Ethereum & the Future of Finance

The lightbulb went off while I was debugging a trade claims workflow at SAP.

I was staring at the logic we'd built into our system: if this agreement exists, and this claim is valid, then release these accruals. It sounds straightforward until you realize how many things can break between a promotional plan and a payment.

A manufacturer plans a promotion with a retailer. That plan becomes a deal. The deal becomes an agreement - a formal contract that sets aside financial accruals to cover the expected cost. Later, when the retailer submits a claim - maybe a deduction on their next invoice, maybe a request for a credit note - the system has to validate that claim against the agreement and release the right accruals.

In SAP's S/4 with condition contract management, we handle this through layers of configuration, validation rules, and reconciliation workflows. It works, but it's complex. And that complexity exists because contracts in traditional enterprise systems are documents. Passive. They describe intent. They don't execute themselves.

That's when the pattern clicked. Ethereum's smart contracts weren't just about DeFi speculation. They were programmable agreements. The contract itself could hold the accruals. The validation rules could be encoded directly. When conditions are met, execution happens automatically. No reconciliation. No dispute about whether the claim matches the agreement. The agreement is the execution logic.

Something clicked. Programmable money wasn't an abstract crypto concept. It was the missing infrastructure for problems I was solving every day.

What "Programmable" Actually Means

The term gets thrown around loosely, so let me be specific.

Traditional financial systems separate the agreement from the execution. You sign a contract. Lawyers interpret it. Accountants track it. Software manages workflows around it. When something goes wrong - and something always goes wrong - humans intervene to reconcile what the contract said with what actually happened.

Ethereum collapsed this separation. Vitalik Buterin's insight was that the same blockchain technology securing Bitcoin's ledger could secure arbitrary computation. Not just "Alice sent Bob 10 coins," but "If condition X is met, automatically execute action Y."

The technical term is smart contracts. But think of them as self-executing agreements. The contract holds funds directly. The rules are encoded in logic anyone can audit. When conditions trigger, the contract executes exactly as written - no interpretation, no intermediaries, no reconciliation.

Imagine a vending machine that lives on the internet, has no owner, can't be shut down, and manages millions of dollars according to rules written in code. Now imagine that vending machine can interact with other vending machines, composing complex financial operations from simple primitives.

That's Ethereum. Not digital currency - a world computer for programmable finance.

Proof the Primitives Work

By Q2 2021, this world computer was processing over $150 billion in what the crypto natives call DeFi - decentralized finance. The numbers seemed absurd. More value locked in smart contracts than the GDP of most countries, running on software that anyone could audit, governed by code rather than institutions.

The applications mapped to patterns I recognized from traditional finance, but with the intermediaries removed:

Lending protocols like Aave and Compound let you deposit crypto as collateral and borrow against it. No credit check. No approval committee. Interest rates adjust algorithmically based on supply and demand. By May 2021, Aave alone held over $14 billion in deposits - all managed by smart contracts.

Decentralized exchanges like Uniswap replaced traditional order books with liquidity pools. Instead of matching buyers and sellers, you trade against a smart contract that holds reserves of both tokens. The price adjusts automatically based on the ratio. No exchange operators. No market makers taking their cut.

Yield aggregators emerged to optimize returns across protocols. Deposit your tokens, and algorithms move them between opportunities faster than any human could manage.

The product manager in me saw the deeper pattern: these weren't just financial products. They were composable financial products. Each protocol exposed interfaces that other protocols could build on. Aave's lending could plug into Uniswap's trading which could feed into Yearn's yield optimization. Lego blocks for finance.

Traditional enterprise systems can't do this. They run on siloed databases, proprietary APIs, and legal agreements that take months to negotiate. DeFi protocols interact permissionlessly, settling in minutes.

This is what proof of concept looks like at scale.

The Enterprise Connection

Here's what kept pulling me back: the same logic powering $150 billion in DeFi could solve real problems in enterprise finance.

Consider trade promotions. A CPG manufacturer might run thousands of promotional agreements with retailers annually. Each agreement involves planning, negotiation, execution, claims processing, and settlement. The current infrastructure - ERP systems, spreadsheets, email chains, manual reconciliation - works, but it's friction-heavy and error-prone.

Now imagine that promotional agreement as a smart contract. The manufacturer and retailer agree to terms. The contract holds allocated funds (accruals). When the retailer submits a claim with valid proof of performance, the contract automatically validates against its rules and releases payment. No back-and-forth. No dispute resolution. No waiting for someone in accounts payable to process the paperwork.

The complexity doesn't disappear - you still need the business logic. But the execution becomes deterministic. The agreement doesn't just describe what should happen; it is what happens.

This isn't theoretical. The primitives are live, handling billions in value. The question is whether enterprise will adopt them.

The Friction Is Real

I won't pretend the technology is ready.

When I tried to make my first Uniswap trade, the network quoted me a $47 gas fee - for a $200 swap. A few weeks later, during a popular NFT mint, gas prices spiked to nearly $200 per transaction. The network that promised to democratize finance was pricing out anyone who wasn't moving significant capital.

The irony wasn't lost on me. A system designed to remove financial gatekeepers was creating a new kind of gate: you needed to be wealthy enough to afford the transaction fees.

This is the blockchain trilemma in action. Ethereum optimized for security and decentralization - every transaction verified by thousands of independent nodes. Scalability was sacrificed. The architecture couldn't handle the demand.

Layer 2 solutions are emerging - Polygon, Arbitrum, Optimism - each making different tradeoffs to process transactions cheaper and faster. The scaling landscape is messy, competitive, and confusing. But it also feels familiar. Early internet all over again - dial-up giving way to broadband, competing standards eventually consolidating into something usable.

The technology is immature. The trajectory is clear.

What This Changes

The traditional financial system moves trillions of dollars daily through infrastructure built in the 1970s. SWIFT takes three to five business days for international transfers. ACH batch processes overnight like it's still the era of punch cards.

These systems persist because they're entrenched, not because they're optimal. Banks earn float on your money sitting in transit. Payment processors charge fees because merchants have nowhere else to go.

Programmable finance offers something different: rails that settle in minutes, operate 24/7, and expose their logic for anyone to inspect. The user experience is rough. The fees are volatile. The technology is immature. But the architecture is fundamentally more capable than what it aims to replace.

The question isn't whether programmable finance will exist. It already does, processing more value than most traditional payment networks. The question is whether it remains a parallel system for crypto natives - or becomes the infrastructure that enterprise runs on.

Where This Leaves Me

I've paid more in gas fees than I'd like to admit. I've had transactions stuck pending for hours. The experience is often frustrating.

But I've also watched code execute financial logic that would require teams of lawyers in the traditional world. Seen agreements that enforce themselves. Observed primitives composing into complex operations without human intermediaries.

The concept can't be uninvented. Programmable value. Self-executing agreements. Composable financial primitives.

Whether Ethereum specifically wins or loses, the idea of money that executes its own rules changes what's possible. For DeFi speculation, sure. But also for trade claims, supply chain finance, insurance, and every other domain where we currently paper over the gap between agreement and execution.

The lightbulb that went off while debugging that SAP workflow hasn't dimmed. If anything, it's getting brighter.

Programmable money: hard to use today, impossible to ignore tomorrow.