Wel­come to the Hive Mind

Here’s how blockchain could trans­form ev­ery­thing in your life. For starters, say good­bye to the cloud

Newsweek International - - TECHNOLOGY - — ADAM PIORE

ACOLYTES RAVE ABOUT ITS WORLD- chang­ing tech­nol­ogy. By one es­ti­mate, cor­po­ra­tions will have spent nearly $11 bil­lion on blockchain by 2022. And when you con­sider the po­ten­tial ad­van­tages, you can see why: The tech­nol­ogy can’t be hacked or tam­pered with. It cuts out mid­dle­men—the “trusted in­ter­me­di­aries” who take a cut with each trans­ac­tion. And it could dis­rupt the gi­ant com­puter in­stal­la­tions con­trolled by Google, Ama­zon and other cor­po­rate en­ti­ties— col­lec­tively known as the cloud—with a “hive mind” of in­ter­linked com­put­ers.

It’s too early to know pre­cisely how that might af­fect our daily lives, but some ven­tures sug­gest sig­nif­i­cant ben­e­fits. → Con­trol over your per­sonal data. A startup called uport will soon of­fer a ser­vice that will au­then­ti­cate your iden­tity when you in­ter­act with other dig­i­tal ser­vices. But it will prevent those ap­pli­ca­tions from col­lect­ing any of your per­sonal data un­less you ex­plic­itly grant per­mis­sion. → Bro­ker­less real es­tate in­vest­ments. Meridio, an off­shoot of Con­sen­sys, is work­ing on a plat­form that al­lows peo­ple to own frac­tional shares of prop­erty, record­ing buy­ing and sell­ing trans­ac­tions through blockchain. The ser­vice is aimed at those who might not oth­er­wise in­vest in prop­erty di­rectly. → Di­rect sales from mu­si­cian to lis­tener. Ujo, a startup, is de­vel­op­ing an app that uses the self-ex­e­cut­ing “smart con­tracts” as­pect of blockchain to set up au­to­matic roy­alty pay­ments. The idea is that artists will pro­vide their mu­sic di­rectly to con­sumers, cut­ting out itunes, Spo­tify, Pan­dora and other mid­dle­men.

→ Jobs for the gig econ­omy. Gate­coin, a cur­rency ex­change in Hong Kong, will of­fer a vir­tual bul­letin board for com­puter pro­gram­mers, con­nect­ing peo­ple for small odd-job cod­ing projects. Through smart con­tracts, it will au­to­mat­i­cally trans­fer pay­ments us­ing cryp­tocur­ren­cies such as bit­coin once the work is com­pleted. “It’s about re­ally em­pow­er­ing the fu­ture of work to be more ef­fi­cient in terms of pair­ing peo­ple,” says Ron Gar­rett, man­ag­ing part­ner of Con­sen­sys Labs. “We’re go­ing to be able to move on to a lot more dif­fer­ent types of prob­lems and dif­fer­ent types of in­dus­try. More and more peo­ple are not tak­ing stan­dard 9-to-5 jobs, work­ing at desks. They’re trav­el­ing and look­ing for work eco­nom­ics that sup­port that.” → Track­ing the sup­ply chain. IBM and Con­sen­sys are of­fer­ing blockchain-based prod­ucts to track mer­chan­dise along a sup­ply chain—from sup­pli­ers of ma­te­ri­als to man­u­fac­tur­ers and all the way through to ship­ping of fi­nal prod­ucts—so that lost items can eas­ily be lo­cated and dis­putes re­solved with­out de­lay.

→ Authen­ti­cat­ing mer­chan­dise. IBM and Con­sen­sys have launched ef­forts to use blockchain to en­sure that goods come from le­git­i­mate sources. IBM and a startup called Everledger, for in­stance, are us­ing the tech­nol­ogy to make it eas­ier to iden­tify “blood di­a­monds,” which come from zones of con­flict, in com­pli­ance with United Na­tions rules. In an ef­fort to stamp out il­le­gal fish­ing and hu­man rights abuses, Con­sen­sys has teamed up with the World Wildlife Fund to track tuna caught in the Pa­cific.

