When we talk about smart contracts, the first thing that comes to our mind would usually be Ethereum (ETH) — to put it bluntly, the mother of all smart contracts. Well, that statement may be a little misleading, but I would argue that Ethereum was the first project which drew public attention to smart contracts implementation. It was made possible due to the design of a blockchain infrastructure. And just in case you might not know what Ethereum is, it is a decentralised platform for running smart contracts.
A smart contract is a program which contains a set of commitments, including how the contract participants shall fulfil these commitments. It executes across multiple computers so that the computers can have a consensus on the computation which enforces the validity of the contract — and is widely used in Ethereum. Today, mainstream smart contract adoption includes ICOs, Multisig transactions, and Cryptokitties, whereas more widespread applications of smart contracts are still in its early stages of development.
On Ethereum specifically, every smart contract that is deployed runs on every full node in the Ethereum blockchain. Whenever a user wants to call a smart contract, that smart contract gets activated on each of the full node across the entire Ethereum network. This has resulted in scalability issues, which is somewhat recognised as the key technical challenge that needs to be solved in order for blockchain applications to reach mass adoption. The Ethereum community has since been diving into new technical implementations, while other enterprises/organisations have ventured into creating their own blockchains, seeking to address the scalability issues.
Before we dive into exploring other newer blockchains which feature smart contracts, it is interesting to note that smart contracts are not totally new — the term was coined and explored with 10 years before Bitcoin’s existence. However, the term and its appliances have only recently been further explored. Ethereum’s platform has allowed developers to build DApps (Decentralised Apps) on its blockchain, that is defined by smart contracts. The immutability and cryptographic security features on the blockchain keep these contracts secure.
Having a middle ground to store smart contracts removes the need for an intermediary party, as conditions within the contracts can be now developed and enforced on the platform itself. A simple example would be a buy-sell agreement — the moment the buyer makes payment to a seller, the contract enforces the item to be released from the seller to the buyer.
Since Ethereum, the potential of implementing smart contracts has continued to be explored. Other communities and enterprises have also started looking into more specific ways in which smart contracts can be adopted.
So far, the use of public smart contracts has been limited. As mentioned above, token sales, multisig transactions and cryptokitties are the main areas in which we have seen smart contracts being deployed on the public chain. However, problems in regard to these implementations have arisen since. Ponzi scheme ICOs. Multisig wallets being hacked. Scalability issues on the Ethereum blockchain last December with the launch of Cryptokitties. The case of the Cryptokitties alone has made the entire Ethereum blockchain seem unreliable, where scalability issues have been commonly brought up.
Newer (than Ethereum) startups like Tendermint have since launched into trying to provide a ‘better’ consensus protocol; it boasts that it is able to process thousands of transactions per second, and writing smart contracts in more commonly used programming languages like Golang, Python etc., compared to Ethereum’s Solidity limitations.
(Tendermint itself is another whole virtual realm of services & products that we can discuss in another article)
Large enterprises like Microsoft, IBM, JPMorgan, SAP, Consensys, and many others that I may have missed have also ventured into providing consultation services and building private / consortium blockchains in a number of industries (logistics, financial institutions etc.)to build smart contracts on.
This is with the intention that smart contracts need not necessarily be deployed in an entire public blockchain for the world to see. Participating parties of the smart contract can simply spin off full nodes of the smart contract within a consortium blockchain to enforce these smart contracts — keeping the details of the contract private. Other methods also include leveraging on cryplets to protect details of the smart contract and linking it to the Ethereum (public) blockchain.
Disclaimer: The segment below highlights a few DApps-chains, but the number of existing blockchains which allows decentralised applications to be built is non-exhaustive. Also, in no way am I trying to promote these cryptocurrencies below.
The number of public blockchains which features DApps (decentralised apps) has also surged tremendously. Relatively newer platforms (or not so new anymore) such as Enigma (ENG), EOS (EOS), ICON (ICX), and NEO (NEO & GAS), have different goals on what they aim to empower the world with.
Enigma, where the team is building a blockchain which provides ‘secret contracts’ — due to the fact that data (inclusive of smart contracts) on the public blockchain is public. Secret contracts deployed on Enigma would remain private.
EOS (aka. Ethereum on Steroids), focuses on Ethereum flaws to build a ‘better blockchain’ as they claim to provide better technical capabilities compared to Ethereum. One of the main technical capabilities being addressed is the number of transactions per second (TPS), which has been a well-known issue both Bitcoin and Ethereum has been facing while scaling.
ICON, or the ICON Foundation, which seeks to provide a network (within the ICON Republic) in which multiple independent blockchains can be built on the ICON blockchain with DApps, and be able to communicate with one another.
NEO, the eldest of the four, has the deepest relations in China, a key player in innovative technology. It’s preparing itself for the smart economy, and places a huge emphasis on staying regulatory compliant. Here is a list of existing NEO + NEP-5 tokens available currently.
From this alone, we can clearly see that many parties are figuring out on the best way to leverage on the blockchain infrastructure to shape the next phase of technology. It is clear that smart contract adoption will only continue to grow for now, as more and more parties are seeking on ways in which smart contracts can be better utilised.
We should, however, remain vigilant on the potential dangers of relying on smart contracts. Quantstamp could very much be one of the first few who has taken a big leap in creating a smart contract security-auditing protocol. Despite that, it is essential to keep in mind that security audits and vulnerability discovery on smart contracts are still in its infant stages.