Ethereum as Platform Innovations
By Othman Darwish
Researcher of products development use the term “platform” to describe projects, that create new generation of families of products, for a specific firm. Platform innovation firm provide the foundation and common components and technologies, acting as infrastructure, where other innovations can be built on, as result of this model, new innovations diffused rapidly.
Digital Currency like Bitcoin come with different type of innovations: Product Innovation such as cross-border payments, irreversible transactions, and pseudonyms payments. Process Innovation where governance based on censuses between untrusted parties, rather than centralized party and authority, and this done through different consensus algorithms such as proof of work and proof of stack. Position Innovation, digital currencies are open source projects, the participating and the development is open for everyone. Paradigm Innovation which enable transferring money between two peers without need for trusted central party.
Bitcoins basic programmable instruction set or what is known as bitcoins transaction script[1] designed basically to serve the execution of instruction that is needed during payment exchanges, such as poof the ownership of a token, unlocking or spending a transaction …etc.) . Blockchain or Distributed Ledger Technology -DLT-, the underlaying technology of Bitcoins payment network, have the technological potentials which enable it to goes beyond the digital currency and payments exchange, and could be act as platform base innovation or infrastructure for new innovations, In 2014 Ethereum network was built as newly innovated decentralized blockchain platform, that is able to execute programmable decentralized unstoppable application or what is known as DApps, unlike traditional applications ,which follow centralize traditional client-server model , or distributed model , where different nodes collaborate common goals, DApps are application which run in peer to peer network of computer ,and designed in away the enable it to run in the internet, without the control or the need of single entity . In order for DApps to be host inside a blockchain and be a part of global distributed ledger, it must meet specific criteria, such as it must be completely open source, data and records of different operation must be cryptographically sorted, and be able to store and generate cryptographic tokens. Just like traditional application, DApps able to expose front end user interface, and back end business logic, that business logic or program code know as smart contract.
Ethereum is an open source smart contract protocol and is decentralized – representing a cultural shift of some of its predecessors (just as Bitcoin also was). Ethereum uses the“ether” as digital currency to motivate a network of peers to validate transactions, secure the network and achieve consensus about what exists and what has occurred – thus enabling a smart contract to self-execute .Smart Contract is application program that run inside blockchain, in open and transparent way, efficient, and secure tamper resistant approach, without the need for centralized or trusted service provider , when transacting a smart contract a mutable ( change resistance ) records logged inside blockchain. its acts as rule set and form application business logic, it could use virtually to exchange unlimited possible assets type, such as currency, house, or a bond, can be represented in the form of a token and consequently traded on a blockchain,. This business process model starts motivating many of the existing online marketplaces, and services providers that have grown up recently, since it has the potential to dramatically reduce their administrative costs and transaction times.
Smart Contract target to provide a more advanced security to traditional contract law and regulations, and reducing the burden and complexity of writing new smart contract, as smart contract technology can be used to automatically execute terms and conditions of a contract between two or more parties [2] . The terms of legal contract are written in a programming code, and this code is used to define the rules and consequences in the same way that a traditional legal document act, declaring and stating the obligations, benefits and penalties which may be due to either party in various different circumstances. This code is then autonomously –automatically executed by a distributed ledger infrastructure, without the further onerous input from any party. It’s unlikely that smart contract going to replace the whole traditional contracting laws (at least at near future), but such innovation going to change the way that businesses and even induvial contracts conducted and the way of enforcing their agreements.
The emergence of bockchain technology and cryptocurrencies, have changed dramatically the way that entrepreneurs and startups raise their fund; traditionally startups companies raise their fund in limited ways: through private equity, venture capital, or bank loan. Now day, startups companies turned to blcokchain as platform to raise capital for their projects.
