The Year of Smart Contracts: A Look at Some of the Biggest Names
You’ve got to keep in mind that blockchain is a technology, not a byword for a coin like Bitcoin. People often mistake bitcoin and blockchain for each other — but that’s a fundamental misunderstanding that can crossover to investment decisions, which can seriously harm your profitability.
Bitcoin may have been the first major coin to develop from Satoshi Nakamoto’s mathematical proofs created in 2009, but the real development of that paper was the showcasing of how blockchain technology could be used to create a decentralized system that did not require a central authority to solve the problem of trust.
That paper has given birth to thousands of cryptocurrencies — each with their own technical approach and tinkering with the originally designed technology. Bitcoin is by no means perfect and other teams have been deliberating on how to improve upon the technology.
Other ideas, using the protocol as a foundation, have sprung up from blockchain technology. Using the system’s mechanisms of establishing trust, they have sought to create more efficient transactions between parties, one in which no middleman is required to validate and enforce transactions between them. Why worry about whether someone will send you a delivery after payment when the system itself can guarantee that? Such a feature would bring enormous changes to multiple industries.
The feature we’re referring to is smart contracts and it will be a revolutionary introduction to our economy.
The Game-Changing Nature of Smart Contracts
If 2017 was the year cryptocurrency, and specifically Bitcoin, went global, then 2018 will be the year of the smart contracts. Several coins are duking it out to become the dominant smart contracts platform. But why? What exactly makes smart contracts so special?
Consider this scenario: you, either as an individual or a business, have made a large purchase for some product online. You worry about all the problems about buying something from someone you don’t know. Will the goods arrive on time? Will they be in a sufficiently good condition? Will they be delivered at all?
Consider another one: You’re working remotely for an individual. You’re completing your tasks but you’re concerned that you may not be paid on time or in the amount decided beforehand. What can you do if your employer backs out of a deal? What if there’s a genuine reason as to why the payment cannot be made?
In both cases, in the current scenario, the best you can do is hope. You place your trust in the seller or the employer to keep their end of the bargain. Should it be necessary, you contact a legal expert to handle the matter. However, that can be time-consuming and expensive. They’re both problems that are rampant but there’s little that can be done about it.
Smart contracts change all of that. These are auto-enforcing contracts that automatically execute when both parties meet all of the conditions of the contract. In the case of buying and selling, if a buyer makes an initial payment, the buyer will be induced into shipping the product. When the product has been shipped to the address, the smart contract will automatically deduct funds from the buyer.
In the case of an employment contract, if a piece of work is submitted, the smart contract will automatically release funds into the employee’s account.
Since blockchain protocols are simply programmable pieces of information, smart contracts can be scripted to perform and handle almost any sort of action, not just commerce and employment. Don’t let the worry of trust bother you, let an objective piece of information that treats everyone equally handle it fairly.
The idea is simple but, until now, we’ve had no way to implement it. You can see how disruptive this will be for any and every industry. It’s a matter of programming the contract to suit a particular need. The generality of the nature of the smart contract makes it an incredibly useful tool — and coin developers know this.
The versatility of smart contracts has spawned the creation of numerous smart contract platforms, each vying to be the number one platform in the game. They each bring uniqueness to the smart contract battle. Here, we’re going to take a look at the four major competitors in this space.
All of these are in the top 20 by market cap and each has unique strengths that may give it the edge to become the top smart contracts-focused coin.
Ethereum (ETH)
Bitcoin is the biggest player in the cryptocurrency market, but Ethereum isn’t far behind. The platform was started by Vitalik Buterin who felt the need for a platform that would be suitable for the development of decentralized apps. At the time, the scripting necessary for building such applications was unavailable and thus began the launch of Ethereum.
Ethereum has had a tumultuous history, despite its market cap of $118 billion, second behind only Bitcoin. It is by far the most popular choice for smart contract applications. This is despite the fact in 2016, it experienced a hack that resulted in a loss of $50 million resulting in a hard fork to produce a new incumbent called Ethereum Classic.
Ethereum’s strongest aspect is first mover advantage in this space, It’s early push into the cryptocurrency market and smart contracts has made it the most popular coin for the development and deployment of new cryptocurrency centric enterprises, launched on their platform booming the ICO market. Ethereum is also supported by the Enterprise Ethereum Alliance, an organization that connects the top Fortune 500 companies with Ethereum experts. This is a significant boost to bringing smart contracts to the real world applications of the world of business. The technology itself is revolutionary and initially focused on giving developers the tools required to program contracts and apps. It runs on a Turing-complete scripting language, which makes it more convenient for programmers to actually develop something of use. This Turing-completeness is a technical concept that describes a machine can compute any process that a Turing machine can.
