By now you’ve almost certainly heard of bitcoin, the cryptocurrency founded in 2009. At the time of writing, 1 bitcoin is equivalent to roughly $458. When it peaked in 2013, 1 bitcoin was worth $1,242. Thanks to its blockchain technology, Bitcoin, which is now valued around $6 billion, enables users to pay each other anonymously. This ensures governments and banks don’t get a cut of any transaction.
To ensure payments are fair, bitcoin users can peruse a digital ledger whenever they wish. Ledgers are entirely public; there aren’t any fat cats fudging numbers in dark backrooms.
In the years since the most popular cryptocurrency entered the vernacular, a number of competing “altcoin” currencies have emerged in an attempt to dethrone bitcoin. Among them: Litecoin, Ripple, and Namecoin.
Now, there’s a new kid in town: Ethereum. Released in the summer of 2015, Ethereum—which is described as a blockchain app platform—has already attracted the interest of some impressive players. Microsoft, IBM, and JPMorgan Chase are already developing for Ethereum’s distributed application platform. What’s more, the new platform is already hovering near a $1 billion valuation.
The Endless Potential of Ethereum
Whereas bitcoin is limited to peer-to-peer payments, Ethereum promises a whole lot more. Using blockchain technology, Ethereum’s creators—including 22-year-old Vitalik Buterin—believe their cryptocurrency can also be used to verify legal contracts and land registries, among other things.
Singer Imogen Heap, an early adopter of the technology, hopes to decentralize the music industry via Ethereum’s promise of “smart contracts” between content creators and consumers. Last year, she released a song for sale via the cryptocurrency, essentially cutting out god-knows-how-many middlemen who would have traditionally taken a slice of each sale.
Think about what that means for any creative professional. Instead of working with agencies as a contractor and only getting a portion of a payment, creatives can use Ethereum to get paid for the entirety of their labor. This functionality will likely translate into a huge uptick in productivity in the sense that workers will get paid more for the work they do.
What’s more, in any institution where people oversee things, there’s room for corruption, and there’s room for human error. Though Ethereum is still in its infancy, the cryptocurrency promises to essentially eliminate those two facets from a number of institutions, including law firms.
Why Lawyers Hate Ethereum
Believe it or not, Ethereum could essentially eliminate lawyers. Why do lawyers get paid? They know the law—and all its complexities— inside and out. Keep in mind that the tax code itself is nearly 75,000 pages long. You’re not going to thumb through all that if you get caught up in a tax snafu.
Theoretically, law-abiding citizens may one day be able to eliminate lawyers from their lives for good. This infographic shows how folks could use Ethereum to create “smart wills” thereby negating the need to ask a lawyer to draw up a will in the traditional sense.
Here’s how that would work: Someone puts their assets in an Ethereum account. They then sign a smart contract indicating where those assets should go after their death. Once that person passes away, the contract automatically sends the assets where they’re supposed to go.
Of course, this concept can be extended to other aspects of law, too. But the same premise remains: Build a contract that’s smarter than a lawyer (i.e., knows the law in its entirety without having to second guess itself, ever), and you really don’t have a need for lawyers.
Lawyers, you’ll remember, charge as much as $400/hour for their services. If Ethereum realizes its true potential, you wouldn’t have to pay a penny to essentially get the same quality law representation.
But wouldn’t people who thought they were screwed out of something in a smart will take action and file suit?
The Ethereum team thinks not. Not pleased by simply building what is shaping up to be extremely transformative technology, Ethereum’s creators are floating the idea of a Decentralized Borderless Voluntary Nation (DBVN)—which is essentially an internet-based, virtual country that folks could volunteer to “live in.” Ethereum users could govern themselves—all voluntarily.
Money in Your Gas Tank
Another real-world example of how Ethereum could theoretically affect your life: Have you noticed that some gas stations charge you a little bit more money per gallon if you pay by credit card than if you pay by cash?
The reasoning is simple: Credit card companies collect a small fee on every transaction, generally 2% or 3% (thank you, Amex!). When gas prices shot up to $5/gallon a while back, gas station owners were losing a lot of money. So they tacked on an extra fee to cover the losses incurred from credit card transactions.
Credit cards are convenient for users to carry and use. Storeowners accept them because of that convenience. But what if a payment technology replaced credit cards altogether—without taking a percentage of each transaction? That’s exactly what Ethereum promises. So in an Ethereum-driven world, you’d never ever be charged more because there wouldn’t be an institution acting as a middleman standing between you and a storeowner. Say goodbye to paying more for a gallon of gas than you absolutely have to.
Ethereum is still in its infancy, so it remains to be seen just how the public blockchain platform will transform our lives, or if it ever will. But one thing is certain: If the vision of the technology is ever truly realized, we’ll have more money in our pockets. And we’ll be more productive, too, if for no other reason than we won’t have to waste our time interacting with lawyers.