On the Origin of Smart Contract Platforms
The extinction of Colored Coins by Ethereum is one small step in the brief evolutionary history of cryptocurrency-based smart contract platforms. Recently this evolution has begun to accelerate with the emergence of new platforms and innovations in the ecosystem, leaving developers and speculators alike wondering which will survive and which will become extinct.
For those investing their money or intellectual capital, keeping up with the torrent of innovation happening in the space can be time consuming. This series of articles will provide analyses of the emerging platforms and technologies in this ecosystem with a focus on their impact to the dominant species, currently Ethereum.
At the present time Ethereum is thriving; it is the second most dominant coin by market cap, has a large and growing ecosystem of DApps, tools, developers, and corporations, and is the preferred home of initial coin offerings. Ethereum’s short history also includes the DAO hack, a contentious hard fork that resulted in a permanent community split, and a Parity multisig wallet bug that put over 200 million USD at risk and resulted in permanent loss of ETH and other tokens.
These events remind us that the dominance of a smart contracts platform delicately hinges on the security of its smart contracts. Research is being done in the Ethereum community on languages and tools to build safer smart contracts, but until these technologies see widespread deployment, Ethereum contracts will remain vulnerable to attack. Similarly, scalability is vital to Ethereum’s success. Key innovations, such as proof of stake, sharding, sidechains, and off-chain computation are under active research and development, but still months to years away from deployment.
Meanwhile, competing platforms, also in various stages of development, are innovating on languages, scaling, security, governance, and usability. They are testing out highly scalable consensus protocols, new paradigms of decentralized governance, and other promising advances. They enjoy the advantage of learning from Ethereum’s experiences while making a clean start without billions of USD at risk. In most cases their efforts have been well funded by initial coin offerings, and there is no shortage of hype around them.
“On the Origin of Smart Contract Platforms” will be a series of articles that will track the emergence and evolution of competing smart contract platforms and try to predict their impact to the ecosystem. Each article will evaluate the technology of an emerging platform and assess the threat that the platform will come to dominate and extinguish the incumbent. This threat assessment is not so much a measure of the platform’s innovativeness as it is an estimation of the potential for the platform’s key innovations to displace the incumbent’s network effects before it can adapt by assimilating these advances to preserve its dominance. Adapability for smart contract platforms depends on factors such as network effects, governance, and inertia and is the key to to survival in an ecosystem exploding with innovation.
The threat of dominance posed by any emergent platform will change over time, often quickly and dramatically, as research progresses and influential events unfold. To capture the dynamic nature of this evolution, we’ll assign each competitor an “Dominance Threat Level” that estimates, at the present time, the platform’s potential to supplant the incumbent as the dominant smart contracts platform. We’ll use a color-coded scale (inspired by the the IUCN Red List) as described below:
The Dominance Threat Level assigned to a project represents an educated guess based on information available at the present time and is expected to change. The analysis that goes into this threat assessment is limited by the author’s experience and interests in computer science and engineering. Specifically, relevant factors such as a project’s marketing strength, community, or financial condition are mostly ignored while technical white papers, mathematical proofs, and well-specified limits receive disproportionately more credit. In short, all conclusions in these articles are narrowly biased and therefore should not be construed in any way as investment advice.
That said, I hope this information and analysis is useful to those who wish to understand and stay on top of developments in the rapidly evolving smart contracts technology space. Stay tuned for articles on Tezos, DFINITY, NEO, EOS, Cardano and more competing platforms in the days to come.
Thanks to Zero-Hour-Zulu for his input on early drafts and assistance in formulating the theme of this series.
Thanks to Cyndi Conklin for the series logo design
Special shout out to DecStack, the Virtual Co-Working Spot for CryptoCurrency and Decentralized App Projects, for their help and encouragement.