc) deciding what those things mean is something altogether different. And endlessly complicated. This doesn't mean that contracts can't be better and that Ethereum can't help streamline the process. But the notion that cases, laws and lawyers aren't relevant or are responsible for complexity isn't quite right. The fact that laws are complex is at least in part because people are complex and our transactions are too." (https://www.linkedin.com/today/post/article/20140501211427-112013610-byzantium-etherium-contracts-cucumbers)


Scalability Issues

"One common concern about Ethereum is the issue of scalability. Like Bitcoin, Ethereum suffers from the flaw that every transaction needs to be processed by every node in the network. With Bitcoin, the size of the current blockchain rests at about 20 GB, growing by about 1 MB per hour. If the Bitcoin network were to process Visa's 2000 transactions per second, it would grow by 1 MB per three seconds (1 GB per hour, 8 TB per year). Ethereum is likely to suffer a similar growth pattern, worsened by the fact that there will be many applications on top of the Ethereum blockchain instead of just a currency as is the case with Bitcoin, but ameliorated by the fact that Ethereum full nodes need to store just the state instead of the entire blockchain history." (http://buyxpr.com/build/pdfs/EthereumWhitePaper.pdf)


Discussion 2

How Ethereum Might Support the Commons

By Rachel O'Dwyer:

"Some of these applications are still speculative; some of them are already implemented. Potential applications of Ethereum include peer-to-peer forms of cloud computing or Dropbox; incentivised Wi-Fi mesh networking or big data and machine learning; games and gambling; reputation systems; and of course financial applications. Already existing applications include Airlock.me a keyless access protocol; La’Zooz, an alternative ride-sharing application; the Eris stack, a distributed application server; Bitvote a distributed voting system; and Traity and Cryptoswartz, both online reputation systems.


Distributed Organisations & the Trust Web:

One significant claim is that blockchain-based technologies such as Ethereum can support and scale distributed forms of cooperation on a global scale.

This has been referred to under a few different names: the recent Coin Center report refers to Distributed Collaborative Organisations, while Ethereum’s founding developer Vitalik Buterin speaks elsewhere about Decentralised Autonomous Organisations. As David Bollier recently pointed out, this model resonates with organisations that are interested in fostering commons-based peer-production. Where questions about how to reach consensus, negotiate trust and especially scale interactions beyond the local are pervasive in the commons, the blockchain looks set to be a game changer. In this context, the blockchain is presented as an algorithmic tool to foster trust in the absence of things like social capital, physical colocation or trusted third-party management. These are actually referred to as ‘consensus’ algorithms, and they are the staple of projects such as Ethereum and Ripple. As David Cohen has described it “Trust, rules, identity, reputation and payment choices are embedded at the peer level. Participants arrive already trusted and decentrally acknowledged”. Cohen and Mougayar have dubbed this innovation the “trust web” to describe the new suite of applications that weave network value and consensus into the protocol itself, forgoing the social institutions and relations that were previously mandatory.


Node Incentivisation:

Another innovation is that Ethereum incentivises participation, encouraging actors to contribute without introducing centralisation. Ethereum also puts features in place to discourage centralisation in the future. In order to use an Ethereum application, users make micropayments to the developers in ether, Ethereum’s coin, or ‘cryptofuel’ as they term it. This might be making a micropayment in turn for storage space on a server or for acting as a relay in a mesh networking protocol. For example, in a hypothetical Ethereum mesh network, anybody could act as a node, charging small amounts for relaying people’s messages (in the region of a few microcents per kb) and alternatively paying to have their own messages relayed. We can take this further and reward people for other kinds of contributions, such as writing source code or producing creative content on a website. Monetary transactions aside, this encourages people to contribute to the commons and puts systems in place to try and protect its resources from commercial expropriation.

