Most people think of bitcoin as a form of money, if they think of bitcoin at all. But 19-year-old hacker Vitalik Buterin sees it as something more – much more. He sees it as a new way of building just about any internet application.

The bitcoin digital currency is driven by open source software that runs across thousands of machines around the globe. Borrowing code from this rather clever piece of software, independent hackers have already built applications such as the Twitter-style social network Twister, the encrypted e-mail alternative Bitmessage, and the unseizable domain name system Namecoin. But Buterin believes that many other applications can benefit from the genius of the bitcoin software, and that's why he's joining forces with several other hackers to create something called Ethereum.

>Buterin believes so many other applications can benefit from the genius of the bitcoin software, and that's why he has joined forces with several other hackers to create something called Ethereum.

He envisions Ethereum as an online service that lets you build practically anything in the image of bitcoin and run it across a worldwide network of machines. At its core, bitcoin is a way of reliably storing and moving digital objects or pieces of information. Today, it stores and moves money, but Buterin believes the same basic system could give rise to a new breed of social networks, data storage systems and securities markets – all operated without the help of a central authority.

Born in Russia and raised in Canada, Buterin was interested in mathematics and computer science from an early age. But when he first stumbled on to bitcoin in 2011, it didn't grab him. "I ignored it," he says. "I thought it had no intrinsic value, so it had to fail."

But, over the next few weeks, he grew curious about this unusual creation. He received his first bitcoins as payment for articles written for a site called Bitcoin Weekly, where he was paid five bitcoins per article, the equivalent of $3.75 at the time. "It was my first ever real job, and it paid around $1.30 per hour," he says. He kept writing about the digital currency in the pages of Bitcoin Magazine and other pubs. Then, in 2013, just as he was about to lose interest in the thing, the price of bitcoin skyrocketed.

Deciding that bitcoin was going to be a much bigger deal than most people realized, he dropped out of university and started traveling the world, jumping from bitcoin meetup to bitcoin meetup and contributing to various open source projects. Ethereum is the result of all those conversations and software experiments.

A Bitcoin for Everything ————————

Ethereum won't use the peer-to-peer network that bitcoin runs on, nor will it use the same software. Instead, Buterin and his team are building a completely new system that will run atop its own network. But the project borrows heavily from the ideas behind the bitcoin software.

All bitcoin transactions, for instance, are stored in a massive public ledger called the "blockchain." This is a type of encrypted database, and you can use it to power other applications – as we've seen with Twister and BitMessage. Ethereum will feed still more applications through something similar to the blockchain, and it will offer a stripped-down version of the Python programming language – known as Ethereum Script – that's specifically designed for building these blockchain-based applications.

As with bitcoin, the network that underpins Ethereum will be powered by machines donated by the people of the world, and to encourage donations, the system will allow these machines to collect fees from developers who build and run an applications atop the network. In similar fashion, bitcoin shares its money with those who run the machines driving its network.

The system could potentially drive everything from Dropbox-style storage systems to custom digital currencies. According to Buterin, it will be particularly well suited to something called "smart contracts." A simple example is a betting system. Two people could place bets on, say, the outcome of the Super Bowl, entrusting a certain amount of digital currency to system. The system would then check the final score of the game via the web and distribute the funds appropriately. No bookie needed.

But Buterin also envisions far more complex smart contracts, including joint savings accounts, financial exchange markets, or even trust funds. Theoretically, these contracts would be more trustworthy because – if the software is properly designed – no one could cheat. Many bitcoin geeks even believe that smart contracts could lead to the creation "autonomous corporations" – entire companies run by bots instead of humans.

The Ethereum team plans to have a test network up and running soon, and on February 1, it will launch a crowdfunding campaign to finance its further development. The code will be open source, another reflection of the bitcoin way.

A Web of Our Own —————-

Ethereum isn't alone in its lofty ambitions. There are several projects trying to add smart contracts and other new tools to bitcoin. Some, like QixCoin and Bitcloud, are building their own networks. Others, like Colored Coins and Mastercoin, are piggybacking on the existing bitcoin network. Buterin has contributed to both Colored Coins and Mastercoin, but ultimately, he decided that it would make more sense to create an entirely new system.

"I saw really smart people whacking their heads against the wall at Colored Coins, and eventually, I realized people are having such a hard time not because the problem is hard," he says. "The problem is easy. People are having a hard time because bitcoin is a bad protocol to build this stuff onto."

>'The problem is easy. People are having a hard time because bitcoin is a bad protocol to build this stuff onto'

Although applications that run on the bitcoin network have the advantage of using existing infrastructure – and they benefit from the scrutiny that security experts give the system – they're limited by the design of the host software. For example, although bitcoin offers its own scripting language, the language is deliberately limited to ensure security. The Ethereum team believe these limitations made sense in the early days of bitcoin, when the ideas surrounding the currency were new and unproven. But they say that since bitcoin now seems reasonably stable and secure, it's time to experiment with ways of making it more flexible.

But, certainly, Ethereum faces several challenges. Many are worried that the Ethereum blockchain will quickly grow to an unwieldy size if it gains widespread use. Buterin thinks the team can tackle this problem, but we won't know for sure until the network is in action. Security is another big concern. These are just two reasons why the team is launching a test network before rolling out the real thing. "It won't be the official network and transactions won't carry over, and it will likely be quite buggy and fail a lot at first," Buterin says.

In other words, it's very early days for this new-age software system. But Ethereum and other next-gen crypto-platforms paint a very attractive picture of our online future, one where users are in control, not governments or big companies. Building this future is an enormous task, but Vitalik Buterin wouldn't have it any other way.