Tag: blockchain smart contracts

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Blockchain and DLT

Is it Game-over for Ethereum as we usher in Radix smart contracts?

Imagine a utopian world without lawyers. A world where two people can enter into an agreement with absolutely no worries that one party may breach it and get away with it. A world run by digital contracts written in computer code. Yes, it is possible, and it is already happening, thanks to the invention of smart contracts.

Imagine a utopian world without lawyers. A world where two people can enter into an agreement with absolutely no worries that one party may breach it and get away with it. A world run by digital contracts written in computer code. Yes, it is possible, and it is already happening, thanks to the invention of smart contracts.

Imagine a utopian world without lawyers. A world where two people can enter into an agreement with absolutely no worries that one party may breach it and get away with it. A world run by digital contracts written in computer code. Yes, it is possible, and it is already happening, thanks to the invention of smart contracts.

What is a smart contract?

A smart contract is a piece of technology that may eventually do away with intermediaries. This is because it is a trusted agreement between two people written in computer code. It does not need a third-party to ‘witness’ or even enforce.

The smart contracts you have heard of are probably those that run on Ethereum’s blockchain platform. After all, the platform that was developed especially for developers to write smart contracts on and run on them. While it is not the only decentralized ledger to implement a general-purpose smart contracts feature, it was among the first.

Some experts argue that new decentralized ledger platforms, in particular Radix, have come up with better ways to implement smart contracts. Smart contracts on such platforms offer both the developers and users more than the blockchain platforms have to offer.

History of smart contracts

The idea of a smart contract was first conceptualized by legal scholar and cryptographer Nick Szabo back in 1994. He discovered that a self-executing contract was a possibility if there was a way to implement a decentralized ledger. This idea was way ahead of its time, and the invention of blockchain, the first kind of distributed ledger technology or DLT, is what made its implementation possible. 

A smart contract is an agreement converted into computer code, run and stored on a distributed system, and supervised by a network of computers, also referred to as nodes. Such a contract is ‘smart’ for two main reasons:

☑️It contains ledger feedback that makes it practical for use in transferring funds and receiving products and services.

☑️The contract is trusted by both parties that enter into it. It is therefore executed transparently and without the need for a middleman to oversee it.

The problem with current smart contracts

Smart contracts are one of the most utilized applications of decentralized ledger technology. Bitcoin was the first DLT to support smart contracts. It used them in payment channels, time locks, multisig accounts, and escrows. However, the limitations of the underlying blockchain technology greatly hinder its application.

Ethereum was developed with smart contracts in mind. The developers understood the limitations of the Bitcoin platform and chose to design a new platform that replaces the restrictive Bitcoin’s script with another that is more versatile. This would allow developers to build their own applications that use the platform’s smart contracts capability.

Ethereum’s smart contracts application platform may be the most popular today, but it has glaring weaknesses that it may never be able to overcome. This is because of the limiting factors of the blockchain platform and not the platform design or development. The most notable are:

☑️Blockchain does not scale very well. The concept of a ‘chain of blocks’ is a very powerful one, not only because it guarantees data integrity and necessitates trust between parties in the contract, but also because it has proven to have the capability to disrupt industries.

However, blockchain-based systems are slow and get even more sluggish as the chain grows longer with more blocks of transactions added to the chain.

☑️The consensus protocols used by blockchain systems are at a high risk of centralization.  Blockchains use either Proof-of-Work (PoW) or Proof-of-Stake (PoS) consensus protocols which carry certain degrees of different potential dangers.

It would be justifiable to say that even today, no blockchain system is absolutely decentralized.

☑️Blockchain-based smart contracts place a lot of burden on the developer. Creating an app on the Ethereum platform, for instance, involves creating the basic rules for how the app should behave and implementing its security features in the code. Even building a simple token system on Ethereum is still a very complicated affair.

For a technology that is intended for transactional systems, blockchain-based smart contract platforms are very unappealing to developers.

The future of smart contracts

The world has had a taste of the benefits of smart contracts built and run on decentralized systems, and there is no going back. Since blockchain, and its consensus protocols will never allow for global scalability and 100% decentralization, the world will have to adopt something better for smart contracts. The good news is that it is already here!

The ideal decentralized ledger (DLT) would have all the benefits that blockchain has to offer, and without scalability and consensus problems plaguing blockchain. Radix is such a platform. It is highly efficient and fast, but most importantly, it is scalable.

Radix is designed to have two layers: the Radix Ledger, the base platform that implements DLT, and the Radix Engine, which is the application layer on which transactional rules of the DLT are enforced. The Radix Ledger combines a distributed database ledger (which rakes in all the benefits of blockchain) and a one-of-a-kind consensus called Tempo.

Unlike blockchain, Radix leverages the causal relationships of events in the distributed ledger to create an absolute order of events using logical clocks to partially order events and vector clocks. This design ensures that the distributed system is faster and more efficient than any other DLT in existence. It also detects and prevents protocol violations with greater accuracy.

Why is Radix the future of smart contracts?

Bitcoin was a huge success as digital cash for the simple reason that it was modeled after real-world money, and it enforces its contracts the way cash works. The developers of Radix, not wanting to reinvent the wheel, modeled their revolutionary DLT after real-world business assets and transactions to make it easier for developers to work on, but without compromising its two primary features: trust and security.

