Be sure to read our previous post beginning here on some basics of “blockchain” technology. Today, we’ll tell you about an even newer evolution in the rapidly evolving blockchain saga.
Our title headline today is how a fellow named Joe Lubin, founder of a company called ConsenSys that develops applications for the burgeoning “Blockchain” technology, describes Ethereum. Chances are if you’ve heard of Ethereum at all, it’s because the new platform was the victim of a $60 million hack a while back.
What you may not know is that companies including IBM, Microsoft, BP, JP Morgan and a lot of others recently attended a forum sponsored by an industry group called the Enterprise Ethereum Alliance. Ethereum technology, while still young, comes with enormous promise, despite last year’s hack setback. Advocates believe Ethereum “could be a universally accessible machine for running businesses,” according to a Matthew Leising of Bloomberg Businessweek.
Cornell University professor Emin Gun Sirer says “Ethereum gives you a new way for the computer to interact with the real world and how money moves.” In effect, it’s a complete business-to-business transaction engine and database. It’s based on the “Blockchain” concept of digital money. The idea behind Blockchain is to create a verifiable virtual currency that can be distributed as easily as an email. It’s an online ledger on computers distributed around the world.
We’ll spare you the details, but the idea is that every “bitcoin” distributed is tracked and verified, in a system that basically runs itself. Its main purpose is to move currency from point A to point B.
What Ethereum adds to the Blockchain is the ability to store fully functioning programs called “smart contracts.” So beyond moving money, users can potentially control contracts or projects, thus allowing a person to complete a job for a customer and trigger payment on completion – all without added human intervention, in a secure framework.
That’s the concept, at any rate. As Leising notes, “Once you can create contracts – which in essence are just operating procedures – you can use them to manage almost any kind of enterprise or organization.”
A variant on the technology would see companies participate in an Ethereum platform on a closed invitation basis, given that a public platform tends to increase security risks, whereas a semi-private network among aligned business partners might provide an effective alternative with the same end result.
A variety of companies are exploring their options today. John Hancock is experimenting with compliance tracking and anti-money-laundering regulations in its wealth management unit. Airbus is exploring ways to move its entire supply chain to a Blockchain.
If all this sounds a lot like the future of enterprise business models, one shouldn’t be surprised. There are security and logistical wrinkles to be worked out, to be sure, but the idea of a self-regulating supply chain of integrated enterprise systems that embrace project management, verifiable currency transfers and contract fulfillment has a lot of companies paying attention to the Blockchain ledger technology.
Right now, Ethereum is helping to lead the way. It’s a name worth remembering.