Ethereum To Soar After JPMorgan, Intel, Microsoft And Others Form Blockchain Alliance

Tyler Durden's picture

Step aside bitcoin, there is a new blockchain kid in town.

In recent days, the world's second most popular digital currency, Ethereum, has been surging (despite its embarrassing hack last June when some $59 million worth of "ethers" were stolen forcing the blockchain to implement a hard fork to undo the damage), prompting many to wonder if some big announcement was imminent. It appears that yet again someone "leaked" because on Monday, an alliance of some of the world's most advanced financial and tech companies including JPMorgan Chase, Microsoft, Intel and more than two dozen other companies teamed up to develop standards and technology to make it easier for enterprises to use blockchain code Ethereum - not bitcoin - in the latest push by large firms to move toward the holy grail of a post-central bank world in which every transaction is duly tracked: a distributed ledger systems.

In total, some 30 companies are set to announce on Tuesday the formation of the Enterprise Ethereum Alliance, which will create a standard version of the Ethereum software that businesses around the world can use to track data and financial contracts. This will be a huge boost to the recently sagging credibility of the technology, which suffered substantial damage during last summer's previously noted hack, when nearly half the value of Ethereum was wiped out overnight.

According to Reuters, the Enterprise Ethereum Alliance (EEA) will work to "enhance the privacy, security and scalability of the Ethereum blockchain, making it better suited to business applications", according to the founding companies. Members of the 30-strong group also include Accenture Plc, Banco Santander, BP Plc, Credit Suisse Group AG, UBS Group AG, Banco Bilbao Vizcaya Argentaria, ING Groep NV, Bank of New York Mellon Corp , Thomson Reuters Corp (and startups ConsenSys and BlockApps.

The fascination with ethereum, or bitcoin for that matter, is familiar to fans of the digital currencies: the EEA joins a growing list of joint initiatives by large companies aiming to take advantage of blockchain, a shared digital record of transactions that is maintained by a network of computers rather than a centralized authority, eliminating the need for a central information clearinghouse. The technology is viewed as being harder to corrupt or hack because of its reliance on many people rather than just a single authority.

Companies in a wide range of industries are hoping that it can help them streamline some of their processes, such as the clearing and settling of financial securities.

About 70 financial firms are involved with a R3 CEV, a New York-based startup focused on developing blockchain technology for the finance industry, while technology firms such as IBM and Hitachi are part of the Hyperledger Project, a group led by the Linux Foundation. The EEA underscores the enthusiasm around the nascent technology, but also highlights some of the hurdles that companies must still overcome before they can deploy blockchain on a large scale. This includes ensuring that the technology can support the vast number of transactions processed by large corporations, while being secure enough to meet their stringent security standards.

The new Ethereum alliance has been described by some of its backers as a way to insure that the IBM-led blockchain effort is not the only option for businesses looking to use the technology. Other companies like R3 and Chain have also been developing alternative blockchains.

Several banks have already adapted Ethereum to develop and test blockchain trading applications. Alex Batlin, global blockchain lead at BNY Mellon, one of the companies on the EEA board, said over the past few years banks and other enterprises have increased collaboration with the Ethereum development community, facilitating the creation of the EEA.

“We are pretty equally spending our time across the different chains,” said Alex Batlin, the global head of blockchain at Bank of New York Mellon, which is joining the Ethereum alliance.

Unlike some other collaborative efforts, members do not need to pay a fee to participate in the EEA, for now.

Ethereum was introduced in 2013 by a developer named Vitalik Buterin, then 19, who had previously worked on Bitcoin. Since its official release in 2015, the Ethereum network has been the target of hackers and theft.  Yet it has also won a large following among programmers who view it as a new and sophisticated way for groups of people and companies to initiate and track transactions and contracts of all sorts. That has led some companies to bet that Ethereum will win the race to become the standard blockchain for future business operations.

“In every industry that we come across, Ethereum is usually the first platform that people go to,” said Marley Gray, the principal blockchain architect at Microsoft.

Today's announcement may be just the vote of confidence Ethereum needed by major corporations to catapult it in popularity, and perhaps even overtake bitcoin which suddenly seems like "yesterday's" technology. Indeed, as the NYT adds, the creation of the Ethereum alliance shows a continuing commitment among big companies to making the technology work, in large part because it promises to create much more streamlined databases that require less back-office maintenance.

It is already reflected in the price, which has soared on the news, and is up 25% over the past week.

