Smart contracts and blockchain are the Laurel and Hardy of the crypto world, always finding a parallel mention - just that they are a lot more serious than that! Smart contracts are progressing and are well-poised to become one of the most demanded features of blockchain technology.
Smart contracts and blockchain are the Laurel and Hardy of the crypto world, always finding a parallel mention - just that they are a lot more serious than that! Smart contracts are progressing and are well-poised to become one of the most demanded features of blockchain technology. They could find their applications in any place where a ‘contract’ is relevant, right from legal and financial systems to even IoT and healthcare.
Smart contracts eliminate the need for intermediaries and clerical delays, and this adds to automation, efficiency, cost-effectiveness and an advantageous rigidity in the processes. Imagine little things like your pharmacist having your drugs ready as soon as the doctor prescribes your medicines, and the pharmacist not being able to include any generic drug that might unpleasantly react with the prescribed ones! This is what smart contracts are capable of.
These little pieces of codes find bigger applications in large-scale enterprise blockchain projects. Enterprises, with their widespread areas of operation, need a rigid automation solution that is trackable and immutable - something that can be assuredly and adequately filled by smart contracts and blockchain.
Let us look at a few of them, along with one of the biggest challenges that these blockchain projects are facing - scalability!
It might not be a surprise if you had already thought about Ethereum when reading the last paragraph - that is the extent of synonymy that it has established when it comes to creation and deployment of smart contracts. The core of Ethereum has made it easy for developers and regular people to create smart contracts.
Most of the smart contracts on Ethereum use the ERC20 standard. The numbers of smart contracts, the developers, and the ERC20 tokens stand as resounding testimonials to the awesomeness of Ethereum. Most of the ICOs and crypto tokens created on Ethereum are ERC20 compliant.
While the Ethereum community does its best to educate the common people, the permissionless nature of the platform makes it practically impossible to vet all the tokens and coins created on the platform.
One of Ethereum’s prime focal points of concern is on scalability, and when it comes to a public blockchain like Ethereum, slower networks are surely a challenge. The limitation came to light when Cryptokitties was launched, and the transaction reduced the network speed from a few seconds to a few hours.
It has incorporated technologies like off-scale transactions to up its game since then. While the issue hasn’t been completely resolved, the future doesn’t look bleak either.
Once the scalability issues are resolved, Ethereum claims that it should be able to successfully handle 24,000 transactions per second - 12 times faster than Visa. This will also make activities like crowdfunding easier and faster than what Ethereum has already done, with the benefits of low transaction fees!
Corda is a private smart contract platform that is designed to create and execute smart contracts between a small group of people. Smart contracts on Corda are created using Kotlin. Corda presents a wide selection of tools that you can use to create a smart contract. Corda is not open to the public, and it is confined to a group of entities who have a prearranged agreement to use it. However, it is expected that it might become more open in the future, although not like Ethereum.
Since Corda is private, it has not seen volumes that choke its limits of performance, and cannot be compared to a public blockchain like Ethereum. Corda, even with its yet-to-be-noticed limitations on scalability, might be good for businesses that need a transaction volume between 15 and 1,400 transactions per second.
Bitcoin Cash is a hard fork of bitcoin, and this project has enabled some smart contract features that bitcoin chose to drop early. This smart contract, when fully deployed on the chain, can even create multi-layer smart contracts that can trigger transaction even when one part of the contract is executed. Since bitcoin was envisioned to be nothing more than a peer-to-peer cash transaction system and not a multifunctional crypto project, these functions were dropped.
The new cryptocurrency severed its ties with Bitcoin in August 2017, and one of the first things that they did was to reactivate their smart contract. It almost sounds like even blockchains and smart contracts have their own share of breakups and rebounds!
It is probably the only cryptocurrency that has sorted out its scalability issues. Because of its smart contracts scalability feature, it serves as a place where users can host their own smart contracts.
Bitcoin Cash uses a permissioned subset of interested parties for its smart contracts. This would mean that the smart contract is transparent only to the transacting parties - it contrasts Ethereum, as the smart contract is out there in the open, even for non-participants.
Stellar is often referred to as the Ripple clone, and its smart contract platform doesn’t attract attention as much as many of its functions do. The functionality is not as extensive as Ethereums, but it is adequate in its utility to facilitate transactions. Using the smart contracts on the Stellar platform, you can easily use transaction sequencing, time-locked transactions and multisig escrow transactions that will facilitate joint-entity crowdfunding and atomic swaps.
The limitation with Stellar is that it relies on a third party like a trusted escrow to execute the smart contracts. It even makes users and the crypto community question the association of the attribute ‘smart contract’ with Stellar, especially when it’s so dependent on a third party escrow. However, it has all the features and the possibilities to have complex smart contracts capabilities.
The ‘scale’ property of Stellar is quite similar to that of Ripple. The good news is that the scalability problem of Stellar is because of blockchain data storage abilities. When this issue is resolved, Stellar has the capability to scale up, irrespective of transaction-volumes. Also, its dependency on the third party escrow might minimize its capacity to handle high-volume transactions. Once it has its native smart contract execution program, the processes will relatively be faster.
As much as the blockchain technology, smart contracts - which are a decade elder to blockchain - is also in its infancy. There are good chances that we will see advanced scalable solutions and the entire blockchain landscape turn accommodative to the changes. That will make it really easy, simple and straightforward to use smart contracts even for everyday business-activities.