un­der $2 bil­lion in 2018 to $11.7 bil­lion by 2022, ac­cord­ing to a re­port by the In­ter­na­tional Data Cor­po­ra­tion. The firm looked at 16 dif­fer­ent use cases, such as reg­u­la­tory com­pli­ance, food safety and dig­i­tal iden­tity. Iron­i­cally, the most ag­gres­sive spenders so far have come from the very in­dus­try the orig­i­nal bit­coin blockchain sought to by­pass: fi­nan­cial ser­vices firms. They are ex­pected to spend $552 mil­lion in 2018 alone, ac­cord­ing to the IDC re­port. An­other study based on a sur­vey of 200 bank­ing in­dus­try hon­chos placed the num­ber at $1.7 bil­lion, with one in 10 of the banks and other com­pa­nies sur­veyed re­port­ing blockchain bud­gets in ex­cess of $10 mil­lion. The typ­i­cal “top-tier bank” had 18 full-time em­ploy­ees work­ing on the tech­nol­ogy and planned to go live within the next 24 months, ac­cord­ing to a re­port from Greenwich As­so­ci­ates.

Those push­ing the blockchain tech­nol­ogy no longer see much con­nec­tion to the vir­tual coin so long ex­co­ri­ated by in­dus­try lead­ers—most fa­mously by Jamie Di­mon, the chair­man and CEO of Jpmor­gan Chase who has called bit­coin a “fraud” and a “scam.” Rather, they ar­gue, the ex­is­tence of their own dis­trib­uted ledgers of trans­ac­tions will some­day save fi­nan­cial ser­vices firms bil­lions of dol­lars in var­i­ous ways: by in­creas­ing the ac­cu­racy and short­en­ing the time for set­tle­ment in the trad­ing of eq­uity shares, speed­ing up and sim­pli­fy­ing cross-border pay­ments, and al­low­ing self-ex­e­cut­ing smart con­tracts that au­to­mat­i­cally en­force the obli­ga­tions of all par­ties in a con­tract. And all of that would be ac­com­plished with­out the added ex­pense of the hu­man in­ter­me­di­aries cur­rently needed to mon­i­tor and make sure the trans­ac­tions hap­pen.

“Trans­ac­tions are grouped in blocks, recorded one af­ter the other in a chain of blocks (the ‘blockchain’),” the con­sult­ing gi­ant Deloitte re­cently wrote in a re­port is­sued to its bank­ing clients. “The links between blocks and their con­tent are pro­tected by cryp­tog­ra­phy, so pre­vi­ous trans­ac­tions can­not be de­stroyed or forged. This means that the ledger and the trans­ac­tion net­work are trusted with­out a cen­tral au­thor­ity—a ‘mid­dle­man.’” The tech­nolo­gies could ben­e­fit smaller play­ers in myr­iad other in­dus­tries as well. The low­ered cost of do­ing busi­ness that will re­sult from ef­fi­cien­cies could un­lock $1 tril­lion in trade that oth­er­wise wouldn’t oc­cur, mostly in emerg­ing economies and among smal­land medium-size com­pa­nies, ac­cord­ing to the World Eco­nomic Fo­rum. (It would do so by, among other things, mit­i­gat­ing credit risk, low­er­ing fees and speed­ing up pro­cess­ing times at borders.) Sup­ply-chain spe­cial­ists, mean­while, have emerged as some of the tech­nol­ogy’s most de­vout pros­e­ly­tiz­ers. Jerry Cuomo, an IBM fel­low and the com­pany’s vice pres­i­dent of blockchain de­vel­op­ment, talks about the day he first learned about Ethereum and

THE COM­PANY STRUC­TURE IS IN­SPIRED BY LU­BIN’S UTOPIAN IDEALS. IN­STEAD OF A TRA­DI­TIONAL HI­ER­AR­CHY, THE RE’S A GOV­ER­NANCE STRUC­TURE CALLED A “HOLOC­RACY.”

read Bu­terin’s re­port as if it were a white-light ex­pe­ri­ence.

“I re­al­ized it was go­ing to change the world,” he says. “I caught blockchain fever. Ev­ery­thing sud­denly made sense.”

