After having dedicated an article and a report to Bitcoin, it still hasn’t been possible to move away from the subject – given the wealth of developments, projects, new accomplishments, promises and inspirations connected to it. Indeed, original enough to no longer be marginal, Bitcoin has been a source of prolific inspiration within its own community, which has decided to widen the protocols of the leading crypto-currency to many other applications. The goal is to make the Bitcoin cryptographic system as universal as possible and put it to use for a multitude of widespread services – this is what the founders of the Ethereum project have imagined.

Ethereum, version 1.0

Ethereum is an enhanced Bitcoin. This is crypto-currency opened to all horizons. Based on cryptography, Ethereum is the dream of a revolution. Not only a technical revolution, but also a structural one: because the point of Ethereum is to revisit an entire monetary ecosystem that will decentralize all economic activities that can operate on the basis of a mathematical algorithm.

Conceived by Vitalik Buterin[1], Ethereum is a decentralized platform used to create contracts which is based on the same principle as the block chain used by Bitcoin [2] and its own programming language. An early supporter of the Bitcoin cause, and the cofounder of Bitcoin Magazine[3], Vitalik Buterin accepted the challenge of widening the block chain system to other application fields than just currency. A system in which Ethereum is both the programming language able to execute any type of codes and a currency – Ether[4], used to pay these contracts. The block chain system consists in solving algorithms using software whose computing power is shared in networks. More specifically, a block chain is a decentralized log of transactions carried out by system users to guarantee the security of transactions.

Ethereum lexsi

Ethereum develops its own programming language, like Turing-complete[5], meaning a “flexible” universal language which is used to apply the block chain principle to all kinds of applications other than currency: e-contracts, smart property, etc. Not that this has never been imagined before Ethereum: virtual currency and related security are only one of the possible application fields of the cryptographic block chain protocol, and in theory, this one has never been reserved exclusively for virtual currency; but it has been limited until now by the fact that languages have been too incomplete to apply to more than one object at a time. Ethereum is offering to lead the way and surpass the Bitcoin technology by developing a new, thoroughly complete programming language – that can be adapted for universal use beyond currency.

Another advantage of Ethereum is obviously the fact that it requires no intermediary during transactions. Based on the assumption that third parties cannot necessarily be trusted, as has been shown by a number of cases over the past few years  (Snapshat and dropbox, for instance), and that the third party is costly to the contract, Ethereum does without intermediaries to make a better profit and ensure higher security: a decentralized system governed by a crypotographic protocol is the solution that Ethereum proposes. According to the various members of the Bitcoin/Ethereum community, a wide range of applications are possible: “decentralized dropbox” for Gregory Maxwell[6], “Associated Press DAC” [7] for Daniel Larimer[8], decentralized Wikipedia, political parties, etc.

Ethereum, the Bitcoin 2.0

Some have been inspired by the Bitcoin technology in order to create Distributed/Digital Autonomous Companies[9] (DACs), which are sort of “anarchist” companies due to the fact that they are independent, decentralized and do not have a “boss”. The main idea is to transfer the security aspects of the Bitcoin currency to an incorruptible business, guaranteed by math and with “inhuman integrity” as Stan Latimer puts it.

These DACs are guaranteed by three fundamental laws:

  • Integrity, meaning automatic verification of the authenticity of the actions of a pair by all of its pairs
  • Majority, meaning the company’s operating rules cannot be modified without the agreement of the majority of participants. In this case, the revolutionary aspect is due to the fact that the employees are making decisions – and not the shareholders.
  • Decentralization, which means that a DAC must protect itself, within the limits of the two previous laws. Against outside attacks, the open source policy and the block chain system create the balance. But from the inside, the aim is to ensure that developers remain independent against any form of coercion or corruption. Decentralization, therefore, in terms of operation, but also in terms of development.

Ethereum lexsi 2.png


The DACs do not emerge with Ethereum as such, but it is Ethereum that overcomes the DACs flaws using the Bitcoin technology. Indeed, the Bitcoin technology did not enable the DACs to fully function since it does not have a true programing language, i.e. Turing complete. This is what Vitalik Buterin’s project can add, as mentioned earlier.

Ethereum’s major contribution is thus this script language, at the heart of which is the contract, meaning an automated and secure transaction between two entities. The inherent security of the system is, moreover, the guarantee that the transaction is honest, making the traditional “good faith” of third parties null and void.

