The first blockchain application was Bitcoin, a peer-to-peer payment system. Ethereum goes even further. Instead of simply processing and storing currency transactions, its nodes are meant to collectively function as a “world computer” on which, using specialized programming languages, users can create applications meant to closely resemble those already present. on our phones. except no one does it.
These decentralized applications, or “dapps,” can include things like voting systems, trading marketplaces, or even social networks – imagine a Twitter or Facebook that no one owns. Being decentralized, they would theoretically be immune to attempts at manipulation or closure. For Ethereum’s most ardent supporters, these projects hold the promise of a whole new type of democratic society in which it is much harder to concentrate wealth and power, hide corruption, and exert dark influence behind the scenes.
A year ago – practically centuries ago in the age of cryptocurrencies – investors were pouring billions of dollars into promising projects creating dapps. They invested via initial coin offerings, in which blockchain company founders raise money, crowdfunding-style, by selling digital tokens. Prices of coins, including Ether, Ethereum’s cryptographic token, were skyrocketing. Many of their fans believed that blockchains and cryptocurrencies would quickly supplant traditional financial intermediaries, topple monopolistic internet companies, and decentralize the web.
Then came the CryptoKitties.
Perhaps it’s fitting that a childish game is the way to kill the mood. CryptoKitties, launched in late 2017, are colorful cartoon cats like digital versions of Beanie Babies, the stuffed animals that became a collector’s craze in the 1990s. Like Beanie Babies, CryptoKitties are each unique one way or another, but unlike Beanie Babies, they can reproduce. The uniqueness of each cat is verified on the Ethereum blockchain using a special type of token, and players can buy, sell, or “breed” cats using Ether.
The problem was that CryptoKitties became too popular too quickly. As with Beanie Babies, some kittens have become highly prized, exchanging hands for up to $170,000 worth of Ether. The mad rush to replicate them suddenly increased transaction volume sixfold, clogging the network and slowing down Ethereum. This revealed the truth: the technology is immature, incapable of handling the types of workloads that large enterprises would demand.
“I think people may have gotten ahead of themselves,” says Jamie Pitts. We’re sitting apart from Devcon, which was funded and organized by Pitts’ employer, the Switzerland-based nonprofit Ethereum Foundation. The foundation isn’t big on titles, but Pitts is something of an administrator. He helps make technical improvements to Ethereum’s software, work that can be akin to herding real cats.
A soft-spoken and introspective web developer by trade, Pitts has sincerely believed in Ethereum since he first saw Vitalik Buterin’s white paper in 2013. (Each cryptocurrency begins with a white paper describing its technical principles.) He has no illusions, however, about his current abilities. “A great computer from the 70s,” he says with a fond smile. Buterin, the enigmatic young creator of Ethereum, uses a slightly less pejorative comparison, calling it “a smartphone from 1999 that can play Snake.”