Jake Vartanian – The Significance of EthEnt for Ethereum

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Ethereum recently announced EthEnt, which is a foundational template for large corporations to collaborate and build on top of the Ethereum Blockchain. There has been a lot of hype around this new formation as the price of Ether has risen to almost $20 after the announcement. The partners include JP Morgan, BP, BBVA, and more.

This is not the first Blockchain consortium. We have been seeing large companies come together to collaborate on utilizing Blockchain tech for over a year now. So, what makes EthEnt unique? Why was this one New York Times worthy? Do we really understand the implications?

What’s Ethereum?

In 2014 Ethereum did a public token launch and approximately $16M was donated to build the project. Currently, with a market cap of close to $2B, we can see that this project has already caused some serious ripples in the cryptocurrency/Blockchain landscape. So what makes Ethereum unique?

Aside from being simply a store of value and a medium of exchange, the digital protocol token known as Ether has the ability to execute smart contracts, or blocks of code designed to execute a wide spectrum of possible transactions. The transactions can range from a simple escrow storage, all the way to the most complicated derivatives of digital tokens also created through smart contracts. Like Bitcoin, Ethereum has, up until this point, been a completely public Blockchain.

EthEnt vs R3 and Hyperledger

As previously mentioned, EthEnt is not the first consortium/protocol focused on Distributed Ledger Technologies. We have seen many large banks and corporations partner with R3, who is in the process of releasing Corda to make settling transactions and private contract creations much more smooth between banks. They have recently admitted that they don’t utilize a Blockchain because they don’t need one (this highlights the lack of needed resiliency when operating in tandem with government). This doesn’t mean that the project isn’t good. It will still definitely make settlement times more effective, and create more opportunity for interbank trading.

Hyperledger is another project similar to Corda, but again lacking a public Blockchain. Having a few distributed nodes is definitely an improvement to old standards, but tends to serve limited parties. Ethereum and Hyperledger may actually start to merge due to an intelligent partnership structure with Monax.

Collaboration vs Competition

Banks exist to make more money from the money that they’ve stored of other people (while often not even taking into consideration the clients). Large energy companies exist to provide the most limited amount of power/resources for the most amount of money. We could make the case that this is not the best way to store our wealth or to acquire energy resources, and that people should in fact be their own banks/marketplaces. But, considering how banks and other large corporations aren’t handing over their power willingly and embracing a more beautiful paradigm (and for some reason people as a majority aren’t yet feeling the desire to transition more fully to cryptocurrencies), a transition onto protocols such as Ethereum is a forward step in this process of transformation.

Not only are the banks now participating in the cryptocurrency ecosystem by utilizing ETH (even though they might have private chains), but this is a meaningful step towards integrating fiat currencies with cryptographically valued assets. With enough time and transacting, fiat and crypto will be almost indistinguishable.

Into the Imagination

So, banks are going to operate on Ethereum. The digitization of assets is starting to occur at a rapid pace. Some fiat is devaluing itself naturally, and other fiat is making its way onto public or private Blockchains. The entire financial landscape is rapidly shifting, and Ethereum seems to be presenting one of the most viable long-term solutions for well.. just about everything. Code bases and the ability to execute complex financial transactions are starting to become the foundation of new financial entities. With projects like Augur, uPort, and Akasha coming on to the scene, the way we interact with applications is also rapidly shifting.

The intersection of finance with energy and healthcare (and everything else) is rapidly approaching, and smart contracts on Ethereum can make these processes seamless. Operating on proprietary closed looped systems is going to be more fractured, especially when spanning multiple sectors of the economy in one smart contract.

Conclusion

EthEnt feels like a very natural evolution from the current situation across various sectors of the economy. More interaction with clients through smart contracts makes sense from the perspective of health, banking, and energy companies. It will be interesting to see how corporations adapt in this evolving ecosystem when traditional services such as banks accounts are no longer needed, energy is available from multiple sources, and healthcare is not limited to the opinion of your local doctor.

Jake Vartanian

About Jake Vartanian

Jake Vartanian acquired his first bitcoin for under $1 in 2011. After sending his first transaction, he realized the monumental impact this newly acquired freedom would eventually have on our planet. Studying every digital currency that came onto the market for hours every day provided unique insight into the space. Experiencing markets develop from their inception, a perspective not achievable in traditional markets, has made it clear that a strong community is the key to growth. In 2016, he founded Cryptodex, a blockchain consulting and marketing firm to support companies seeking to integrate cryptocurrencies or a digital token into their ecosystems. Balancing his work in blockchain technologies with a traditional Raja yoga practice rooted in Himalayan Vedantic teachings keeps him attentive and focused (most of the time).

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  • Brian Recupero

    Interesting article. Thank you! One question though, what do you think will happen to the price of 1 ether over time as this technology becomes more popular, and why? Will it rise, rival bitcoin’s price? Or, will it stay below 100$, or just fizzle out? What is ether’s connection to the adoption of this technology? Especially considering Ethereum may get rid of mining altogether. Would ether be worthless then? I don’t really see anyone discussing ether’s long term value so I’d be interested to hear your opinion.

    • Mark

      To the moon

    • Jake Vartanian

      Hey Brian

      Appreciate your comment.

      As more and more people utilize the Ethereum protocol, the price could rise more due to the amount of smart contracts that are being executed on a daily basis. Each contract takes a certain amount of ETH to run (as well as all other transactions on the network). The amount people and corporations holding for speculative purposes also should be taken into consideration. General supply/demand dynamics also.

      ETH won’t be worthless (unless something really crazy happens) as the utility of one Ether is quite high in my opinion. Rivaling bitcoin price is a hard connection to make because of the difference of number of tokens on each protocol. Bitcoin is 21M and Ether could be closer 300M. The most important piece is the market cap, which is (price * # of tokens). The market cap of Ethereum definitely could rival Bitcoins market cap.

      I hope that covered all the questions. If not, let me know. Happy to elaborate wherever I can.

      Cheers!

      • Brian Recupero

        Thanks. That’s good to know that the contracts take a certain amount of ether to run. That clarifies somewhat. The rest is up to time and users I guess. I was just wondering how much ether I should invest in. I’d be happy if it crossed100$.

        Side note, what are your thoughts on dash? Do you think it’s viable at all, in a bubble, or ready to break out?

        • Jake Vartanian

          Will preface this by saying that investing in crypto is risky and to only put in what you can afford to lose. I am not a financial advisor and this should not be taken as financial advice. What I suggest to friends and family is 1% of assets into crypto.

          Ether could one day cross $100, but I don’t think that for the time being there are enough functioning applications on the protocol to justify that price. With the current tokens in existence, that would be approx a $10B market cap. Maybe 3 years.

          DASH is a great cryptocurrency. They have a concept called masternodes which allows people to earn a return on their DASH if you run a node and have a certain amount of the currency (higher returns than a bank account). They are also releasing DASH Evolution soon, which will make the private keys and cryptography aspects of crypto much simpler for the average user. I think a $500M or even $1B market cap for a seriously innovative project isn’t too far out in the long term as more and more people get into the space. That being said I am wary of such a large increase in price so quickly.

          Always do as much research as possible and make your own conclusions before taking the leap!

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