According to what has been stated up to now, it seems that Ethereum is the modern answer to ideas and principles that are much older than the smart contract [10] (Nick Szabo[11]), transaction agents (General Magic[12]) or peer to peer (at the heart of the Internet and IP addresses that can be either client or server).

Ethereum, towards a web 3.0

A project as ambitious and revolutionary as this one obviously comes with a number of obstacles, whether coming directly from the inside or outside. It is possible to pinpoint at least four at this stage:

  • Next there is the issue of a still limited range of decentralization; indeed, full decentralization is not yet possible at this stage of the project given current technology. Mining, made possible with the Ethereum technology, represents financial and energy costs that are too big to imagine a decentralized web, for instance. This is all the more true given that mining is currently calibrated on a Proof Of Work (POW)[13] system, a huge energy consumer that contributes to global warming. Ethereum is planning to switch to a hybrid system combining Proof Of Stake[14] and POW. Thus, freed from the wasted energy and power of the POW, the network will be more flexible, more efficient, less sensitive to hashrate[15] and more user friendly.

Ethereum lexsi 3

  • First of all, replacing a central authority or legislation. Is it conceivable to dispose of a unique authority in favor of a mass authority? Ethereum’s challenge is to change people’s mindsets so that they are gradually less attached to traditional forms of regulation – which are limits to innovation as well as to the interest of the majority. In an economy based on sharing, decentralization makes it possible to return the commissions made by intermediaries to service providers who will also be decision makers – each and everyone, for their own community. Ideally, everyone will be benefiting, in a fair and balanced way. Yet, it usually takes time to change people’s habits and this is a major challenge for the Ethereum project.
  • Another obstacle to be feared by the founders of Ethereum is obviously the problem of resistance, since it is clear that market players with a dominant position will not appreciate having their own system or business model undermined. If the risk is real, it still seems that the greatest resistance – according to the members of the Ethereum community – will come from the inside, given that some have seen in Ethereum a way to destroy Bitcoin. Ethereum will obviously reply to its critiques that the project is not undermining Bitcoin but rather a way of surpassing the system to create something more universal and less restrictive than crypto-currency. In this sense, it is actively participating in the development of the web 3.0.
  • The last obstacle is not the least important: the creators of Ethereum are counting on the fact that their product is particularly secure. Their strong argument is the cryptographic protocol used. Attractive on paper, this argument is not in practice. As young as it is, Bitcoin – based on the same cryptographic protocol as Ethereum, has still been targeted by a number of sophisticated attacks that have seriously undermined its reputation of inviolability. Not to mention the fact that Ethereum has the specificity of developing its own programming language, deemed by the Bitcoin developers as a source of security problems.

Ethereum’s critics are entering a serious battle ground here because a script language is an open door to vulnerabilities, whether this concerns outside data, its capacity to retrieve information on blocks or its “natural” passiveness to possible bugs, which are potential backdoors on transactions, contracts and other Ethereum applications.


Ethereum is still only a project and as such it cannot pretend to be a perfect finished product. Still, it can display its ambitions; and the criticism, if unlucky for being early, has the virtue of pushing the project developers to perfect the product. The proof is visible with all the applications that abound like ramifications around Ethereum. We saw earlier what kind of applications could be imagined by members of the community, one of these projects, and not the least, was undertaken by Stan Latimer and involves the creation of the first banking DAC, Bitshare X[16].

Today, the first blocks have started to be mined by the growing community and are even available for purchase for about $1 US, on platforms such as Kraken[17]. The first feedback[18] about the official launch of Ethereum are quite unanimous as to the residual imperfection of the code and the lack of documented support and a user friendly platform. It is therefore not an exaggeration to say that it’s a new project that is still very experimental, which is not surprising since it is both very young and very revolutionary.

If it succeeds its security challenge, Ethereum presents an open door to the future that will be both revolutionary and full of multiple developments. It is based on this condition that Ethereum will gain people’s trust and change mindsets. But Ethereum – beyond respecting this essential condition, has already succeeded a challenge that is just as important: having opened up minds to the possibility of change; the rest is just speculations and technical challenges. The dream is already a reality because it has been born. Now it is up to its creators to make it materialize.

[10] et
[16] –Bitshares X is a family of DACs using the business model of both a bank and a stock market, issuing money on the basis of deposits and securities that can be drawn up in several ways, the only difference being that the system operates on the basis of a Delegated Proof of Stake (DPOS), a process by which shareholders can exercise their influence on the creation of blocks by choosing representatives; the role of the representatives is to produce blocks in the available amount of time and perform as many operations as possible.
[18] Illustration :