Ethereum’s Brave New World

When you say the word ‘blockchain’ the first thing that comes to mind is Bitcoin, as this distributed data structure is intimately connected to the first large scale cryptocurrency. Today’s column in the Telegraph from Jamie Barlett notes that the internet will soon be impossible to control, in ways that the public and policy makers are only just beginning to understand.

Ethereum‘s next generation blockchain will very likely be the vehicle for much of this intentionally decentralized future. A cryptographically secured public record can facilitate so much more than just financial transactions. When that public record also offers its own integrated programming environment it will be possible to code up the proverbial “idea whose time has come”, set it lose in the blockchain, and no amount of political pressure from the entity it will replace can stop it.

Unintentional Centralization, Unintentional Control

This unintentional centralization exists at every level of the technical network, from routers and computers to protocols and standards. The United States dominates the process of defining the path forward, having created the underlying systems and many of the standards processes employed by bodies like the Internet Engineering Task Force.

There is a debate as to which application level nexus is a bigger problem, but there are two that top the list. Some point to Google’s dominance in the search market, while others have concerns about what social networks like Facebook and Twitter know about us, and how that information is being used.

Google’s search engine tries to be helpful, learning your likes and dislikes. But when a political consulting firm buys information on six hundred million cookies and their associated social media accounts, that is a recipe for steering elections with very fine grained messaging. Facebook is equally potent; a friend mentioning voting boosts the chance you’ll vote 0.39%, which is a seismic shift for a get out the vote effort.

There are darker forces at work. The Islamic State is famous for its social media propaganda efforts, including slickly produced beheading videos, but the same techniques were employed to trigger GamerGate. This nontroversy, based on salacious rumors about a female game developer and a male gaming industry journalist, has driven several talented women not just from their internet presence but out of their homes due to the unwanted attention. Social media sites are dealing with the fallout from both of these. There are questions as to the process used and which people, or even which culture, should be used as the basis for deciding what is indecent or dangerous.

When decentralized systems are in play, the dynamics are dramatically different. Facebook and Twitter face concerns of counter-terrorism and free speech regarding the Islamic State. When accounts there were closed in mass waves, a portion of the Islamic State promoters loudly declared they were moving to Diaspora, a decentralized grassroots alternative to Facebook. History does not record the fate of the hapless jihadis who chose to invade; the restless natives apparently made short work of the intruders.

Decentralization’s Many Implications

How will things change when the next generation block chain that corrects the defects in original becomes available? The three key changes are:

  • Rapid Transactions – Bitcoin transactions are measured in minutes; point of sale transactions must take place in seconds.
  • Anonymous Transactions – Bitcoin’s blockchain reveals quite a bit of information, while Ethereum’s would be entirely opaque if participants chose.
  • Decentralized Autonomous Entities – A corporation can define a set of rules, release the code to implement them into the Ethereum blockchain, and so long as they are effective in their intended purpose, the corporation will be a going concern.

The first two advances are fairly simple to understand, but the third, which may be used by a range of entities from corporations to organizations, is a bit more subtle. Bitcoin’s blockchain supports the exchange of not just data, but instructions on what to do with the data. The instruction set is simple; the blockchain is not “Turing complete”. Ethereum’s effort corrects that deficit, providing the ability to publish decentralized programs that will implement the rules required by an autonomous entity.

That is all a bit abstract, but the real world implications can be a bit shocking. As I mentioned in Zero Customer Knowledge VPNs, the admittedly feral Cryptostorm has just released an integrated gateway to the darknet called Torstorm, they expect their business process innovations to be cloned by others, and one or more of those clones will be Decentralized Autonomous Entities that purchase hosting and sell VPN services. If the code defining these interactions lacks the provision for responding to a subpoena, then there won’t be any response, since no nation state would be able to enforce its will against a broadly distributed blockchain.

From Inside Ethereum

I had a long talk with Ethereum developer Stephan Tual, and I came away with a page full of hints on what to expect next year. The Whisper protocol will do what Bitmessage does today, there is a Python derivative for programming the blockchain called Serpent, but underneath it all they expect a functional language called Solidity to gain adherents. There is a storage scheme codenamed Swarm, and if it employs the decentralized model for acquiring resources someone is going to stand up a successor to The Pirate Bay, but we’ll never know who. That service will remain up until something better replaces it, no matter how much effort nation state law enforcement puts into trying to shut it down.

Like all innovation, things happen first in the gray zones at the edge of society, but a secure, transparent, distributed blockchain is a hazard to every outdated business model. Tual reports that every bank large enough to have a development staff is working on blockchain technology, intending to eliminate transaction clearing middlemen, as well as keeping pace with the changing use patterns of their customers.

As an adult learner, I find some of these large conceptual shifts challenging, but my path has been eased by the Ethereum YouTube Channel, which offers dozens of substantial videos on various aspects of the project.

What do you think of the march of Ethereum and its implications? Comment below!

Images from Ethereum and Shutterstock.

Last modified: March 4, 2021 4:42 PM

Neal Rauhauser: Cryptocurrencies, cipherspace, and contagions, both of markets and society, are what capture my attention.