Laura Shin , FORBES STAFF
With the price of Ethereum's token, ether, up almost 4,000% for the year, Blockchain.info, one of the oldest and most popular user-controlled bitcoin wallets, Thursday adds it as a second currency to the service.
The move gives the 16 million Blockchain wallets access to the second-highest market cap coin, which is used to power smart contracts on the Ethereum platform.
Additionally, the wallet, available in 140 countries, now integrates the crypto-to-crypto exchange Shapeshift so users can easily trade from bitcoin to ether and vice versa.
"The reason we decided to add Ethereum is we really feel like Ethereum as a community, ecosystem and technology has really matured," said Peter Smith, Blockchain's chief executive, of the two-year-old cryptocurrency.
While another popular cryptocurrency wallet, Coinbase, began offering ether more than a year ago, Smith said Blockchain has to be more conservative because of the demographics of its users. While Coinbase's customers are more concentrated in North America and Europe, where many people have probably already heard about Ethereum, Smith said Blockchain's user base is more global, with 80% residing outside of the United States. "When we survey our user base, the majority of them don’t know what ether is, haven’t heard of it," he said.
For that reason, he said, "We feel we have a serious responsibility that when we’re offering something, we’re offering something that’s high quality," he said.
Blockchain.info maybe be the most popular user-controlled wallet, in which the holders hold their own private keys, as opposed to a hosted wallet like Coinbase where the company holds the users private keys. "What’s most fundamental to know about our product is our tagline, which is 'Be your own bank.' Our philosophy is not to run a crypto bank, but give people software packages so they could be their own bank," said Smith.
The most popular user-controlled Ethereum wallets now are desktop or web applications, so from the start, Blockchain, which also has a mobile wallet, will likely be the most user-friendly mobile option for people who want to control their private keys.
Smith said Blockchain is choosing to add Ethereum now based on its progress. In its two years of existence, Ethereum has undergone some major challenges, starting with a failed smart contract more than a year ago called the DAO (which stands for decentralized autonomous organization; this one was structured as a smart contract-run venture fund) that, first, collected $150 million from people all over the world, and then fell victim to a "hack" in which someone who exploited a loophole in the code made off with $50 million.
That then led to a decision by some to "hard fork" or roll back Ethereum's digital ledger to a time before the DAO and the "hack," but that decision was so contentious that a group that disagreed with it have kept alive the original chain, Ethereum Classic, whose token, ether classic, is worth a fraction of Ethereum's ether.
However since then, Ethereum has become the platform that has spawned the initial coin offering craze that has so far raised $2 billion in crowdsales of new tokens, and its price has risen along with this trend. With more people having easy access to ether through Blockchain, it could fuel the craze or at least spread it to more people.
Smith felt confident about adding ether now because the token trades on more exchanges, including regulated ones, it has more trade volume, making it less likely the price will be manipulated and because technical issues around one of the methods used to secure the blockchain, called proof of stake, look as though they will be resolved.
He demonstrated the wallet for me by sending me $1 of ether to me -- the first transaction of ether from Blockchain to Coinbase. The transfer took two minutes and seven seconds.
Smith then gave a demo of exchanging ether for bitcoin, which, due to fees on both the Ethereum and Bitcoin networks as well as a wide spread in the exchange rate, caused his $21 worth of ether turn into $12 of bitcoin. Currently, fees on the Bitcoin network are around $6, he said, noting that the fees would be a smaller percentage of a higher-value transaction.
Aside from its progress, Smith said Blockchain decided to add Ethereum because, "for products we want to build in the future, Ethereum is very integral to that," he said, mentioning products that need smart contracts, or derivatives of tokens. "We want something to add to the wallet to be truly additive. Fundamentally, we’re not about helping people speculate, so for us to add something, we want to make sure it adds some unique value, some unique additives, some unique driver to our platform."