Author's Posts

The Rudimental is a project that takes the ICO model and applies it to video content creators. The way it works is that you create a project and you can trade shares in your project on an open exchange. This provides a mechanism for alternative funding opportunities and allows users to be compensated for finding a diamond in the rough. Imagine if you could have invested in Justin Bieber when he was just a no-name kid putting music on YouTube? This is the new paradigm that the blockchain enables.

Another interesting aspect of this project is it’s integration with other blockchain projects such as Gnosis (prediction market platform) and Boardroom (blockchain governance suite). This will further these tools and the ecosystem as a whole by providing a real use case that people can learn and build upon for future projects.

The Rudimental will only focus on video media at this time but hopes to expand to additional media types. They also claim full SEC compliance for anyone concerned about the legality of exchanging equity tokens in this way. This project is nearing release and is promising to release some new information to the community very soon, and we will provide updates as that happens.

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The short answer: Game Theory.

Consensus networks like the Ethereum blockchain that record data and transactions as a single source of truth seems like it would be a great fit for multiplayer games. A natural suggestion would be putting games involving chance, such as poker, backed by the block chain and guaranteed to be fair by the blockchain network and cryptographic hashes. Why hasn’t the blockchain disrupted online poker and similar games?

The reason is not a technical problem, but more of a game theory problem. Due to the pseudo-anonymous nature of the blockchain, it is impossible to perfectly know the identity of each user and prevent collusion among participants. To put it another way, if you were to join an online poker table, it would be impossible to know whether the other players were other individuals, or if it was one guy with a dozen accounts. The fact that someone could create multiple identities and use that to his or her advantage is a difficult problem to solve.

People are working on solutions to this. Anyone dealing with any kind of financial regulation typically must comply with Know Your Customer (KYC) laws. While KYC compliance is not new, the tradeoff is that these processes are expensive and time consuming to implement. There are blockchain systems being developed that will rely on KYC to operate fairly, such as with FirstBlood, and it will be interesting to see what solutions they come up with.

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OpenBazaar is a decentralized marketplace for goods and services with no fees and no censorship.  Anyone can host their own store and sell products to anyone in the world.  You can optionally elect to have a third party to mediate in the event of a dispute (e.g. my package never arrived in the mail) to protect yourself.  Beyond the dispute resolution, all transactions are handled directly between buyer and seller.

OpenBazaar received some buzz last year when they received a $1 million dollar investment from Andreessen Horowitz.  The first iteration of the platform only supported Bitcoin, however you can now transact in a number of other currencies, including Ether.

Check out the full post on the OpenBazaar blog:

https://blog.openbazaar.org/openbazaar-1-1-10-released-purchase-with-ether-monero-and-more-via-shapeshift-io-integration/

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A new project, otlw,  is trying to address one of the fundamental issues in our current education system: assessment and accreditation.  In simpler terms, how can we prove that a student has a particular skill and then communicate that to the relevant parties?  The current system of standardized tests and degrees from the educational institutions themselves comes with a number of problems.

One problem is when the institutions charged with educating the students are also charged with accrediting them, we have a conflict of interest.  The institutions are incentivized to teach for a standardized test, and if they make their own tests for assessments, to mold their tests to fit their teaching. A consequence of this is that it becomes too expensive to cater to the individual needs of the students.  To accommodate students individual learning styles or take a deeper dive into various topics is not economically viable if it does not align with the standardized test, or whatever is used as the assessment ‘test’.

otlw wants to use the Ethereum blockchain to create an accreditation reputation system.  By separating education and accreditation, students will be able to learn how they see fit instead of being forced down one particular standardized educational track.  For example, imaging being able to learn front end web development from any number of free courses available on YouTube, and getting good enough to become accredited through otlw, and then use that accreditation to get a web dev job.  It’s sort of a half-way step back to the old apprentice system of old, where reputation is codified in the blockchain.

The way it works is that individuals when someone wants to be assessed, a number of people who have already been accredited as knowledgable on a subject will be selected to perform an assessment. There will be a special Ethereum token used by the system to hold value. The assessors will be rewarded in tokens for giving the same assessment as the majority, and punished by losing tokensfor being very different from the majority.  By accrediting individuals themselves, they increase their own reputation, and they are rewarded with tokens that have a monetary value.

As is typical with these systems, the value is created and shared in a circular fashion.  The students benefit from being able to engage in self-guided learning of their choosing and can have their skills verified, the assessors are compensated financially and increase their own reputation, and the students benefit from their assessors having a higher reputation.  You could imagine such a system being the backbone on which other platforms are built, such as distributed classrooms that could compete with the large education systems from early childhood education, to higher education, and anywhere in between.

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Co-tricity is a peer-to-peer energy surplus marketplace where users can buy and sell surplus energy which is built on the blockchain.  The main benefit is increased transparency and more more efficient matching for surplus energy by matching users of similar consumption curves.  The current energy re-sell marketplace is opaque and energy is not always sold to consumers with a similar consumption curve to the provider.  At times power is wasted, and the producers of energy have no say in where that energy goes.  At a high level, the blockchain solution allows us to build an efficient energy re-sale system around our actual consumption and needs and provides the opportunity to incentivize producers and consumers in a way that increases efficiency for everyone. This project is a great use case for the blockchain where everyone involved in the system benefits.

Co-tricity is a join venture between Consensys and RWE, a large power company.  It will be interesting to see where this project heads and even who will benefit the most from such a scheme.  The blockchain provides increased transparency, so regulators may find this to be an appealing solution to tracking energy, and especially re-sold surplus energy, on the grid.  Maybe the consumer market will thrive and we will see more users contributing energy to the grid.  This solution could also provide a more efficient, cost-effective way for utility companies to trade energy.

