Setting up your own central bank is just the start with Ethereum

Ethereum lead designer Alex Van de Sande has heralded the beta launch of the Ethereum Wallet with some lapel-grabbing blogposts.

Inviting users to "build your own cryptocurrency" or "build a better democracy", the posts explain step by step how to create a value token, place that within a contract and allow parties to the contract to make decisions based around the inherent value. The result is a democratic value-based system that exists autonomously and transparently on the blockchain.

Van de Sande explained that tokens and coins become interesting with Ethereum because of what you can do with them. Once you have a group of people controlling a currency and voting on it, you have created the simulation of a central bank, and a completely transparent one – a novel proposition in itself.

He said: "You create a token that is controlled by a democracy. So it means that that democracy can vote if they want to release more tokens, or if they want to freeze somebody's account, or unfreeze it for that matter.

"It's interesting because it works a little bit like central government or central bank: they can seize assets and generate money. But it's completely transparent and it lives on the blockchain. If you were building a central bank in your house, let's just say, then probably the government would go inside your house and say: 'What are you doing? You are not supposed to do that.'

"But it's a central bank that lives on the blockchain and every decision it takes is only done transparently and after a vote. And everyone who holds a token is essentially saying that they trust the vote, they trust the system, they trust the contracts that are there and they trust the people who own the shares that can vote. So in a sense it's a great way to build – not only like a democracy – but it's a great way to build a company."

DAOs

Democratic autonomous organisations (DAOs), existing entirely on blockchains are sometimes thought of as rather grandiose ideas. However, Van de Sande argues that it goes a bit deeper than just having the company's treasury located on the blockchain. "I would say that bitcoin allows you to keep the money of the organisation on the blockchain; what Ethereum does is allows you to keep the whole organisation on the blockchain. For example, who is the president, who are the board members, who decides who to hire, who decides who to fire, how do you manage salaries, how much do people get, how do you decide on raises?

"All those things can be located directly on the blockchain and can be built in Ethereum. It grows as your organisation grows. You can make your contract hire developers and designers, for example. Then you can create another contract which is the whole design department. You are creating a sort of a fractal organisation. You start building it with the basic branches and those branches have smaller branches and at some point you have a whole tree, growing slowly."

So would the first DAO-type companies be collections of software designers apportioning shares to one another? Van de Sande used the example of the smart contract-powered lock company Slock.it to illustrate how this is happening already in the "real world".

Slock.it

"I describe what slock.it does as something like this: it's a company that makes door locks that can rent themselves. This is not a door lock that connects to the internet and uses a service like airbnb to get a credit card etc. The lock itself has a wallet, rents itself using digital money and sends funds to the parent company.

"The company itself is a digital company: this is not a 'virtual' company registered in Delaware with a branch in Ireland and offices on San Francisco. It's an actual digital company that only exists on the internet. And they are funding themselves via the blockchain. Not using VCs, not using tech enthusiasts' funds, not using a big company like Alphabet. They are overstepping all that by selling their digital shares of a digital company directly using the blockchain."

Van de Sande's enthusiasm is persuasive; he can see for miles with this technology. The fruits of connected decentralised networks will oversee their own replication. Rather like genetic code, these will become selected for via systems of built in value. He cited the work of the philosopher and artist Primavera Del Fillipi who is working on the "plantoid" project, an "android equivalent for plants".

Plantoids

This is where an artwork has attached a wallet that holds funds and once it receives enough donations (like a plant storing energy) it will sprout another contract which will hire a new artist to make a copy of it, with some mutations preferably.

"She [Del Fillipi] has been active in the Ethereum community for a while now. She is working with a group of artists and they are building what she calls a bionic plant. There are pieces of sculpture with bitcoin addresses and she is working on adding an Ethereum address.

"The idea is that the sculpture will sprout another plant. Via a literal seed fund, the plant hires a new artist to make a second plant, based on the first one. So in a sense there is an ecosystem because if the new artist builds a better plant maybe that one will sprout more seeds to create copies.

"Instead of funding the artist in order to build the sculpture, you build the sculpture and the sculpture funds more copies of itself."

Machine memes

Continuing this line of thought, Van de Sande believes Ethereum will add rigor to the notion of "memes" first posited by Richard Dawkins in his famous book, The Seflish Gene. This theory later became the focus of Susan Blackmoore's Meme Machine. A meme is basically an idea contained within human brains which is selected for, like a successful genetic attribute, and then replicated. Just like genes use the DNA, memes use brains in order to replicate themselves.

Blackmoore developed the concept: memes have evolved from the time people started using tools as basic technology and account for the spread of things like language and art. Our brains have increased in size to accommodate the spread of memes. Today we are starting to see a third level, the cross pollination of memes with machines.

Van de Sande said: "By the end of the book, Blackmoore argues that we could see a similar new replicator created on top – I don't think she named it – but it would be mostly technological innovations and machines that use memes to replicate themselves and evolve independently.

"Genes simply use animals and people to replicate themselves and create more copies. Genes created this wonderful revolution of animals and have allowed a whole civilisation to flourish.

"So what happens next? What happens if machines can start using humans to replicate themselves? Like viruses use genes to make cells produce more viruses, machines could use memes – and monetary incentives – to convince humans to produce more of them."