Smart contracts are means of facilitated transactions that work on the blockchain, through executable contracts written in code. The term smart contracts was first coined by Nick Szabo in 1994. However it was first implemented in 1997; long before the first decentralized cryptocurrency, Bitcoin was birthed. His objective was to provide a distributed ledger for storing contracts that can be accessed by users.
The basic feature of a smart contract program is an established blockchain with a stored code which could be replicated and is accessible as well as monitored by a network of users that are connected to the blockchain. In essence, the meaning of this is that service (or contract) providers are able to set up a smart contract which holds a value product. Once the stipulated condition(s) have been met by the user, the contract will then exchange the value product with the user on the network.
One salient advantage of the smart contract is that it makes transactions between contract providers and the ‘buyers’ possible in a highly transparent and efficient manner. These transactions are processed without the involvement of an intermediate third party and with negligible probability for failed transactions. This means that smart contract systems are completely automated systems that work based on the executable input instructions. Hence, when a smart contract is on, no one has a means of manipulating or re-programming it.
All of the transactions carried out on the smart contract can be monitored by any computer that is connected to the blockchain. Since the whole process is automated, there is no need for the contract provider or the user to further initiate anything; the system has been programmed to know the action for every phase of transaction.
As the technology of smart contracts progress, we are beginning to find application of them in various different fields such as healthcare, insurance, banking, government and so on.
There are a number of already developed smart contract platforms, each of which is programmed to function for their individual designed purposes. Typically, each smart contract platform is designed with a specific contract language. Thus the language that programs one contract may differ from that of another.
Of all the smart contract platforms, Ethereum holds the most significance with the highest market cap out of any smart contract, and the second highest overall. There is also an entire ecosystem of digital assets built on its blockchain, totalling around 535 tokens which are listed on Coin Market Cap [SOURCE].
It has an ERC-20 (Ethereum token standard) that allows the creation and subsequent transaction of different ERC-20 built tokens. With this standard in place, the Ethereum network is built for the purpose of creating individual (or corporate body) smart contracts, and these contracts are powered by Ether gas, which values the token itself.
ERC-20 tokens have two ways of performing a token transaction:
Ethereum allows developers to use the Solidity contract language to program and create smart contracts with a wide range of computational orders and processing abilities. Smart contract developers on the platform are required to pay for computing power using ETH tokens or Ether.
Although there are many advantages to using the Ethereum platform, it is not devoid of its challenges. The ERC-20 standard does not have a function that enables security and retention of value within the Ethereum network. Thus if token transfers are made to a smart contract that does not work with ether, the transaction is rejected by the recipient smart contract and a corresponding loss of the sent tokens (value) occurs. Due to this bug, the Ethereum ecosystem has lost millions of dollars already.
Often known as the “Chinese Ethereum”, NEO has grown considerably over the past few months with different tokens such as Trinity (TNC) and Red Pulse (RPX) being built on its network. Smart contracts can be developed on the platform using several programming languages like Python, Java, C# and a few others that are more well-known to programmers (unlike the rather obscure Solidity development language). This creates more opportunities for smart contracts to be built on the network, since there are more options for programming languages to prospective smart contract developers.
In addition to this, NEO can handle far more transactions per second than Ethereum. The NEO network can handle around 1,000 transactions per second, while for Ethereum it is typically around 15 per second. It is also different from Ethereum in that its processor payment token (GAS) is different than the platform token. It also uses a Delegated Byzantine Fault Tolerant algorithm, which essentially provides dividends to NEO shareholders, as opposed to Ethereum’s Proof-of-Work.
The main disadvantage with NEO is that it is not a fully decentralized platform due to its centralized node system. Deploying smart contracts on the network also costs a significant amount of GAS, around 500 GAS which equates to around $10,000 USD at today’s price of GAS.
The ICON cryptocurrency is a newer digital currency network, of South Korean origin. Although relatively new, it has established partnerships with a number of institutions to include hospitals, insurance firms, banks, and is still expanding. [SOURCE] ICON’s main goal is to provide a platform in which players from financial, security, insurance, healthcare, educational, and commerce industries and more can coexist and transact, all on a single network.
ICON connects an ecosystem of blockchain communities through the ICON Republic, which functions as the governing head for a federation independent blockchain bodies. The grand master blockchain on the network known as the ICON Nexus is the ‘source’ for the attached ‘smaller’ blockchains.
One aspect of the ICON network is the adoption of a ‘loopchain’ technology in which smart contracts are created within individual autonomous blockchain, and are subsequently connected to other blockchain as an interaction within the overall network. Thus the individual blockchains called Community Nodes (C-Nodes) are connected to the ICON Nexus as attached nodes.
The platform allows transfer of the ICON exchange token within the blockchains which ensures complete interaction within the incorporated industries having the autonomous blockchains. The platform has a capacity of successfully shouldering massive world wide adoption being able to handle 9,000 transactions per second.
ICON also has its very own decentralized exchange-which sets currency reserves for each blockchain community so that ICON communities can exchange value which each other. In this way, the decentralized exchange complements each of the ICON portals by establishing another gateway for the communities to connect to the ICON Republic.
To Be Continued in Part 2…