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The Ethereum blockchain has done another hard fork, meaning that the network issued an update and any new transactions from anyone still running the old version will be considered invalid.

This one appears to have happened rather smoothly, unlike the second hard fork that left the network with 2 separate and mutually incompatible chains.

Read more on the latest hardfork here:
http://www.coindesk.com/ethereum-forks-again-so-far-so-good/

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The legal status of ICOs is still to be determined, however the current consensus is that the determination will ultimately come down to whether or not the coin distributed through the ICO can also be used to perform some function.

If a dApp does an ICO and simply delivers a coin for the purpose of appreciating in value it’s more likely that it will be considered and regulated like a security, which would render the ICO sale illegal.  On the other hand, if the token delivered also has some utility on the dApp, like being used to participate in the dApp, then it is less likely to be considered a security and will likely be a legitimate way  to raise funds.

Check out this great talk from Peter Van Valkenburgh from Coin Center on the subject.

Slides here https://ethereumfoundation.org/devcon…

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FirstBood is a decentralized platform for peer to peer betting on online games like as League of Legends, Dota 2, and Counter­Strike: Global Offensive.  One interesting aspect of this project is that it relies on a jury system to resolve conflicts.  Two players place a bet then complete a game and report to FirstBlood who was the winner.  Most of the time, those two users will agree on who won.  During the times when the two users both claim to be the winner, twelve other users are selected at random, presented with evidence from both players, and are compensated for delivering the correct verdict (or the verdict that agrees with the majority).  Jury members are compensated in FirstBlood tokens, whose value is tied to Ether.

This is a great example of the sharing economy that emerges from decentralized systems.  Users are compensated for their participation in the networks and for completing vital tasks such as conflict resolution.  If the size of the sharing economy continues to grow, people will be able to supplement their incomes settling disputes on FirstBlood, or doing other tasks on other dApps.  You could even imagine compensation from participation in various dApps could be a viable source of income.  It’s possible the concept of income and working will change as our economy becomes more like advanced bartering.  For example, imagine paying for a ride across town by writing an article and getting page views, where you provide value for value without money changing hands.

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Someone cashed in for 636 Ether with a bet that Trump would win the election on PredictionToken, which allows you to make and take peer-to-peer bets on a yes or no outcome with the result verified in the blockchain.

The way it works is a smart contract mints Yes and No coins on the Ethereum blockchain whose value is tied to future events. Yes or No coins can be bought and sold on an exchange like EtherDelta. Once the event comes to pass, the result will be verified and written in the blockchain by Reality Keys. After that, the winning positions’s coin can be redeemed for 1 Ether each while the losing position’s coin are not worth nothing.

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It’s helpful to have a basic understanding of what the blockchain is before diving in to Ethereum.  If you are not familiar with the blockchain, first check out this post (2 minute read).

What is Ethereum?

The first implementation of the blockchain was created as part of the release of Bitcoin in 2008.  Beyond all its innovations, the Bitcoin blockchain itself was made intentionally simple.  You can send and receive Bitcoins, but Bitcoin’s blockchain is pretty much limited to sending currency transactions.

The major innovation of Ethereum is that you can write complex logic inside the blockchain itself and takes the Bitcoin blockchain to the next level.  Ethereum is a more generic blockchain that allows developers to build apps– like games, social networks, financial and insurance services, etc., inside the blockchain.   The Bitcoin blockchain was limited to currency transactions, but Ethereum takes the blockchain innovations and applies them more generally, while maintaining the decentralized nature of the network. Because the Ethereum blockchain is more complex, the apps in the ecosystem will be able to solve more general problems and get the most out of decentralized technology, and the ecosystem will be able to build on itself.

Why should I care?

Logic that is written inside the blockchain is called a smart contract.  With smart contracts you can create and interact with electronic agreements with pre-determined terms with actions that run autonomously.  Using smart contracts, the Ethereum platform allows people to solve problems in unique ways that reduce the reliance on human trust and central authorities.  It has the potential to fundamentally alter the way we do business on the internet and think about employment and interact with the economy.

One great innovation already built on top of Ethereum is the DAO.  The DAO is a decentralized autonomous organization and a kind of venture capital fund lead by the investors themselves.  The DAO allows for individual entities to build their own cryptocurrency on top of Ethereum and use this cryptocurrency to issue shares.  One outcome of this feature is a sort of IPO meets crowdfunding allowing startups to do an ICO or initial coin offering, and raise funds from individual investors in exchange for shares in the form of the newly minted cryptocurrency.  This turns the IPO on its head and allows crowdfunding contributors to receive a token that has monetary value in exchange for their contribution.  Compared this to many Kickstarters where you might get a free T-Shirt.

There are many other possibilities for new business models and solving new problems in Ethereum that we touch on in other posts, like the ability to be compensated for discovering an artist or a company (and funding them by buying their token, which may rise in value if they hit it big), to the emerging sharing economy, and cost saving measures that cut out the middle man.

It will allow complex interactions by any two parties anywhere in the world and reduce the reliance on expensive centralized infrastructure. This has the potential to be a game-changer not only in financial institutions in industrialized nations but also provide access to services that have previously been denied to those in poor, isolated countries. It could provide financial solutions for the 400 million people in India without a bank account.

Because of the nature of complex logic being written in the blockchain, the Ethereum ecosystem will build upon itself as developers continue to publish for dApps. The blockchain has the potential to fundamentally change society and finance and dApps on the Ethereum blockchain are uniquely poised to solve global problems in a scalable and cost-effective way.

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