Cryptocurrencies and distributed applications (Dapps) are now running red hot. Many recent launches have gathered massive amounts of funding through crowdsales, or Initial Coin Offerings (ICO), where participants usually get cryptocurrency or tokens in exchange for funding. For example, recently a distributed application platform called Gnosis executed their own crowdsale, where they were able to gather 250K ETH funding for their own platform with $298 million in total valuation.
Lately we have witnessed several crowdsales of similar magnitude. Euphoria levels remind me of the dotcom bubble. Indeed we are witnessing the first pioneers in the dapps revolution. And this revolution is largely powered by Ethereum platform.
Ethereum is powering the next generation of Dapps
The original cryptocurrency, Bitcoin, is still the king of the hill with valuation around $20 billion. Second in valuation is Ethereum, still quite a bit behind Bitcoin, but rising very rapidly in valuation and usage. Contributing to Ethereum’s popularity is the fact that many emerging distributed applications choose to build on top of Ethereum platform, instead of trying to build their own. Those projects are building on Ethereum providing a decentralized virtual machine, with Turing complete instruction set.
Example projects building on Ethereum
In recent years, basic IT infrastructure has gone through transformation to cloud services. Now, several distributed applications have emerged with promise to be able to deliver cloud services, this time on decentralized networks running on Ethereum. For example Golem is building a network, which allows anyone to sell spare computing capacity and receive payment for it in cryptocurrency. Likewise anyone can rent and utilize the computing capacity of the whole Golem platform by buying parallelized execution capacity for their code. This is very well suited for High Performance Computing applications, like graphics rendering, scientific calculation etc. Golem platform can be thought of as a decentralized super computer.
Similar project called iEx.ec is also building a decentralized computing network, but allows to buy and sell other computing services, like storage and networking. This can be thought of as a decentralized cloud service.
Gnosis, which I mentioned earlier, is building a decentralized prediction market. Prediction markets are offering people a chance to benefit financially from their possible insight by allowing them to place bets in favor of a specific outcome. Being able to bet on specific outcome on a rate you deem acceptable in turn gives away information to the market, which can be utilized in many services, for example in finance, politics and governance. Possible applications according to Gnosis are art price discovery, stock market fundamentals prediction, insurances, market based governance etc.
Bitcoin’s capacity problems
Bitcoin seems to be in a difficult situation. The capacity of the Bitcoin network has been maxed out for a while now, and this is having a negative effect on transaction delays and fees. The Bitcoin community has not been able to come to consensus about the way the capacity upgrade should be done.
However, due to the decentralized nature of cryptocurrencies and Bitcoin network, a solution is bound to emerge from the community, which eventually gathers enough support to be able to resolve the situation. And there are plenty of other cryptocurrencies, with superior features, just waiting for their chance to enjoy increased adoption in absence of the former king of the hill.
The revolution has just begun
Decentralized applications and cryptocurrencies enable creation of value and value transfer without a trusted authority. This is a huge deal, because the authorities we have traditionally trusted to control money have become corrupted and have been able to shape the world according to their liking. Cryptocurrency revolution promises to challenge this status quo.
New cryptocurrencies and Dapps are emerging at such a rate, that it’s quite hard to be able to keep up with them all. Upcoming ICOs can be monitored at appropriately crowdsourced Ultimate ICO Calendar. Many crowdsales are able to reach their targets in just minutes after their launch, and you have to be really quick to be able to get onboard. Cooler heads might be advised to wait until tokens sold in ICO eventually reach popular cryptocurrency exchanges. I believe that after few weeks of trading, markets are able to price any project’s potential with better accuracy than during the ICO.