Bitcoin has garnered a lot of interest in the last year, with strong rallies creating new proponents and incredible volatility causing some people to write it off, but it doesn’t even have to work out as a functional currency to impact society. The technology that makes Bitcoin work has broader applications that are just now starting to be explored.
“Ethereum allows for the creation of complex, yet decentralised, economic tools like financial derivatives, in which two parties can bet on the rise and fall of an asset, or crop insurance that pays out to a farmer according to a weather data feed,” reports Jacob Aron for New Scientist.
Block chain can be used for more than Bitcoin
Ethereum founder Vitalik Buterin is trying to extend the usefulness of the block chain, the mechanism Bitcoin uses to generate new currencies and record transactions. The concept behind the block chain is that previous activity creates a record, and in order for new information to be added to the record, a complex mathematical problem has to be solved, and the difficulty of the problem is scalable so the more computing power that gets thrown at it the harder it becomes, resulting in predictable update times (about every ten minutes for Bitcoin).
Corrupting the process reliably would require as much computing power as the rest of the network combined (though it’s possible to get lucky). Rewriting the previous block would require more computing power than the rest of the network squared, and the difficulty increases exponentially with each iteration. As long as the underlying problem holds up, the process is very secure.
Stronger scripting language will extend the block chains usefulness
What Buterin and others have realized is that this distributed process can be used for all kinds of data exchanges, and that it can be coupled with more a complex scripting language than Bitcoin uses (simpler scripting was seen as more secure when Bitcoin was invented) and can be the basis for a wide array of apps. Buterin specifically mentions distributed versions of Dropbox and eBay inc (NASDAQ:EBAY) as two possibilities, but if the scripting language is strong enough (what coders refer to as Turing complete) than there’s almost no limit to what could be developed using Ethereum as the base.