Redecentralization is as important as the invention of the PC. We will look back on the early years of the Internet as a strange blip that will be called the Commercial Internet or maybe the Centralized Internet. PCs, for all their faults, empowered individuals. In the Commercial Internet, individuals become the product served by giant centralized data centers to advertisers. That is why it is Redecentralization; it is getting us back to the original decentralized design of the Internet and the idea that individuals should own the data and processing power that is so critical to modern life. Like the PC, an operating system is needed. Ethereum is that operating system.
I recognize that there are alternatives to Ethereum and that Ethereum is still a work in progress. However most of the debate has shifted from what platform to use to what kind of ecosystem of value will form around Ethereum. People are talking about how to use Ethereum, not whether to use Ethereum. If you don’t use Ethereum, you have to defend that decision.
In business, you plan around probability. There are very few cases of 100% certainty in dynamic fast-moving markets; a high probability is enough. People building on Ethereum are starting projects by banking on a high probability that it will succeed, and creating fallback plans for the low probability that it will fail. That is fundamentally different from evaluating different platforms before starting the project. The prize is so big that some technical risk is better than being late to market.
One reason that Ethereum is getting so much traction is that it is equally suitable to both enterprise and consumer use cases.
Enterprise use of Ethereum
During bear markets, enterprises love to cut costs and will pay handsomely to any vendors who can deliver that.
We saw that in 2002 and in 2009. I do not know when the macro cycle turns, but I do know that statistically we can count on it turning.
When it turns, enterprise IT comes back into fashion and Blockchain is another tool in the enterprise IT toolbox.
Blockchain represents a different generation of enterprise IT. For decades, enterprise IT has been about optimizing existing processes. In the founding days of Enterprise IT we turned manual processes into computerized processes; the payoff was massive. To borrow an overused phrase, it was transformational. For decades we have simply been doing incremental changes to those computerized processes and the payoff has been much less; we were optimizing rather than transforming. If you cut 10% of costs the project was a success. Blockchain based enterprise IT projects don’t seek to optimize processes, they seek to eliminate processes. For example if you move to real time clearing & settlement, you don’t optimize credit and market risk processes, you eliminate credit and market risk entirely.
Consumer Use of Ethereum
We have already reviewed three Ethereum based DAPPS here.
If you want a more comprehensive list, go here.
This is called traction – for the Ethereum platform.
It is too early to tell which of these consumer DAPPS will get traction in the market. I am confident that we will see a lot more of these DAPPS coming down the innovation pipe and a few will get mainstream traction.
At the leading edge of Ethereum adoption
Last week I left the smart Manhattan offices to head to northern Brooklyn to visit Consensys. This was not a colorful developer pampering office. Yes, we sat around a conference table that doubled as a ping-pong table; but this was clearly a bootstrapped operation full of bright people fired up by changing the world not by the trappings of success. I had trouble finding the office because there was no logo on the door; I went through a coffee shop to get to their offices. This neighborhood was still in the early stages of gentrification.
Around the ping-pong table (ahem, conference table), developers were as comfortable talking about the finer points of derivatives clearing and compliance as they were discussing developer tools. Big Wall Street firms could feel comfortable here despite the decor.
Yet they were also developing consumer-facing applications.
It is hard to put a label on Consensys. All of these fit:
- Consumer app developers
- Enterprise IT developers
- Core Ethereum developers.
- Venture production studio.
- Custom solution vendor.
With or without Bitcoin?
You can use Ethereum’s internal currency (Ether) or you can use Bitcoin via a sidechain. It does not matter where you come down on this debate, you can use Ethereum.
Permissioned or Permissionless?
You can use Ethereum to run a private permissioned Blockchain or a public permissionless Blockchain. It does not matter which is right for your use case, you can use Ethereum.
Network effects forming around Ethereum
The reason that it matters that Ethereum can handle enterprise or consumer, Bitcoin or Altcoin, permissioned or permissionless is that platforms win when a lot of developers invest time to learn it. If they see only limited use case, they will be more hesitant. If they are being paid by day by a bank for an enterprise solution while working at night on their consumer DAPP, they will love Ethereum because it can do both.
The reason that developer interest matters so much is that Ethereum is a work in progress where there is a lot of synergy around the component services.
This is eradicating the hard distinction between consumer facing and developer facing. You can use a prediction market in your DAPP via Augur or do value exchange via EtherX or price feeds via Oraclize. Critical components such as Identity will be used by most DAPPS as well as being consumer facing.1 - Reader Likes This Post