A somewhat simple example is flightdelay. This is an ordinary website on the surface, but on the background – through Metamask – it uses the blockchain to access flightdelay’s smart contract which is just if/then, else, while, etc. code. What is unique is that this code does not have a centralized server, therefore does not require anyone’s permission to run. As such, it can be fully automatic, allowing machines or other unrelated code to directly communicate with the smart contract and automatically transfer or receive value. As this code is held and validated/executed in thousands of machines, it is as good as impossible to tamper with or change in any way, making it far more secure than a centralized database where one administrator can change data at will.
In this example, the smart contract gets a data feed for flights and, based on mathematical algorithms set by coders, it determines the amount of eth you will receive if the flight is delayed or canceled. It all runs on its own. There are no employees, administrators, there are no accounts, no registration, no third party at all, just some code that does it all.
Another use of Ethereum’s blockchain and smart contracts may be authentication. By tagging sneakers, for example, or by scanning high-end dresses, blockchain technology can allow owners to verify the authenticity and genuineness of a product, as well as enter ownership details and perhaps even custom messages, tackling fake goods trade and increasing enforceability of property rights.
It further allows for the creation of completely new business structures, such as Decentralized Autonomous Organizations or DAOs. As the smart contract can hold funds, investors need not transfer money upfront to the management class, but can instead vote on the release of a specified amount of money dependent on results. Replacing CEOs and board of directors.
This is done through tokens. Ethereum, being Turing complete, allows for the creation of new currencies (tokens) on top of ethereum’s network. Entrepreneurs can and do issue tokens in return for eth to create new projects ranging from music and other intellectual rights, fantasy sport, decentralized supercomputers, social networks, stable currencies, derivative and hedging products, automatic machine payments, as well as countless of other innovative projects that are daily announced.