Cuomo was at the time a found­ing mem­ber and chief tech­nol­ogy of­fi­cer of an IBM busi­ness unit with a $6 bil­lion port­fo­lio of of­fer­ings that fo­cused on “mid­dle­ware,” the soft­ware and sys­tems that act as a bridge between dif­fer­ent server net­works, and dif­fer­ent busi­nesses. When an em­ployee first ex­plained Bu­terin’s idea to him, Cuomo’s mind im­me­di­ately went to the kind of pro­to­typ­i­cal dis­pute he saw ev­ery day: “A sup­plier calls a cus­tomer and says, ‘Hey, you didn’t pay me.’ The cus­tomer says, ‘I’ll pay you when you send me the bloody thing I or­dered.’ The sup­plier says, ‘But I sent it.’ The ship­ping com­pany says, ‘We de­liv­ered it.’”

From there, says Cuomo, it can take an av­er­age of 44 days for IBM’S sup­ply chains to set­tle up. “In IBM, we see tens of mil­lions of dol­lars—a hun­dred mil­lion dol­lars eas­ily—in any given sup­ply chain, on any given day, tied up in these dis­putes, and it’s ac­cepted as nor­mal busi­ness prac­tice.”

If there was one set of dig­i­tal, im­mutable records shared by ev­ery­one in­volved, up­dated in­stantly and si­mul­ta­ne­ously on ev­ery party’s cor­po­rate com­puter ev­ery step of the way, there would be no need to ar­gue over three dif­fer­ent sets of books, en­gage in con­tentious phone calls and in­volve numer­ous per­son­nel in these dis­putes. One look at blockchain, and you could re­solve it and lo­cate the lost item al­most in­stantly.

Such a sys­tem, Cuomo re­al­ized, had the po­ten­tial to dras­ti­cally re­duce costs in myr­iad other ways too. In­sur­ance pre­mi­ums would go down, since mer­chan­dise would be more eas­ily track­able. Com­puter se­cu­rity costs might be cut or shared between dif­fer­ent ac­tors. And since there would be only one set of records, ad­min­is­tra­tive per­son­nel might be freed up to do other things.

Af­ter read­ing Bu­terin’s pa­per, Cuomo “fell in love with Ethereum” and pushed IBM to in­vest heav­ily in blockchain tech­nolo­gies. But when Cuomo and his team ac­tu­ally be­gan look­ing at what it would take to meet the pri­vacy and se­cu­rity re­quire­ments of IBM’S cor­po­rate clients, they de­vel­oped reser­va­tions. Cuomo knew his firm’s cor­po­rate clients would love the idea of a dis­trib­uted ledger, but he also knew they’d want to con­trol to whom it was dis­trib­uted, an is­sue Ethereum’s pro­gram­mers had not yet be­gun to con­sider. Cuomo and his team thus set to work ex­am­in­ing how they might cre­ate “per­mis­sioned” blockchains that only a se­lect few could ac­cess and see. Build­ing such a “walled gar­den” on top of the ex­ist­ing Ethereum ecosys­tem, they con­cluded, would re­quire “deep surgery” on the core Ethereum code. Fur­ther­more, says Cuomo, when IBM’S cor­po­rate lawyers ap­proached the non­profit Ethereum Foun­da­tion—set up to over­see the cre­ation

of the new blockchain ecosys­tem—they found its com­mu­ni­tar­ian in­tel­lec­tual prop­erty and li­cens­ing rules to be too re­stric­tive: The foun­da­tion, rather than IBM, would own the rights.

“So any com­mer­cial­iza­tion would have to go through the Ethereum Foun­da­tion,” says Cuomo, “and for lawyers within IBM specif­i­cally, but more gen­er­ally from a com­merce per­spec­tive, those kind of open-source li­cens­ing terms are usu­ally not looked upon very well.”

