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The popular digital currency Bitcoin, witha market capitalization of over $16 billion, was in the news over the weekend after it recrossed the $1,000/Bitcoin value threshold. Despite the buzz around Bitcoin, there is another cryptocurrency-related project that is poised to revolutionize the way in which we exchange.

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The Ethereum Project, an open source platform developed by 22-year old programmer Vitalik Buterin, is seeking to build upon the blockchain technology established by Bitcoin by allowing developers to use the blockchain to build decentralized applications.

The blockchain is a decentralized database where records and entries are virtually unchangeable. While Bitcoin utilizes blockchain technology to manage a currency, the Ethereum Project provides an open source environment where programmers can create applications on the blockchain.

Tristan Winters, a reporter at ETHNews, the leading online Ethereum news site, explained to me the Ethereum project in laymans terms: Ethereum is a world computer. Instead of hosting apps on a server, you host them on the Ethereum blockchain and p2p network (world computer). So the apps are censorship resistant and no one can shut them down, even if they want to.

Ethereum is driven by Ether, a cryptocurrency that acts as fuel for the system. According to the projects website, Ether is a necessary element that ensures that developers are writing quality applications:

Ether is a necessary element a fuel for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations. To put it another way, ether is the incentive ensuring that developers write quality applications (wasteful code costs more), and that the network remains healthy (people are compensated for their contributed resources).

Because of the open source nature of Ethereum, its has almost limitless functions. Developers have proposed and began work on decentralized file storage systems, financial systems, and business management systems.

Ethereum allows actors to create smart contracts, which are programs that run on the blockchain that can handle currency in a way that is unchangeable. Smart contracts can be used for a variety of business functions, such as the representation of shares, organizational voting, and fundraising.

The decentralized nature of the Ethereum blockchain would allow for social networks that are truly resistant to censorship. Unlike Facebook or Twitter, a social network operating on Ethereum wouldnt be accessed via centralized servers. Such a network would exist as a peer-to-peer network that lives on computers throughout the world. Because such a network would have no centralized body, censorship would be extremely difficult.

Although it is unclear what the future holds for the Ethereum Project and the value of Ether, it seems likely that there is increasing interest in decentralized applications that have the potential to liberate an increasingly centralized world.

Tom Ciccotta is a libertarian who writes about social justice and libertarian issues for Breitbart News. You can follow him on Twitter @tciccotta or email him at tciccotta@breitbart.com

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