Initial Coin Offer –ICOs are newly innovated crowdfunding approach, and enable those companies to fund their projects, by accepting cryptocurrencies like ETH instead of traditional currency. The crowdfunding events know as tokens sales, where investor from anywhere in the world can then invest. During tokens sales, ICOs distributes digital tokens to investors in exchange for cryptocurrency investment. Etheruem platform act as attractive infrastructure for those ICOs because it’s of smart contract features and standardized token e.g. ERC-20 [3] , This standard allows projects to issue tokens with customized characteristics on the Ethereum blockchain. ICOs tokens can then be accounted for, transferred and stored all on the Ethereum blockchain. After the token sale ended as stated and defined in ERC-20 smart contract, ICOs tokens become available to trade on exchanges.
Blockchain as Innovated platform and their complementary innovated applications such ( agreement smart contract ,ICOs ) are still in the early stages of its developments , in order to success and provide long term valuable products and services ,it have to create a solutions for existing challenging and potential problems , for instance, in smart contract as agreement ,there is inflexibility in forming a contract terms and conditions, this is because the contract is written as software program in distributed ledger ,and once agreed upon it cannot be easily modified. unlike traditional legal contracts, there is always the conditions that a contract can be amended, novated or terminated before the contractual goal is complete. A smart contract would need similar mechanisms to ensure flexibility and commerciality. From another hand, since smart contracts and blockchain are open by design, it has to find a solution for transactions confidentiality. In traditional contractual documents, there is often a non-disclosure clause that both parties will keep information (particularly commercially sensitive terms such as pricing) confidential, this issue need to be addressed, researches around a concept like “zero knowledge proofs” [4] is being explored to devise a way to separate the way of verifying a transaction from seeing the content of a transaction. Legal jurisdiction is another big challenge need to be address, the blockchain technology and concept is so new, and there are very few courts and authorities that are set up to recognize the legality of financial smart contracts, to make it success, blockchain innovators need to keep the needs of society and consumers in mind, and businesses need to ensure legal compliance to protect their community and ensure trust and safety.
Digital Currency like Bitcoin come with different type of innovations: Product Innovation such as cross-border payments, irreversible transactions, and pseudonyms payments. Process Innovation where governance based on censuses between untrusted parties, rather than centralized party and authority, and this done through different consensus algorithms such as proof of work and proof of stack. Position Innovation, digital currencies are open source projects, the participating and the development is open for everyone. Paradigm Innovation which enable transferring money between two peers without need for trusted central party.
Bitcoins basic programmable instruction set or what is known as bitcoins transaction script[1] designed basically to serve the execution of instruction that is needed during payment exchanges, such as poof the ownership of a token, unlocking or spending a transaction …etc.) . Blockchain or Distributed Ledger Technology -DLT-, the underlaying technology of Bitcoins payment network, have the technological potentials which enable it to goes beyond the digital currency and payments exchange, and could be act as platform base innovation or infrastructure for new innovations, In 2014 Ethereum network was built as newly innovated decentralized blockchain platform, that is able to execute programmable decentralized unstoppable application or what is known as DApps, unlike traditional applications ,which follow centralize traditional client-server model , or distributed model , where different nodes collaborate common goals, DApps are application which run in peer to peer network of computer ,and designed in away the enable it to run in the internet, without the control or the need of single entity . In order for DApps to be host inside a blockchain and be a part of global distributed ledger, it must meet specific criteria, such as it must be completely open source, data and records of different operation must be cryptographically sorted, and be able to store and generate cryptographic tokens. Just like traditional application, DApps able to expose front end user interface, and back end business logic, that business logic or program code know as smart contract.
Ethereum is an open source smart contract protocol and is decentralized – representing a cultural shift of some of its predecessors (just as Bitcoin also was). Ethereum uses the“ether” as digital currency to motivate a network of peers to validate transactions, secure the network and achieve consensus about what exists and what has occurred – thus enabling a smart contract to self-execute .Smart Contract is application program that run inside blockchain, in open and transparent way, efficient, and secure tamper resistant approach, without the need for centralized or trusted service provider , when transacting a smart contract a mutable ( change resistance ) records logged inside blockchain. its acts as rule set and form application business logic, it could use virtually to exchange unlimited possible assets type, such as currency, house, or a bond, can be represented in the form of a token and consequently traded on a blockchain,. This business process model starts motivating many of the existing online marketplaces, and services providers that have grown up recently, since it has the potential to dramatically reduce their administrative costs and transaction times.