That was 2015, and IBM de­cided to go its own way, lead­ing the ef­forts to set up a par­al­lel open-source col­lab­o­ra­tion with more cor­po­rate-friendly IP, or in­ter­net pro­to­col, rules. Known as Hyper­ledger, the project is run out of the Linux Foun­da­tion and likely has the sec­ond-largest num­ber of de­vel­op­ers work­ing on it, be­hind Ethereum. The project is over­seen by a gov­ern­ing board con­sist­ing of 20 mem­bers, among them Cisco, In­tel, Hi­tachi, Bank of New York Melon, Wells Fargo and Ac­cen­ture. It is chaired by Blythe Mas­ters, a for­mer Jpmor­gan ex­ec­u­tive and the cur­rent CEO of Dig­i­tal As­set Hold­ings, a com­pany she co-founded to build dis­trib­uted ledger tech­nolo­gies for reg­u­lated fi­nan­cial in­sti­tu­tions. (Prior to get­ting in­volved with blockchain, Mas­ters was per­haps best known for in­vent­ing the credit de­fault swap, a fi­nan­cial in­stru­ment that would later play a no­to­ri­ous role in the 2008 fi­nan­cial cri­sis—the same cri­sis many peo­ple credit with fuel­ing the rise of bit­coin).

You’re li­able to hear a lot more about Hyper­ledger in the months ahead. Re­cently, some of the first cor­po­rate blockchain projects have moved from proof-of-con­cept phase to fully

op­er­a­tional pro­grams, us­ing in­fra­struc­ture de­signed by IBM con­sul­tants, de­ployed on the tech­nol­ogy called Hyper­ledger Fab­ric that IBM helped de­velop and re­liant on IBM to pro­vide the ini­tial com­put­ers on the blockchain and “on­board” par­tic­i­pants.

Among them is We.trade, a con­sor­tium of 10 Euro­pean banks—in­clud­ing HSBC, San­tander and So­ciété Générale—which launched last spring. The net­work pro­vides a blockchain that con­nects the par­ties in­volved in cross-border trade trans­ac­tions—in­clud­ing the buyer, the buyer’s bank, seller, seller’s bank and trans­porter. It is ac­ces­si­ble from any con­nected de­vice and is now be­ing used to man­age, track and ex­e­cute a small but rapidly in­creas­ing num­ber of do­mes­tic and in­ter­na­tional trade trans­ac­tions. A high-pro­file roll­out is ex­pected some­time this fall.

An Ibm-backed food safety ef­fort called Food Trust went live in Au­gust. Ac­cord­ing to the Cen­ters for Dis­ease Con­trol and Pre­ven­tion, ev­ery year, about 28 mil­lion peo­ple fall ill in the United States as a re­sult of food­borne ill­nesses; about 3,000 die. Re­calls and the cost of on­go­ing mon­i­tor­ing and track­ing ef­forts cost the in­dus­try bil­lions. In 2017, IBM and Wal­mart’s vice pres­i­dent for food safety, Frank

Yian­nas, demon­strated how blockchain might fa­cil­i­tate the rapid re­sponse to an out­break or sim­ply make it eas­ier to com­ply with reg­u­la­tory in­spec­tions. Yian­nas as­signed a team to trace the ori­gin of a sin­gle pack­age of man­gos us­ing tra­di­tional meth­ods. It took them 6 days, 18 hours and 26 sec­onds. Us­ing the blockchain, it took 2 sec­onds.

Since Food Trust blockchain went live, more than 2 mil­lion trans­ac­tions have been recorded, and more than 4 mil­lion in­di­vid­ual prod­ucts have now been logged on it by Wal­mart, Kroger and other big-name sup­pli­ers, ac­cord­ing Brigid Mc­der­mott, vice pres­i­dent of IBM Food Trust, who is over­see­ing the project. That, of course, is just a frac­tion of the food mov­ing through the sys­tem with just a small group of the ma­jor play­ers in­volved. (There are an es­ti­mated 1.2 mil­lion food sup­pli­ers, 200,000 re­tail­ers and 500 mil­lion farm­ers world­wide.)

To start, each of the par­tic­i­pat­ing sup­pli­ers—in­clud­ing Driscoll’s, Dole, Nestlé baby food, Unilever and Tyson Foods—have be­gun track­ing some por­tion of their foods from farm to ta­ble. “We’re in the early stages now with a small num­ber of prod­ucts,” says Mc­der­mott. “We’re not to scale—that’s next. But we’ve moved from a one-off, care­fully con­trolled sit­u­a­tion to one where you have pro­duc­tion data and real prod­ucts run­ning through the sys­tem.”

