“Ethireum” or “ethereum”,
or pronounce it however you want.
The important thing is that when you speak
about blockchain, you’ll often
hear about Ethereum. What is this Ethereum?
Because it’s important. How does it work?
We’ll talk about it in a bit with our guest Thomas Bertani,
director of Eidoo and someone who knows
a lot about the topic. One, two. One, two.
One, two, three. First question for Thomas: what
the hell is Ethereum? Help us understand. Ethereum is a second
generation blockchain platform that was developed around
2013 by Vitalik Buterin, a Canadian-Russian-etc
who was trying to figure out how to create a platform
that shares the characteristics of bitcoin but with additional
functionality for building more
complex applications. So, the more complex applications
in question could be anything from decentralized insurance
to new financial instruments. Or some Panini stickers that
you don’t need to trust the issuer regarding
their rarity for example. In short, applications of,
various types, gaming, gambling. Finance, insurance, but
also crowdfunding, just think ICOs, which are developed
on Ethereum for the flexibility that it offers. So,
Ethereum has this platform that allows you to implement
so-called “smart contracts”. These are autonomous contracts that
live on the blockchain and allow you to create new kinds of applications, that don’t need intermediaries,
and that take advantage of the classic characteristics
of bitcoin but with a flexibility that allows an average developer
to interact with the complexity of the blockchain
and to research new use cases. Oh, by the way, this special
is made in collaboration with Eidoo. Eidoo is a company that
has this ecosystem of startups connected to the
blockchain world and has two interesting qualities I think. The first
is that they try to do innovative things, for example
they’re building an exchange that is decentralized,
which we should talk about a bit because it could be an
important thing to understand. The second is that they’re careful
about the issue of regulation, which we like. For example, I saw that
they got a license called VQF, or something like that,
which is anti-money laundering. Which is an
important subject because, in a world full of good-for-nothings, it’s important
to have someone keeping an eye on the rules.
Eidoo, you’ll hear this name a lot in the following videos
so you should have a look at them.
But let’s continue. The magic word is smart contract, let’s talk more about this, Thomas, help
us get to the heart of the matter. How smart and how contractual
are these smart contracts? Well they’re called smart contracts but in reality we often say
that they’re neither smart nor contracts. Because
they’re just a piece of code a program for our computer,
for our blockchain, which of course cannot be smart,
it’s not intelligent, it merely carries out what
it’s coded to do. In particular, a smart contract
on ethereum can carry out very simple instructions,
so it’s not necessary to imagine particularly complex logic
but even more-or-less simple logic. For example,
you receive a payment and you issue a service.
The word contract, well, definitely makes you think of legal
contracts, but it doesn’t have anything in common with legal contracts.
In particular a legal contract lends itself to interpretation,
while a smart contract is a piece
of code that gets carried out in the same way every time,
in a deterministic way, on the blockchain. This allows you
to achieve the same result each time with the same inputs. Clearly,
if we have an autonomous program, a smart contract being
executed on the blockchain like Ethereum, we always want
to get the same result when the inputs are equivalent.
So, when a payment is received, I want to be sure to always provide a certain service.
So it’s essential to have this kind of property.
So smart contracts are definitely something
very interesting, even if the name is far from
accurate. So you can really do thousands
of things with smart contracts if you think about it.
You can organize a service like Uber or Airbnb
or Mobike, to rent your bikes, in a completely
independent way. If someone makes a certain type of order,
then you release a certain type of bike, and it’s no longer available
for others. In general, this system, if you think about it,
can lead us to complete independence,
autonomy, or automation of some procedures that, today,
require perhaps manual inputs.
In particular, another application that could be built
with smart contracts is a decentralized exchange. Thomas, tell us what a decentralized exchange is, because it could
be something interesting, useful, important. In the case of blockchain,
exchanges are one of the biggest points of centralization,
which is creating problems of trust for trading, funds,
etc, just think about the case of Mt. Gox,
which was one of the centralized exchanges. So exchanges are
merely where you go to trade, particularly in cryptocurrency. You can exchange euro for bitcoin,
bitcoin for ethereum, etc. These centralized exchanges
are places that hold our funds and that
we need to trust. Which means that, as soon as these exchanges,
for one reason or another, disappear, well, you can simply
lose all your funds. They could run away with
your funds or provide an honest, transparent cryptocurrency trading service.