EOS (EOS)
EOS was launched by Dan Larimer, who also founded Steem and Bitshares. Arguably one of the most successful ICOs of all time in terms of funding magnitude. The hype has gone so far as to create the impression that it will be the “Ethereum killer giving it the nickname E.O.S meaning Ethereum on steroids.
Their native token was launched on Ethereum’s blockchain, though it will be launching on its own blockchain system producing many technical advantages. Like all others listed here, it aims to be the world’s foremost platform for developing decentralized applications.
What gives EOS some potential is its marrying of smart contracts with great scalability. The platform also features horizontal scaling, which means that smart contracts can be executed and transactions processed simultaneously. The team even estimates that it can manage a million transactions per second. That is exactly the kind of speed a smart contracts platform would need to take over the world. If anyone can get there it Dan Larimer whom has partnered up with Brock Pierce, creating a Michael Jordan Scottie Pippen type dynamic duo on par to crack Dans 3PEAT with 3 successful, scalable blockchain products. One more feature is worth mentioning: if a bug is found, through supermajority consensus on the network, it would be possible to freeze the code and rectify it, all without requiring a hard fork.
The ability to fix errors and horizontal scaling is something present in no other coin.
NEO (NEO)
NEO is a coin that was created in China in 2014, first under the name of AntShares.
Arguably its strongest selling point is the fact that it is “backed” by the Chinese government, and industry giants like Alibaba and WINGS. This is the reason why it is the most popular coin in China. NEO also has multiple dApps already built on it. Having access to the fastest growing economy in the world is a boon for the coin’s growth.
The fact that the Chinese government is actively aiding it will also help immensely, in a time when many governments are unsure about how to handle cryptocurrency. China has great influence in the world and its decision to stick by this cryptocurrency will give it an advantage that no other coin is privileged with. It can also support up to 10,000 transactions per second, which is a remarkable figure and has a unique system dealing with dispute resolution to avoid complications such as forks.
ICON (ICX)
ICON is a coin that originated in South Korea. This too wishes to become the largest decentralized platform, but its approach is vastly different from the other coins.
Instead of operating as a single platform where transactions are made, ICON wants to let different blockchains interact with each other through its network. Each blockchain can operate independently but also communicate with each other through ICON’s loopchain technology, something unique to it. Essentially, it’s an ecosystem of blockchains.
This ecosystem is made possible through the ICON Republic, the lobby in which all individual blockchain communities will gather. ICON also uses Artificial Intelligence to manage reserve values and exchange rates, as well as calculate the network’s Incentives Scoring System. It also features its own exchange, DEX. What distinguishes ICON from the other platforms is that it conducts inter-blockchain transactions, while still letting each blockchain maintain its own consensus and independence.
A Comparison
As you can see, there’s something special with each of these platforms. It’s hard to pick one over the other and, honestly, from an investment point of view, that would be unwise. The uniqueness that each platform and coin brings is so potent that it is hard to tell if there will be a reason to shy away from any of them. Sure, there are downsides to these coins, but it is still prudent to consider them all; after all, the smart contracts race is only beginning.
Ethereum certainly seems like it’s in the best position for the moment. Being the first player, it has already caught the eye of individuals and businesses looking to take advantage of smart contracts. The Enterprise Ethereum Alliance also gives it a gateway into the business world — and Fortune 500 companies are powerful partners in the race to nab commercial ground. However, looking at some of the technical advantages that its competitors possess, Ethereum will have to find a way to boost its own capabilities if it is to remain successful in the long network. My personal disposition tends to take a negative stance on Ethereum due to the lack of accountability the team displays regarding the chop-shop programme their ICO platform cultivates. Are they here to stay? without doubt, will they win in the long run? It wouldn’t be difficult to foresee Ethereum slipping into a Nasdaq of sorts carrier for the erc20 token based Dapps.
NEO is perhaps the second most likely victor because, rather than just focus on smart contracts and decentralized applications, it wants to build a smart economy. This includes the digitization of physical assets — it wants to create a fully digital economy and it has the Chinese government’s backing. With digital assets, it also brings digital identity. This way, governments are more likely to support it because it is regulated. It will be possible to tie assets to actual identities. Compliance with KYC rules will be extremely persuasive in discussions with governments.
EOS is something like the second generation of Ethereum. Its nature is the same, but it boasts of multiple technical advantages such as higher transactions speeds and, most significantly, horizontal scaling. As smart contracts become increasingly adopted, it will have to find a way to deal with higher numbers. Regarding this, EOS has a vision for the future. You can also expect the inevitable bug or error in the blockchain code and having the ability to correct it without derailing the entire chain is invaluable. I have been a staunch supporter of the EOS project for the last 12 months and see great things ahead.
ICON’s diplomatic approach is perhaps the most unique. Why let coins fight it out for the throne when everyone can work together, with each coin supporting a different purpose. It’s like a United Nations for blockchains. I believe they have a very optimistic future ahead of them and look forward to see how the other chains operate independently and symbiotically.