IBM is not the only For­tune 500 com­pany whose blockchain ef­forts are be­gin­ning to come to fruition. A con­sor­tium called R3 has more than 100 of the world’s largest fi­nan­cial ser­vices firms as mem­bers, and its par­tic­i­pants con­tinue to an­nounce new part­ner­ships and ini­tia­tives. But what of Ethereum and that orig­i­nal mis­sion? When is that great equal­iz­ing “Web 3.0” com­ing, and what­ever hap­pened to Lu­bin’s big dreams?

Spawn of the Genius Alien

the of­fice of con­sen­sys, the for-profit com­pany that to­day serves as Lu­bin’s home base, in Brook­lyn, New York, seems a world away from IBM’S but­toned-down, cor­po­rate cam­puses. It’s pretty far from Ja­maica too. The build­ing is lo­cated in Flat­bush, a gritty in­dus­trial neigh­bor­hood dom­i­nated by hulk­ing, low-slung ware­house spa­ces, and its front door is sur­rounded by graf­fiti and cov­ered with an ex­plo­sion of de­cals. A plac­ard on the side­walk in front of a ground-floor cof­fee shop ad­ver­tises its spe­cials: “cannabis cold brew” and “kom­bucha on tap.” On a re­cent af­ter­noon, the heavy me­tal front door opened to dis­gorge a gag­gle of ca­su­ally dressed hip­sters and techies

YOU FOL­LOW THE ECOSYS­TEM, AND THE ECOSYS­TEM IS CLEARLY BE­HIND THE ETHEREUM CHAIN.

car­ry­ing Wif­fle ball bats, on their way to a team-build­ing ex­er­cise.

Ini­tially, upon his re­turn to Ja­maica, Lu­bin had been in­tent on main­tain­ing his is­land life­style and par­tic­i­pat­ing in the blockchain rev­o­lu­tion from afar. But it didn’t take long for him to go all in. Within weeks, in late Jan­uary, Wired mag­a­zine spot­ted him at a bit­coin con­fer­ence in Mi­ami in the com­pany of his baby-faced new friend. Bu­terin, he ex­plained to the re­porter, was “a genius alien that had ar­rived on this planet to de­liver the sacro­sanct gift of de­cen­tral­iza­tion.”

With Lu­bin’s back­ground in both tech and busi­ness, he quickly emerged as a key strate­gist and took the ti­tle of chief op­er­at­ing of­fi­cer of the en­tity that would bring Bu­terin’s vi­sion to fruition. Af­ter that, things moved fast. A foun­da­tion head­quar­ters was es­tab­lished in Switzer­land (“There was a fear that we had about how the United States would treat blockchain projects,” Lu­bin re­calls). In July 2014, Bu­terin, Lu­bin and the core team launched a “pre­sale” of a new cryp­tocur­rency called Ether that was to serve as the na­tive to­ken on the Ethereum plat­form.

By then, word of Bu­terin’s big idea had spread through the blogs and chat rooms fre­quented by the small, ob­ses­sively de­voted bit­coin com­mu­nity. His white pa­per had been widely read, and an­tic­i­pa­tion of the Ether coin launch had been build­ing for months. The pre­sale of the coin raised 3,700 bit­coins in the first 12 hours, val­ued at $2.3 mil­lion. By the time it ended six weeks later, it had sold al­most 10 times that.

The money was used to fund the op­er­a­tions of Ethereum Switzer­land Gmbh and the Ethereum Foun­da­tion, the two or­ga­ni­za­tions set up to over­see the project. Lu­bin founded Con­sen­sys in the months lead­ing up to the 2015 plat­form launch to build ap­pli­ca­tions on Ethereum and cat­alyze the de­vel­oper com­mu­nity to join him in do­ing so. He chose to set up in New York City to help “ac­ti­vate” the United States.