So, this is why decentralized exchanges
have an essential role. Decentralized exchanges are simply applications built like smart contracts, often on ethereum, which
allow users to have full control
over their own funds but at the same time to exchange
their assets in the cryptocurrency of their
choice, with other users on the same network. When you talk about crypto, about
blockchain, bitcoin, ethereum, etc, in general, it’s always
in reference to their value, to finance,
to cash. The truth is that, out there,
there’s a giant world alternatives, initiatives,
and possibilities. A particularly interesting trend
that I wanted to talk about with Thomas,
is that of the so-called non-fungible tokens. What’s that about? One of the hot topics,
in the last few months, has been non-fungible tokens.
What’s it about? Well, we already know what tokens are.
That is, when we have an ICO, a crowdfunding
event, it’s often to distribute
these tokens, these new assets, which live on
smart contracts (almost always on ethereum)
and which allow you to access various services on the blockchain.
Non-fungible tokens are a similar concept, so an asset that lives
on the blockchain, but unlike fungible tokens,
which we get with an ICO, etc, non-fungible tokens
are where each unit is different from the next. Which means that, each token is unique,
demonstrably so. Why, what’s the use of that?
The use is to represent unique pieces on the
blockchain. So that could be an
artwork, or it could be a Panini
sticker. It could be anything. Essentially, it’s
a demonstrably scarce token. So, it’s not demonstrably
scarce in the same sense that bitcoin is, in the sense that
we know that there’s a limited amount
in circulation, but each unit is essentially unique in itself,
so we only have one token of that type, which means that,
the sale or exchange of this token will have
different dynamics. It’s not traded on an exchange
but more likely on a platform similar to eBay, where we can
list our unique token for sale which could represent a unique work of art that possibly has
someone out there looking to buy it.
So what does this do for us in terms of art ownership beyond
the traditional arrangement? Well, for example,
thanks to the guarantee provided by the blockchain and to the flexibility
of the instrument, the smart contract, etc, we can easily possess a certain shared token,
so for example, we can have a token that
represents a very important or desired artwork,
which is owned by ten different parties,
and maybe one of these owns 10% and wants to sell it
or trade it on an exchange and they can do it in a completely secure way,
without needing to disturb the other nine. I think this subject of non-fungible
tokens is really cool. It’s like saying that,
soon each of us could own a piece of the Mona Lisa, if it were divided into enough pieces so that each one wouldn’t cost too much. The last thing to mention about ethereum
is its creator, Vitalik Buterin, who is a crazy character.
He’s exactly my idea of a mad genius. I read an
interview with him in which he says that he studied Chinese and
a couple of other languages at the same time, and his knowledge ranges from
economic theories to a thousand other things. He’s someone with a mind
that races at a thousand miles per hour,
objectively. He’s not your average character.
So then, the question is, what I’m curious about, is how closely
ethereum is connected to Vitalik. Because if ethereum
is completely connected to him, it would be a mess, if tomorrow
I decide to kidnap him, seeing as how ethereum has become
a protocol of fundamental importance
for humanity, you can turn it on or off, you see?
It’s a mess. Thomas, what do you think? Vitalik is a pretty interesting
character, we could say he’s kind of
the mascot of ethereum. For sure he’s
the original inventor of ethereum but what’s his
role today? Well technically, if I’m not mistaken,
he’s the lead scientist, so his role is to guide
research and development efforts on ethereum. What would happen today if
Vitalik disappeared? Well let’s say that, whether you
like it or not, today Vitalik still finds himself in the position of being the one to resolve any
potential disputes or questions that
may not necessarily be simple to resolve at
the community level. That being said, a blockchain
in and of itself, based on how it works, is a collective effort and it’s
necessary to arrive at a consensus to make any changes at
the protocol level. So that means that Vitalik maybe
can give his point of view and can have a degree of influence
in the community, but he can’t make decisions in
an autonomous, arbitrary way. So we can say that today
Vitalik is a component of the community like Satoshi
could have been, and clearly Satoshi was anonymous while
Vitalik isn’t, but this allows him to continue to guide the project,
which is still in it’s first evolutionary phase and which could
potentially evolve and change much more over time.
What would happen if Vitalik disappeared? There would probably be a bit of of confusion
but more because of the habit of having Vitalik nearby
than because of true technical necessity. With ethereum, the thing to keep
an eye on is the constant evolution, the constant change, that’s the
interesting thing to see. Not how it is today, but
in a year, two years, five years. At the end of the day,
that’s the key. What’s the saying?
Great companies don’t believe in excellence,
but in constant improvement and constant change. Amen.