Fortune

BLOCKCHAIN MANIA!

EVEN IF THE CRAZE FOR BITCOIN AND ETHEREUM ABATES, THE POWER OF THE “BLOCKCHAIN” TECH BEHIND THOSE CURRENCIES IS VERY REAL. HERE’S HOW BUSINESSES ARE TRYING TO HARNESS IT—AND WHY THEY CAN’T AFFORD TO IGNORE IT.

BELIEVE THE HYPE A Bitcoin fan photobombs Federal Reserve Chair Janet Yellen at a congressional hearing

ONE SUMMER MORNING in a coffee shop on Atlantic Avenue in Brooklyn, I sit behind my MacBook Pro as tens of thousands of machines around the globe prepare to indelibly inscribe a record of my tinkering into their collective consciousness. I am in the midst of creating my own digital tokens—essentially online currency—on a sprawling, decentralized network known as Ethereum.

Mike Goldin, a software developer at ConsenSys, an Ethereum development studio based in Bushwick, walks me through the coding process. Goldin is my Sherpa today, graciously attending, with utmost patience, to my every query. (The 10-plus hours I spent downloading software the day prior was unnecessary, he tells me; we’re going to employ some work-arounds that will achieve my goal in a matter of minutes.)

After considering a variety of names for my token—“fortunecoin,” “hackettoken,” “neither”—I settle on a cheeky one that evokes a spectacular flameout of the great ’90s Internet bubble: “Petsdotcoin.” I click “create.”

Transaction hash

0xc14d13893bd0f0ff997a8a701c-0c8844661a6ddb921a42f2f61c-8c7adb0d158c

(Pending) … (Pending) … (Pending) …

Twenty-seven seconds and one block confirmation later, I am the proud owner of 500 newly minted “petsdotcoin” tokens. Their creation cost me $1.57 in Ether, the cryptocurrency that fuels the Ethereum network. Despite that expense, my tokens are valued at 0 Ether, or $0.00, as the program reminds me. They are worthless. But if I had tied those bits to some worthwhile business idea, petsdotcoin might have offered investors a radical new way to fund me, track their stake, and participate in a miniature, virtualized, in-app economy. In that respect, my funny-money vanity project is a tiny part of a movement of profound economic significance.

In case you haven’t been keeping track, digital tokens are a new asset class, powered by cryptocurrency networks like Bitcoin and Ethereum. The sector has attracted maniacal investor interest this year, giving these e-coins absurdly inflated valuations that have inspired endless comparisons to the “dotcom” era. (Hence, petsdotcoin.) At press time, the total market value of all virtual currencies had rocketed past $135 billion, up from just under $20 billion at the beginning of the year.

Hundreds of projects have collectively raised more than a billion dollars through “initial coin offerings” (ICOs). There are now tokens funding every conceivable endeavor: Decentralized cloud storage (FileCoin, Storj). Digital advertising (Basic Attention Token, adToken). A gentlemen’s club in Las Vegas (Legends Room). Marijuana (Potcoin). Satire (PonzICO). There’s even one for dentists (DentaCoin). In a photo recently posted to Instagram, Floyd Mayweather, the boxer, sits on a private jet surrounded by

You're reading a preview, sign up to read more.

More from Fortune

Fortune3 min read
Football Absorbs a Knockout Blow
As the evidence mounts that the sport is hurting its players, a multibillion-dollar cultural and entertainment colossus looks ever more deflated.
Fortune1 min readPolitics
Trump’s Break With CEOs Is a Big Deal
THIS SUMMER, with his ambiguous response to the unambiguous situation in Charlottesville, Va., President Trump completed his alienation of the congressional leadership of his own party, his top military leadership, and his top allies in the business
Fortune2 min read
The Gathering Place
HAWAII IS A HIKE, and planning a trip there can be overwhelming—so many islands, so little time. Start with a visit to Oahu, and place yourself in the capable hands of Leea Evaimalo, who runs the concierge desk at the luxurious, year-old Four Seasons