The growth of Con­sen­sys, like the growth of Ethereum it­self, has been ex­plo­sive. To­day, the com­pany has 1,000 em­ploy­ees, work­ing in 28 coun­tries, some from their homes or cof­fee shops, some in for­mal of­fice set­ups in Brook­lyn; San Fran­cisco; Lon­don; Tel Aviv, Is­rael; Bucharest, Ro­ma­nia; and Syd­ney and Queens­land, Aus­tralia. The com­pany struc­ture is in­spired by Lu­bin’s utopian ideals. Em­ploy­ees choose their own ti­tles, and in­stead of a tra­di­tional hi­er­ar­chy, there’s a gov­er­nance struc­ture called a “holoc­racy,” a de­cen­tral­ized sys­tem of man­age­ment where power is “dis­trib­uted” among self-or­ga­niz­ing teams. Funds are doled out for in­di­vid­ual projects by a “re­source-al­lo­ca­tion cir­cle”—in­di­vid­u­als who are cho­sen by their co-work­ers to serve based on their abil­i­ties.

In Brook­lyn, Lu­bin’s desk is in the far cor­ner of a vast, open workspace crammed between those of ca­su­ally dressed coders, fu­ri­ously peck­ing away on their com­put­ers. On this af­ter­noon, he’s dressed in tan shorts, a T-shirt and a pair of what look like Nike shower shoes. At 53, he ap­pears to be the old­est in the room, dis­tin­guished fur­ther by a fully shaved head.

While IBM was cre­at­ing Hyper­ledger, Con­sen­sys ini­tially fo­cused on build­ing out the un­der­ly­ing in­fra­struc­ture for what Lu­bin and Bu­terin re­fer to as their “vir­tual ma­chine,” the global web of thou­sands of in­ter­linked com­put­ers run­ning the con­tin­u­ously up­dat­ing Ethereum blockchain. And in the months af­ter it went live, pro­gram­mers at Con­sen­sys in­vented tools that would make it eas­ier—and more at­trac­tive—for in­de­pen­dent de­vel­op­ers to build ap­pli­ca­tions that could be run on Ethereum.

One of those ef­forts was a plug-in for Google’s Chrome browser called Me­ta­mask that pro­vides a por­tal al­low­ing de­vel­op­ers to di­rectly con­nect to the Ethereum blockchain through the World Wide Web. An­other, Truf­fle, billed as a “Swiss Army knife” for de­vel­op­ers, con­tains a tool­box of boil­er­plate cod­ing and short­cuts for cre­at­ing new “smart con­tract” ap­pli­ca­tions.

WE’VE GOT A LONG WAY TO GO, AND WE’RE GO­ING TO GO THROUGH EPICS OF DI­VER­GENCE AND CON­VER­GENCE, AND IT’S OK.”

As an added in­cen­tive, Con­sen­sys es­tab­lished its own ven­ture pro­duc­tion stu­dio, Con­sen­sys Labs, which sup­ports en­trepreneurs with fund­ing and ad­vice. They are cur­rently as­sist­ing 42 projects, with teams rang­ing in size from two to 50 em­ploy­ees, ac­cord­ing to Ron Gar­rett, man­ag­ing part­ner of the stu­dio. Gar­rett and oth­ers at Con­sen­sys re­fer to the kinds of ap­pli­ca­tions that will even­tu­ally pop­u­late Ethereum and other pub­lic blockchains (a num­ber of would-be Ethereum usurpers have launched in re­cent months with their own na­tive to­kens) as Web 3.0 ap­pli­ca­tions, or Dapps, for de­cen­tral­ized ap­pli­ca­tions.

Web 3.0

per­haps the big­gest ev­i­dence that con­sen­sys and ethereum have be­gun to ma­ture is that by 2017 both had built out enough of the ecosys­tem’s fun­da­men­tal in­fra­struc­ture to be­gin to ad­dress the con­cerns IBM’S Cuomo rec­og­nized a cou­ple years ear­lier.

To make sure Ethereum is at­trac­tive to busi­nesses as blockchain evolves, Lu­bin has lured away some of the core de­vel­op­ers in­volved in the cre­ation of IBM’S Hyper­ledger fab­ric and other cor­po­rate blockchains. He’s put them to work de­sign­ing ways to build pri­vate, per­mis­sioned blockchains, so-called “side chains,” off of the pub­lic blockchain.

