Smart contracts could be the building blocks for entire decentralized autonomous organizations (DAO's) that function like corporations, engaging in economic transactions—buying and selling things, hiring labor, negotiating deals, balancing budgets and maximizing profits—without any human or institutional intervention. If one takes the view that corporations are just a complex web of contracts and obligations of varying size and scope, then such DAO's could be coded into Ethereum. This opens the door for all sorts of new and interesting possibilities such as emancipated machines that literally own themselves and people being employed directly by pieces of software.
Ethereum and Decentralized Applications
While DAO's may be a concept to be realized in the future, decentralized applications (DAPPS) are currently being developed for Ethereum today. These standalone applications utilize smart contracts and run on the EVM.
Some examples include micro-payments platforms, reputation functions, online gambling apps, schedulers and P2P marketplaces. The key feature to DAPPs is that they run across a decentralized network and are enforced without the need for a central authority or overseer. Any sort of multi-party application that today relies on a central server can be disintermediated via the Ethereum blockchain. This can eventually include chat, gaming, shopping and banking. The Bottom Line What bitcoin did for money and payments by harnessing blockchain technology, Ethereum may do for applications of all shapes and sizes. With a built-in scripting language and distributed virtual machine, smart contracts can be built to carry out all sorts of functions without the need for a trusted third party or central authority. Using its internal cryptocurrency, ether, nodes can be paid for their processing power in running these decentralized apps, and eventually entire decentralized autonomous organizations may exist in an ether economy. The potential is exciting, and the price of ether has recently risen to over $10/ETH, giving Ethereum an implied value of nearly $800 million in just a few years since it was first conceptualized.
Some examples include micro-payments platforms, reputation functions, online gambling apps, schedulers and P2P marketplaces. The key feature to DAPPs is that they run across a decentralized network and are enforced without the need for a central authority or overseer. Any sort of multi-party application that today relies on a central server can be disintermediated via the Ethereum blockchain. This can eventually include chat, gaming, shopping and banking. The Bottom Line What bitcoin did for money and payments by harnessing blockchain technology, Ethereum may do for applications of all shapes and sizes. With a built-in scripting language and distributed virtual machine, smart contracts can be built to carry out all sorts of functions without the need for a trusted third party or central authority. Using its internal cryptocurrency, ether, nodes can be paid for their processing power in running these decentralized apps, and eventually entire decentralized autonomous organizations may exist in an ether economy. The potential is exciting, and the price of ether has recently risen to over $10/ETH, giving Ethereum an implied value of nearly $800 million in just a few years since it was first conceptualized.
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