How Ethereum co-founder Joseph Lubin plans to shape 'Web 3.0'

He said Ethereum was a natural progression of the World Wide Web's first protocols that allowed static text, images and hyperlinks.

Web 2.0 added to the initial online experience by creating e-commerce, interactivity, mobile and social media, and has transformed society, but Mr Lubin said its shortcomings include a lack of embedded security and no native monetary nor identity construct.

Rampant development

New database technology – which is also being created by other enterprise blockchain developers such as Digital Asset, R3, Hyperledger and JP Morgan's Quorum, which are all fighting for the new market – will be more collaborative and create efficiencies for business when information can be relied upon without centralised verification.

This will also open up totally new business models – many of which ConsenSys has already invested in. ConsenSys describes itself as a "venture production studio", focused on building and scaling tools, disruptive start-ups, and enterprise software products based on Ethereum.

The emergence of this new, blockchain-powered internet is being closely watched by global banks and technology giants and it will also hit other trusted intermediaries such as custodians, stock exchanges and lawyers.

The new infrastructure will allow consumers to create a consistent, portable reputation, wresting power away from the likes of Facebook, which has profited by accumulating customer data in a way that lacks transparency.

Facebook-style 'liberties'

"Corporations have taken the liberty of defining identity constructs to service their own business models, which has resulted in treating people as the product," Mr Lubin said.

"Even worse, they have turned the internet into a dopamine slot machine, where we are constantly liking and clicking and are constantly fed images and words designed to keep us rapt on our phones or laptops – so they can sell us more and more."

He said his vision was for better user control of identity, and of information, where "people establish their own, sovereign, self-identity", and said the blockchain was a perfect construct for that.

Ethereum's role

Ethereum allows digital assets to be created natively and prevents them from being counterfeited. Its network processes more than nine out of 10 global initial coin offerings (ICOs.) ICOs are fundraising events where interests in a decentralised company are issued directly to users, bypassing traditional exchanges.

Asked about how Ethereum is being rolled out in more mainstream parts of markets, Mr Lubin pointed to tokenised securities, standards for fungible and non-fungible tokens, crypto commodities and bonds, amortised insurance and atomic swap protocols.

JP Morgan is a big supporter, building its Quorum network on top of Ethereum's public code, while Commonwealth Bank used Ethereum to issue its recent bond-i ("blockchain operated new debt instrument") for the World Bank.

Santander also used Ethereum to build a new interbank payments network that ConsenSys is now developing, and the technology has been tested by the Monetary Authority of Singapore.

Given Ethereum was only released three years ago, it is not yet operating as fast as modern market infrastructure, but Mr Lubin said this was improving.

"There are billions of dollars of trades clearing and settling instantly on Ethereum every day," he said. "It will get faster because we are getting better and better using cryptography to encrypt and validate information."

ConsenSys currently has 25 platforms in development and is working on more than 50 projects.

"We are experiencing exponential growth, it's overwhelming," Mr Lubin said. "We are in a pretty good position where we don't have to do anything that we don't find fascinating."

Decentralised banking

Ethereum enables the trade of the Ether cryptocurrency, which has been bid up and down by speculators in the same way as bitcoin. However, it is different to bitcoin in that the token is required to run programs and store data on the network – like the fuel in an economy.

Mr Lubin said banks should be preparing for a world where customers are fully empowered and effectively become their own bank, using services from a range of providers tailored to them.

"We will move to the point where people will be able to participate more in offering financial services. You need to establish a financial services relationship but then let the person have as much power in the relationship as possible."

He also predicts big changes to the IT industry, which he says is moving from a siloed industry, where one company provides storage or bandwidth or compute, to one where all companies are able to be a resource provider.

"My laptop may share some of its compute, bandwidth or storage, mediated by protocols which we are using already. So we are going to see the IT industry evolve into a radically open free market, instead of siloed pricing mechanisms and heavy infrastructure for selling things," he said.

"It's going to be automatic, and we are going to need the financial industry to keep up with that."