John Wolpert, a for­mer IBM ex­ec­u­tive who served as global head of blockchain prod­ucts un­der Cuomo, joined Lu­bin soon af­ter the launch of Hyper­ledger Fab­ric in 2017. “You want to come start busi­nesses on the next in­ter­net?” Wolpert re­calls Lu­bin ask­ing him. “Joe’s pretty hard to say no to,” he adds. “And it ex­cited me be­cause I’m an ap­pli­ca­tions guy. Now that Ethereum has ma­tured, we can do re­ally in­ter­est­ing things. You fol­low the ecosys­tem, and the ecosys­tem is clearly be­hind the Ethereum chain.”

Wolpert be­lieves that by 2020 the dis­tinc­tion between pri­vate and pub­lic blockchains will dis­ap­pear, and in­creas­ingly most will be­come in­ter­op­er­a­ble and con­nected.

Clark Thomp­son, who came over from R3, a con­sor­tium of fi­nan­cial firms that built Corda, a plat­form for bank­ing ser­vices, notes that there is “an enor­mous dif­fer­ence between a com­mu­nity of sev­eral hun­dred thou­sand ac­tive de­vel­op­ers” and the smaller teams de­voted to com­mer­cially spon­sored ap­pli­ca­tions.

“You’ve got lit­er­ally more than 100,000 peo­ple who are ac­tively con­tribut­ing to the code base,” says Thomp­son, the global so­lu­tions ar­chi­tect lead at Con­sen­sys. Any sug­ges­tion that Ethereum can’t com­pete for cor­po­rate busi­ness be­cause it doesn’t of­fer a “walled gar­den” that shields pro­pri­etary in­for­ma­tion from the pub­lic, like Corda or Hyper­ledger, is “an ar­ti­fact,” Thomp­son says. “It’s a piece of the past. It’s no longer true.”

In 2017, the Ethereum Foun­da­tion it­self pushed for the found­ing of an or­ga­ni­za­tion called the En­ter­prise Ethereum Al­liance (EEA) to de­velop tech­ni­cal stan­dards that will en­sure the in­ter­op­er­abil­ity of dif­fer­ent kinds of per­mis­sioned blockchains.

It will run on the Ethereum blockchain but will also in­ter­act with the rest of the pub­lic blockchain. It’s now work­ing with more than 500 mem­bers, in­clud­ing Jpmor­gan, In­tel and Mi­crosoft.

Ini­tially, says Thomp­son, the blockchain move­ment was dom­i­nated by “a lot of 20-year-old kids in black T-shirts who were like, ‘We’re go­ing to blow up the banks, and we’re go­ing de­cen­tral­ize ev­ery­thing.’” To­day, he says, “there’s a con­tin­uum, and where you de­liver a so­lu­tion on the con­tin­uum is go­ing to de­ter­mine the scale, the reli­a­bil­ity, the se­cu­rity and, in par­tic­u­lar, the reg­u­la­tion that you have to meet to be able to sup­port it. And it’s al­ready hap­pen­ing. I would say last year was about proof of con­cept. This is a year of pi­lots.”

Ron Resnick, a for­mer lead de­vel­oper of 4G for In­tel, who now heads the EEA, says that some fi­nan­cial ser­vices, in­clud­ing San­tander and Jpmor­gan, are al­ready in­te­grat­ing Ethereum-based blockchains into their busi­ness for set­tle­ment and other pur­poses. But the tran­si­tion to wide­spread use is likely to be grad­ual and won’t be­gin in earnest un­til stan­dards that en­sure in­ter­op­er­abil­ity are com­pleted, prob­a­bly next year.

To­day, Lu­bin chafes at sug­ges­tions that pri­vate en­ter­prises can’t op­er­ate with the con­fi­den­tial­ity and se­cu­rity they need on the Ethereum blockchain. “We have plenty of ex­cit­ing projects up and run­ning,” he says, tick­ing off Con­sen­sys’s own sup­ply chain and bank­ing set­tle­ment ini­tia­tives. “IBM just has a big­ger mar­ket­ing bud­get than us.”