Smart Contract target to provide a more advanced security to traditional contract law and regulations, and reducing the burden and complexity of writing new smart contract, as smart contract technology can be used to automatically execute terms and conditions of a contract between two or more parties [2] . The terms of legal contract are written in a programming code, and this code is used to define the rules and consequences in the same way that a traditional legal document act, declaring and stating the obligations, benefits and penalties which may be due to either party in various different circumstances. This code is then autonomously –automatically executed by a distributed ledger infrastructure, without the further onerous input from any party. It’s unlikely that smart contract going to replace the whole traditional contracting laws (at least at near future), but such innovation going to change the way that businesses and even induvial contracts conducted and the way of enforcing their agreements.
The emergence of bockchain technology and cryptocurrencies, have changed dramatically the way that entrepreneurs and startups raise their fund; traditionally startups companies raise their fund in limited ways: through private equity, venture capital, or bank loan. Now day, startups companies turned to blcokchain as platform to raise capital for their projects.
Initial Coin Offer –ICOs are newly innovated crowdfunding approach, and enable those companies to fund their projects, by accepting cryptocurrencies like ETH instead of traditional currency. The crowdfunding events know as tokens sales, where investor from anywhere in the world can then invest. During tokens sales, ICOs distributes digital tokens to investors in exchange for cryptocurrency investment. Etheruem platform act as attractive infrastructure for those ICOs because it’s of smart contract features and standardized token e.g. ERC-20 [3] , This standard allows projects to issue tokens with customized characteristics on the Ethereum blockchain. ICOs tokens can then be accounted for, transferred and stored all on the Ethereum blockchain. After the token sale ended as stated and defined in ERC-20 smart contract, ICOs tokens become available to trade on exchanges.
Blockchain as Innovated platform and their complementary innovated applications such ( agreement smart contract ,ICOs ) are still in the early stages of its developments , in order to success and provide long term valuable products and services ,it have to create a solutions for existing challenging and potential problems , for instance, in smart contract as agreement ,there is inflexibility in forming a contract terms and conditions, this is because the contract is written as software program in distributed ledger ,and once agreed upon it cannot be easily modified. unlike traditional legal contracts, there is always the conditions that a contract can be amended, novated or terminated before the contractual goal is complete. A smart contract would need similar mechanisms to ensure flexibility and commerciality. From another hand, since smart contracts and blockchain are open by design, it has to find a solution for transactions confidentiality. In traditional contractual documents, there is often a non-disclosure clause that both parties will keep information (particularly commercially sensitive terms such as pricing) confidential, this issue need to be addressed, researches around a concept like “zero knowledge proofs” [4] is being explored to devise a way to separate the way of verifying a transaction from seeing the content of a transaction. Legal jurisdiction is another big challenge need to be address, the blockchain technology and concept is so new, and there are very few courts and authorities that are set up to recognize the legality of financial smart contracts, to make it success, blockchain innovators need to keep the needs of society and consumers in mind, and businesses need to ensure legal compliance to protect their community and ensure trust and safety.
[1] Bitcoin
script https://en.bitcoin.it/wiki/Script
[2] Smart
Contracts – From Ethereum to Potential Banking Use Cases http://blockchainapac.fintecnet.com/uploads/2/4/3/8/24384857/smart_contracts.pdf
[3] ERC20
Token Standard https://theethereum.wiki/w/index.php/ERC20_Token_Standard
[4] Zero-knowledge
proof https://en.wikipedia.org/wiki/Zero-knowledge_proof
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