Smart Contracts What Are They, How Do They Work And What Do They Contribute (Part IV)

Smart Contracts What Are They, How Do They Work And What Do They Contribute (Part IV)

In the last post we spoke about the “Current Situation of Smart Contracts in Bitcoin

Platforms Innovating with Smart Contracts

Not all projects revolve solely around the Bitcoin network and there are already several alternatives.

Smart Contracts What Are They, How Do They Work And What Do They Contribute (Part IV)
Blockchain.

Initially Ethereum and, during 2016, Lisk stand out. Let’s go into a little detail to describe each of them.

Smart contracts in Ethereum

Before starting with Ethereum, we want to warn that in this article we are not going to compare Ethereum with Ethereum Classic, we are simply going to limit ourselves to describe the objective of its software whose token or active could be Ethereum, Ethereum Classic, Classic Ethereum or
Ethereum Origin (among others that have arisen after the problems of TheDAO).

Ethereum takes Bitcoin’s smart contracts to another level and is the one who, mainly, has inspired other solutions, such as Counterparty or Rootstock, which want to achieve the same but on the Bitcoin network.

Ethereum, which is one of the most famous projects in the smart contracts sector, is a distributed computing platform based on a public blockchain such as Bitcoin and which also allows intelligent P2P contracts to be executed (between nodes, without central servers) in a decentralized virtual machine called Ethereum Virtual Machine (EVM).

It is based on all of Bitcoin’s theory of being distributed, having its own cryptocurrency, miners and even its own blockchain among other things but, unlike Bitcoin, Etherum has created a much more extensive programming language interpreter (full Turing), allowing much more complex logic to be added within the blockchain.

That is to say, it could resemble a distributed computer, which uses its cryptocurrency (the ether) as the “gasoline” that the miners need in order to execute the contract.

That is to say, now with Ethereum the contracts are programs with many more functionalities and possibilities.

Although for this, and this is something that many people criticize them, they have had to create a whole new network from scratch, renouncing the Bitcoin network (the most powerful in the world).

All applications run in a blockchain with a very high computing power that allows developers to create decentralized applications (DAPPS): Decentralized Autonomous Organizations (DAO), Exchange markets,…

You can consult, study or copy an extensive list of decentralized applications developed on Ethereum on Ethercasts.

Smart contracts at Lisk

This platform to create and execute smart contracts in a decentralized way was launched in 2016 presenting itself as one of the best options to develop secure and fast intelligent contracts thanks to the use of Javascript (the most commonly used programming language) as the language for the creation of smart contracts, thus becoming an alternative to Ethereum in which the programming language used is Solidity.

Blockchain.

After a successful pre-sale of the currency that the contract will need to work (the LSK), in which more than 14,000 bitcoins were collected, Lisk is still in a very initial phase but already has several DAPP concepts in which it is working as the ‘proof of existance’ or a social network for artists called Discovr.

The Oracles

We cannot forget the oracles. One of the most important characteristics for a smart contract to interact with the real world are the so-called oracles.

Oracles are instruments that allow to update internal states of a smart contract through external information (usually obtained through APIs), for example to obtain the quotation of a stock or currency or if a package has been sent by the transport company.

Smart Contracts What Are They, How Do They Work And What Do They Contribute (Part IV)
Smart Contracts.

To better explain it imagine an intelligent contract on a football bet, Madrid – Barça, the contract would use as oracle an official source, for example the website of the Spanish football league.

Depending on the result, it releases the funds to the winner. Who needs a betting house that keeps a percentage of your money? This would be a betting house without commissions, secure and without intermediaries (decentralized).

Oracles also work autonomously. However, it must be borne in mind that the source used by the oracle is a third party that must be trusted, and could be corrupted by its owner, cracked, or simply fail its server, something that has negative implications: we are CENTRALISING trust, something contrary to the blockchain philosophy.

Luckily, there are already projects that are developing solutions for this problem Orisi and Oraclize.

In essence they combine the results of all the information providers that are indicated to him and it is this one who determines his decision in function of what the majority says to him.

That is to say, it decentralizes the obtaining of the result, something genial.

A world dominated by Smart Contracts

Can you imagine that, in a few decades, the politicians of the time are 4 years preparing the smart contract where they will define how the money will be distributed and the actions they will have?

Smart Contracts What Are They, How Do They Work And What Do They Contribute (Part IV)
A world dominated by Smart Contracts

In this way, society should only vote (using blockchain technology too, of course) for the smart contract it wants to use during this new period.

This would guarantee that the voted one will be executed, having a total transparency and tracking of the expenses. Something urgently needed, given the current times …

Maybe that’s what the elections will be like in not too long.

This post continues at Smart Contracts: What Are They, How Do They Work And What Do They Contribute? (Part V)

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