The move may be just the beginning if most corporations adopt Ethereum as the distributed ledger standard: accenture released a report last month arguing that blockchain technology could save the 10 largest banks $8 billion to $12 billion a year in infrastructure costs — or 30 percent of their total costs in that area. Accenture is one of 11 companies on the governing board of the Ethereum alliance.

And while the Ethereum network has an internal virtual currency known as Ether, charted above, the value of which has risen and fallen over the last two years (and is now soaring), Ethereum is much more than just a system for tracking currency. It also allows people to write what are known as smart contracts into the Ethereum blockchain. Two companies could, for instance, create a contract that would automatically send money to one of them if a particular news authority reported that the Chicago Cubs won the World Series or that “La La Land” won the Oscar for best picture. (As the last example shows, what would happen if the authority was wrong is a more difficult question.)

Because of its capacity for smart contracts — and other complicated computing capacities — Ethereum is viewed as more agile and adaptable than Bitcoin.

As with Bitcoin, however, anyone can join the Ethereum network and see all the activity on the Ethereum blockchain. The companies working on the Enterprise Ethereum Alliance want to create a private version of Ethereum that can be rolled out for specific purposes and open only to certified participants. Banks could create one blockchain for themselves and shipping companies could create another for their own purposes. The purpose of the alliance is to create a standard, open-source version of Ethereum that can provide a foundation for any specific use case.

* * *

For those who are new to Ethereum and are curious about the distinctions between that technology and bitcoin, below is a quick primer courtesy of CryptoCompare:

1. In Ethereum the block time is set to 14 to 15 seconds compared to Bitcoins 10 minutes. This allows for faster transaction times. Ethereum does this by using the Ghost protocol.

2. Ethereum has a slightly different economic model than Bitcoin – Bitcoin block rewards halve every 4 years whilst Ethereum releases the same amount of Ether each year ad infinitum.

3. Ethereum has a different method for costing transactions depending on their computational complexity, bandwidth use and storage needs. Bitcoin transactions compete equally with each other. This is called Gas in Ethereum and is limited per block whilst in Bitcoin, it is limited by the block size.

4. Ethereum has its own Turing complete internal code... a Turing-complete code means that given enough computing power and enough time... anything can be calculated. With Bitcoin, there is not this form of flexibility.

5. Ethereum was crowd funded whilst Bitcoin was released and early miners own most of the coins that will ever be mined. With Ethereum 50% of the coins will be owned by miners in year five.

6. Ethereum discourages centralised pool mining through its Ghost protocol rewarding stale blocks. There is no advantage to being in a pool in terms of block propagation.

7. Ethereum uses a memory hard hashing algorithm called Ethash that mitigates against the use of ASICS and encourages decentralised mining by individuals using their GPU’s.

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Jim Sampson's picture

Alright!  MORE 1's & 0's!!!

imbrbing's picture

Just like the FED does, but these 1's and 0's I get to keep and not the BIG BANKS. If it crashes, oh well, I lost $5000,

If not, who knows what I will have when its said and done, but I bet more than $5000.

 

EDIT: If the 1's ans 0's go away for everyone, which I believe is going to happen eventually, even the FED's, that means the lights are out, EVERYONE LOSES THEN.

EMP anyone? Sure I lose all my 1's and 0's, but guess what, so does EVERYONE.

When 1's and 0's go away we are mad max.

Burnbright's picture

Pfft

What's the price based on again lol. Is it backed by intel chips and shity Microsoft software? 

Weirdly's picture

Value is  based on JPM's CDS book. 

EHM's picture

Why Bitcoin is doomed to eventually fail. Limited barriers to entry.

Dirtnapper's picture

Problem for BTC is getting new standards agreed to by 90% of the miners within 24 months  (else it goes away).  It's dog slow on processing (and very limited on the number of processing per second) so it can take hours to complete a transaction.  There are at least two proposals out there to greatly speed up BTC but that has gotten maybe 20%-24% agreed to and the adoption trend is no one's friend.  ETH fixes this issue of getting new things added by adding a a slow down after a given time period (next one is due June/July) unless the miners agree to new changes (which will be a hard fork, IIUC) which will reset the slow down (aka Ice Age) for another time period.  So if ETH miners want their rewards, they will need to agree to a hard fork or watch their income drop.  BTC miners can sit on their hands forever.