Decentralised Infrastructures:

A third significant innovation is a change to infrastructure. Ethereum describes itself as “an infrastructure for next generation social and economic systems”. Blockchain innovations that manage networks, servers or natural resources really do radicalise infrastructure. We’re no longer speaking about monolithic resources with prohibitive barriers to entry, the quintessential server farm housed in some distant industrial estate. Instead, we can imagine infrastructure as something immaterial and dispersed, or managed through flexible and transient forms of ownership. Where powerful servers, channels and processing capacities seem like the primary chokepoint of open networks, the blockchain is a powerful antidote. As Buterin argues in a recent interview: We would build a decentralised Internet network where all of us would access documents and content without going through a server. It means that you will need zero infrastructure to develop and distribute applications. The payoff seems to be that new blockchain-based technologies have the potential to support new forms of commons-based peer production, supplying necessary tools for cooperation and decision making, supporting complementary currencies and even provisioning infrastructures.

Trust in the Code

At this early stage of development, it’s also crucial to think about how criteria like governance, property relations and modes of production are engineered into the blockchain, and what centralising tendencies or emerging possibilities for control might accompany this protocol. The issue most frequently cited has to do with the difficulty of regulating rogue companies in a distributed system. Primavera de Filippi, a researcher at the forefront of legal challenges in distributed organisation, points to the difficulty regulating companies and identifying who or what is in charge when things go wrong. The blockchain is still anybody’s baby and not the exclusive bequest of groups working towards a decentralised Internet or a ‘Post-Snowden’ Internet economy. Companies from share economy start-ups to major players in IT are looking to the blockchain for their next meal ticket. IBM, for example, is currently in talks about a blockchain-tied cash system with a number of central banks. Other issues concern the design of trustless architectures and smart property.


Trustless Architectures:

First of all, What Kind of Subjectivity Does the Blockchain Support? In the development of consensus algorithms and monetary incentives, there’s an assumption that we can delegate much of the messiness of human relations to algorithmic governance, anticipate the motivations of individual actors and foreclose destructive behaviours. This comes back to this question of trust, something I’ve already written about in relation to Bitcoin. The claim being made is not that we can engineer trust in friends, institutions or governments, but that we might dispense with them altogether in favour of what Bill Maurer, Taylor C. Nelms and Lana Swartz refer to as ‘trust in the code.’ As outlined in the Bitcoin whitepaper, proof-of-work is not a new form of trust, but the abdication of trust altogether as social confidence in favour of an algorithmic regulation. In other words, it doesn’t matter whether I believe in my fellow peers just so long as I believe in the technical efficiency of the blockchain protocol. What kinds of subjectivity do we want to algorithmically inscribe into our systems? Blockchain start-ups begin from the assumption that there is no trust and no community, only individual economic agents acting in self-interest. Fair enough, you might think, it’s precisely the fact that projects like Ethereum engineer confidence and provide economic incentives for contribution that may distinguish it from other services like Freenet. But it also proceeds from a perspective that already presumes a neoliberal subject and an economic mode of governance in the face of social and/or political problems. ‘How do we manage and incentivise individual competitive economic agents?’ In doing so, it not only codes for that subject, we might argue that it also reproduces that subject.

Smart Property:

Innovations in property and infrastructure also seem to go both ways. While greater flexibility around ownership of core infrastructure is arguably a good thing, the introduction of artificial scarcity and the new controls implied by smart property also have worrying implications for Internet copyright and Digital Rights Management. Property doesn’t disappear, but instead it is enforced and exercised in different ways. If rights were previously exercised through norms, laws, markets and architectures, today they are algorithmically inscribed in the object. Going forward, it’s clear that there are a number of considerations to take into account, foremost not only how we provision the necessarily technical tools or resources for building a commons, but how we work to cultivate the necessarily kinds of social relations and subjectivity that might accompany this shift. There is real potential in the blockchain if we appreciate it not as some ultimate techno-fix but as a platform that, when combined with social and political institutions, has real possibilities for the future of organisation." (https://www.academia.edu/11627298/The_Revolution_Will_not_be_Decentralised_Blockchain-based_Technologies_and_the_Commons)

More Information

  1. Technical platform is ethereum: Whitepaper: http://ethereum.org/ethereum
  2. Forums: https://forum.ethereum.org
  3. Github: https://github.com/ethereum
  4. Main site: https://www.ethereum.org
  5. Code: https://code.ethereum.org
  6. Blog: http://blog.ethereum.org
  7. Wiki: http://wiki.ethereum.org