On this week’s Rule Breakers podcast, Motley Fool co-founder David Gardner takes on a topic that he’s never hit before, but that plenty of his listeners want to hear about from him: cryptocurrencies. To answer their questions about this transformational invention, he’s enlisted the help of Fool analyst Aaron Bush.

In this segment, they dig into the ways that up-and-coming currency Ethereum differs from the pioneering bitcoin: The original cryptocurrency is at core a tool for transferring and storing value. Ethereum was built to power contracts: It’s programmable money. (Now let them explain what that means.)

A full transcript follows the video.

This video was recorded on Oct. 18, 2017.

David Gardner: Can you briefly explain what Ethereum is and what makes it different from bitcoin and why it’s of value to all of us, potentially.

Aaron Bush: Bitcoin was built to help transact value and store value. Ethereum was built to contract value. It’s programmable money. So Ethereum is a development platform that others can build decentralized applications on top of. What that really means is all the value that is stored in Ethereum, or its token, ether, really is just dependent on what people do with it.

But this is another example of a protocol, or a fat protocol, and what makes it different from the previous version of protocols is that it’s allowing value to be created and stored right here on the protocol layer of the internet, and that transformation is going to allow for new digital inventions that just, straight up, were not even possible.

Gardner: So if I pay you with Ethereum, that also involves maybe within that transaction and that currency the contract itself that legally binds us and we both adhere to. And that’s baked into the money itself that you and I just exchanged through Ethereum.

Bush: Right. You can create contracts through code, and that’s known as a smart contract. It’s really just a small piece of everything that’s going on here. I could say, “Hey, David, if this podcast reaches X number of downloads, then I will give you this number of ether.” And if it does, then it will just automatically execute. There’s no taking that away. That could be potentially transformational from a legal standpoint and things you can do with that, maybe even in the financial system, but that’s really just scratching the surface.

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