observer2017's picture

I prefer unobtanium

LetThemEatRand's picture

Banks live by the famous motto "if you can't beat them, join them."  But they also add to the motto:  "then use influence with elected officials to make what they do illegal or just kill them if necessary."

dumbhandle's picture

This was successfully done to Bitcoin.  AXA and PWC have co-opted it with their investment in Blockstream.  Blockstream dominates Bitcoin programming. Blockstream has hobbled Bitcoin.  And the Chinese dominate mining with their cheap electric.  Bitcoin transactions are unreliable thanks to this state of affairs.  The same could happen to Ethereum.  Monero should be more resistant to these machinations, because the globalists have no interest in a completely private coin.

hotrod's picture

Ok, who else has a Cryptocurrency?  The more the better.  I personally like CLITCOIN.

gatorengineer's picture

Unusable a week a month, and unless laundered promperly can be smelly.

bamawatson's picture

CLITCOIN --- you cant lick it

OverTheHedge's picture

Hard to find without a map?

Surgically removed in some African countries.

izzee's picture

control your "money". Track every "coin" you spend and earn or take-in, where, on what, from who. And if we decide you are some kind of "alt" it will all disappear one fine morning. Just like a Twitter acct, or a YouTube acct, or a Paypal acct - - which people have had locked for "bad behavior on their net business.

Librarian's picture

So, there is a chance then that OneLife OneCoin is legitimate?

Wait!  Wait!  I've got some articles about this!

Right next to my "Bernie Can Still Win This" fliers.

JustPrintMoreDuh's picture

Because nothing screams TRUST like JPM, Microsoft, Intel ... 

SHEEPFUKKER's picture

If they pump it up everyday like the Dow, the citizens will love it. 

Bigly's picture

Big bank bitcoin.  What could go wrong?

Wee_littte_dogee's picture

If you can't hold it in your hand you don't own it, just like cash deposits at your local depository institution.

Sudden Debt's picture

nice... corporate companies with world domination dreams and mass genocide ambitions are creating their own currency....

andthe silver liberty coin that actually held value was banned by law...

nice...

SgtShaftoe's picture

Yeay!! Just what I wanted a cryptocurrency controlled by NSA-backdoored and CIA managed evil corporations! What could possibly go wrong?

Sorry, I'll stick with my metals and a little bitcoin.

Mustafa Kemal's picture

Sarge, we got PMs and a little bitcoin and an even littler amount of ether.

All those criticisms are valid. However the ethereum blockchain is much different than bitcoin blockchain.

To begin, the bitcoin blockchain has a primitive language: from who, to who, how much, kind of. The etereurm blockchain has a fully expressive language, meaning that one can write ver expressive code that does sophisticated things. It has the ability to do smart contracts: you make a deal, set it up, and if the conditoin is met, payment or delivery of some other asset such as a title, is made.. No lawyer, no probate, no renegging on the deal. Done.

Check it out, might be worth a dabble. I suspect it has a very bright future.

no ice's picture

Yes.  When you think of ethereum, you need to think of smart contracts.  Ethereum will save those corporations mentioned in the article 8 to 12 billion dollars per year, so it makes sense that they will use it.  Here's an interesting article about it for anyone interested  http://www.pcmag.com/article/350088/blockchain-in-2017-the-year-of-smart...

Now, as in right now, seems like the time to buy.  This could be very interesting.

 

cowdiddly's picture

Great Bankster Buttcoins. with MIcrosoft as an added bonus when you check your acct all you see is a big blue screen before it crashes

 feel all warm and fuzzy, where do i sign

NoWayJose's picture

What will kill BitCoin is if these clowns get payment stations in stores - like credit cards. You will then ask - why is this different than a debit card!

CJgipper's picture

Exactly their end game.

Mustafa Kemal's picture

"xactly their end game."

Yup, but that doesnt mean it will kill bitcoin. Bitcoin is OUTSIDE the banksters realm. They are trying to hijack an ethereum blockchain

Lanka's picture

Through Coinbase, you can get a debit card and spend your BTC anywhere that accepts debit cards.

AR15AU's picture

The deep state wants to distract from silver NOW

AR15AU's picture

I'm going to buy / order a couple more walking liberty halves every time I read a fucking douche article like this. Its time to say FUCK SOCIETY and say it LOUDLY with SILVER.

Golden Phoenix's picture

Today I saw a 90 year old mercury dime on Ebay for $1. In that time the purchasing power of the dollar dropped 90% so anyone who held such a dime for 90 years broke even. Not considering any transaction costs or taxes on the supposed 'profit'.