The blockchain ecosys­tem is of­ten com­pared to the state of the World Wide Web in 1993, just be­fore it took off. Wolpert, though, be­lieves the anal­ogy is flawed. “I keep hear­ing 1993,” he told an au­di­ence at the Dis­trib­uted con­fer­ence in San Fran­cisco this past July. “I heard that last year and peo­ple are still say­ing it. We seem to be static. I think that’s be­cause we’re re­ally in the 1980s some­where, maybe the ’70s. We’ve got a long way to go, and we’re go­ing to go through epics of di­ver­gence and con­ver­gence, and it’s OK.” Michael Casey, co-author of the 2018 book The Truth Ma­chine:

The Blockchain and the Fu­ture of Ev­ery­thing, and a se­nior ad­viser for the Dig­i­tal Cur­rency Ini­tia­tive at MIT’S Me­dia Lab, says be­fore mass adop­tion can oc­cur Ethereum and other blockchain com­pa­nies will need to ad­dress and up­grade the speed and scal­a­bil­ity of the tech­nol­ogy—prob­lems that thou­sands of de­vel­op­ers are ac­tively work­ing to ad­dress. “The in­ter­net was de­vel­oped over 40 years. It’s re­ally com­pli­cated stuff,” he says. “The tech­nol­ogy has to evolve and be­come scal­able.”

Those kinds of com­ments from the ex­perts have done lit­tle to dampen the hype. The year 2017 saw a spec­u­la­tive frenzy that many com­pared with the dot-com bub­ble, when scores of blockchain-based com­pa­nies—some aim­ing to com­pete di­rectly with Ethereum, some look­ing sim­ply to build on it—also raised money through so-called ini­tial coin of­fer­ings. That led to one of the many cryp­tocur­rency boom-and­bust cy­cles seen since the in­ven­tion of bit­coin, with value ris­ing to al­most $20,000, and Ethereum ris­ing from a 2015 price of around 46 cents to $1,300. (In Fe­bru­ary, Forbes mag­a­zine put Lu­bin’s for­tune, based in large part on his es­ti­mated hold­ings of Ether, at between $1 bil­lion and $5 bil­lion; Lu­bin de­clined to con­firm it.)

Although the hype has for the mo­ment set­tled down, with bit­coin val­ued, at the end of Oc­to­ber, around $6,300 and Ethereum worth about $200, few would be sur­prised to see it start up again. “The en­tire global sys­tem of record keep­ing is go­ing to go through a 5,000-year par­a­digm shift,” says Casey. “We’ve tracked and checked records, and records are the foun­da­tional layer of eco­nomic ex­change sys­tems, they go right back to Sume­rian tablets. We had cen­tral­ized ver­sions of that for 5,000 years. Now, we’re do­ing a de­cen­tral­ized thing that is a game changer.”

THE IN­TER­NET WAS DE­VEL­OPED OVER 40 YEARS. IT’S RE­ALLY COM­PLI­CATED STUFF. THE TECH­NOL­OGY HAS TO EVOLVE AND BE­COME SCAL­ABLE.

A BEAU­TI­FUL MINE Although Di­mon, CEO of Jpmor­gan Chase, once called bit­coin a “fraud” and a “scam,” lead­ers in the fi­nan­cial ser­vices in­dus­try ar­gue that blockchain can save them bil­lions of dol­lars. From top: Tech­ni­cians over­see bit­coin “min­ing” op­er­a­tions; Di­mon; the of­fices of Con­sen­sys.

PLAT­FORM DIVERS From top: Mas­ters, cen­ter, cred­ited with in­vent­ing the credit de­fault swap, now runs the gov­ern­ing board of Hyper­ledger, a con­sor­tium of tech firms de­vel­op­ing IBM’S blockchain plat­form; IBM’S New York head­quar­ters on Madi­son Av­enue.

PRAC­TI­CAL MAGIC At left: Con­tain­ers sent via ship could be eas­ier to track on a blockchain, and pay­ments could be ex­e­cuted more quickly. Below: IBM’S Food Trust is an ef­fort to use blockchain to quickly and ac­cu­rately lo­cate sources of food con­tam­i­na­tion.

A CUR­RENCY AF­FAIR Ev­ery cryp­tocur­rency trans­ac­tion gets recorded and re­vised at the same time on many com­put­ers on a blockchain. From top: An Ethereum to­ken; the Cboe Global Mar­kets ex­change, the first in the United States to trade bit­coin.

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