The past is not prologue but the only person you're probably fucking is yourself.

 

Mustafa Kemal's picture

"Today I saw a 90 year old mercury dime on Ebay for $1"

During that same period, $20 used to buy an ounce of gold, now it buys an ounce of silver 

unsafe-space-time's picture

There will be millions of different criptofiat currencies. Just another way of printing money.

bluskyes's picture

More, and more currencies offset by less, and less value.

Exponere Mendaces's picture

Oh Tyler... hahahaha... I can't believe you're pushing this Ethereum crap.

You know what? Your audience totally deserves it. Go ahead guys, load up on ETH!! (before the next fork, lol)

Leaves more Bitcoin for me, and that's the way it should be.

ZH is ahead on a bunch of things, but cryptocurrency is not your baliwick....

Edit --- What the hell, I have some time -- here's where your wonderful fluff article is full of shit.

There was no "hack" of Ethereum when all of those ETH were stolen. It was a LEGIT CONTRACT written using THEIR LANGUAGE that they later "forked" to undo the damage. That means that if a given majority doesn't like the contracts you've written using their protocol, they'll just REVOKE them later.

That is the damaged shit-coin that you're dealing with. Also, its "turing complete" language is a kilometer-wide attack surface, as the stolen coins show, and it won't be the last. In fact -- one funny story, when they were having a big old confab meeting about ETH development, all of the presenters had to LEAVE the stage to patch another problem that caused 80% of the nodes to FALL OFF THE NETWORK.

Yeah, that's the level of keystone-cop confusion and bullshit you are stepping into if you decide to involve yourself with this pile of fail.

But hey, nobody reads anything except short blurbs -- so BUY ALL THE ETH YOU CAN... hahahahahahah oh man...

 

 

malek's picture

Also Bitcoin can never be forked!
/s

metanoic's picture

Seen this ? https://www.corbettreport.com/the-coming-bitcoin-clampdown/

I understand Ethereum has some nice features for business (in theory) however I can't help thinking there's more to these big players backing it than they're letting on. Did a CIA venture capitalist front company fund this 19yr old's adventures ? I wonder...

 

 

Dirtnapper's picture

You don't understand.  Ethereum is basically a virtual machine running on the internet.  The exploit was DAO's smart contract and not an Ethereum exploit.   This is why the debate raged about that emergency hard fork (vs the normal planned hard forks of each new version of Ethereum) was warranted or not since it was a dapp that was compromised and not Ethereum itself. 

I will note that Zcash devs are working to run on Ethereum (and Ethereum is adding zkSNARKs to Ethereum) so by end of the year (if not sooner), you can mask transactions.

Weirdly's picture

Oh YES!!!  A new Prodigy intranet!  Only run by the most dishonest Banksters on the planet!  Awesome.  How can I invest?

BGO's picture

JP Morgan's leading the charge? Microsoft is on board TOO?  What a fantastic opportunity! They should call their venture MasterCriminalCoin.  

Appreciated Chelsea Clinton's picture

treat it like a stock - -buy low, ride the wave, and get out. i bought at $9.. no harm done.

Dirtnapper's picture

The corps are working on Enterprise Ethereum which can be hooked into (to whatever degree the individual corps wants) public Ethereum blockchain. BTC is just a cryptocurrency running on a blockchain, Ethereum is a virtual machine that supports many things beyond (and not limited to a single coin/token) ETH.

captain-nemo's picture

Ethereum?  With such a stupid name it's dead before they even start it up.

Oh regional Indian's picture

Now those sound like famous last words....

Honest Sam's picture

I think Ford had the same problem with the disastrously named, Edsel.  

Youri Carma's picture

A Binary Bet on the Bitcoin Twins
https://www.bloomberg.com/gadfly/articles/2017-02-27/winklevoss-bitcoin-...
 
'Bityuan' Won't Kill China's Banks. Yet
https://www.bloomberg.com/gadfly/articles/2017-02-26/-bityuan-won-t-push...
 
Bityuan, were it to take off, could show China's banks a way to reenter the game. However, once the technology is in place, nothing would stop the PBOC from moving to a version 2.0.
 
The Bank of England's analysis reckons an interest-bearing national digital currency could give a permanent boost to GDP. Once the PBOC feels confident enough to reach for those benefits, China's banks should really worry.   

Mustafa Kemal's picture

What I dont get from this is, will these ethereum blockchains be using the currency ether?