The Radix smart contract platform makes it easy for a developer to map out business assets on the already-built Radix components. The platform will offer a wide range of easily customizable components that developers can use to define the assets to meet their applications’ transactional requirements.

Since development is greatly simplified on Radix, the developer will get to invest more effort in modeling the behavior of the business processes to be enforced rather than wasting time creating it from scratch using a different language. This is so because Radix Engine Library comes with a ton of models to create almost any common asset transactional system. It also takes a shorter time and less effort even for new developers to learn and create smart contracts on the platform

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Crypto Guides

Smart Contracts – A Brief Introduction

What are Smart Contracts?

What are Smart Contracts?

What are Smart Contracts?

Smart contracts are nothing but deals that are digitally stored using digitization to enable digitalization of the business process. The smart contracts can be touted as one of the best applications of blockchain. Blockchain eliminates the middlemen in whichever industry the technology is leveraged, and smart contracts do the same. One doesn’t have to rely on a third-party player to authenticate the deal but pay some money to build the code which is suitable for all the parties involved and deploy the contract in the blockchain to make it active.

How do they work?

Smart contracts in real is a piece of code which can be written in any language that the blockchain platform may support. The code is written in such a way that when predefined parameters are met, the contract execution triggers automatically, and the conditions are met without any human intervention. This makes it very easy to handle and execute smart contracts.

Are they reliable?

Immutability is one of the essential characteristics of blockchain, as we have seen in our previous articles. Since the blockchain works on the concept of distributed ledgers, a copy of the contract will be available with every party involved. Smart contracts deployed in the blockchain network are immutable; once used, they cannot be changed. All the predefined terms should be met as agreed and signed by all the involved parties. Payments, if any concerned, will be done automatically as well without any human involvement. Thus, not delaying the cash, which makes all the parties happy about the work done. Hence the smart contracts are considered very reliable.

The real-life example of Smart Contracts

There are infinite real-life scenarios where smart contracts can be used. We all have booked tickets for our most awaited events, say concerts, movies, sports and so on. We always use a third-party website/app to book the tickets. Here the audience, as well as the event organizers, are trusting this third-party service provider with their money.

Instead of a third-party service provider, if one can deploy smart contracts in these scenarios, it would be easy to manage money. People buy their passes for the event, and this money is stored in the escrow linked to the contract. The money is not credited to the event organizers’ account unless the event is completed. If the event is completed, the funds will be automatically transferred to the organizers of the game. If not, the amount will be refunded to the audience account as per the terms and conditions of the event.

In this case, we do not depend on a third party for the refund of the amount, which may delay in case of any eventualities. We are also not paying any other extra fee to book the ticket as no third party is involved—this the best real-life example where once can use smart contracts.

Conclusion

The new technologies in our lives have come to make our life easy, and smart contracts come under such a category. We not only save money using them but also get rid of concept terminology of terms and conditions which lawyers use to cash the loopholes when something goes wrong. In this case, we use straightforward language to code the words and get them triggered as required, thus making them comfortable and very reliable to use.

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Crypto Guides

Distributed Ledger Technology (DLT) – The Back-end Of Decentralized Systems

Introduction

Introduction

Introduction

A distributed ledger or DLT is simply a database that exists across several locations or among various participants. But, in the case of centralized databases, it lives in a fixed location. A distributed ledger eliminates the need for a central authority or intermediary to validate or authenticate transactions. This property makes DLT a trending technology.

Technically speaking, DLT is a digital system for keeping track of transactions in which the transactions and its details are recorded in multiple places at the same time. Here, there is neither a central data storage system nor an administrating functionality. Each node in the distributed ledger processes and verifies each item and creates consensus on each item’s veracity. Also, transaction information is securely stored using cryptography that can be accessed using keys and cryptographic signatures.

Blockchain and DLT: Are they the same?

The most popular application of the distributed ledger is the Blockchain. However, blockchain and distributed ledgers are not the same. Blockchain is just a type of distributed ledger. Blockchain is basically a sequence of blocks, which is in a chain. But, distributed ledgers don’t really require a chain. Therefore, Blockchain is a bit different from the typically distributed ledger. So, note that all blockchains are distributed ledgers, but all distributed ledgers are not blockchains.

Benefits of Distributed ledger

  • The primary feature of DLT is itself a great advantage. A distributed ledger gives full control to the information and transaction to the users. This promotes absolute transparency.
  • Distributed ledgers such as Blockchain find great applications in financial transactions. They cut down operational inefficiencies, which ultimately reduces cost on transactions. Moreover, it provides greater security due to its decentralized nature.
  • DLT offers means to securely and efficiently create a tamper-proof log of activities. Be it international fund transfer or shareholders records, its security and efficiency are unmatchable.

Types of Distributed ledgers

Blockchain hit the headlines when Bitcoin, the first cryptocurrency, surged in the market. Several interesting developments were made in the past decade. However, due to systematic inefficiencies and scaling issues, developers were in search of new solutions outside the blockchain. This search led to the development of Holochain, Hashgraph, and Directed Acyclic Graph.

With the arrival of these solutions, which significantly differ from the blockchain technology, has brought discussions regarding which is the best. Below is a brief comparison of these different types of DLTs.

The use cases of DLT are tremendous. Here, we shall take into account the use cases across the industrial, financial, and consumer sectors.

  • Using Smart Contracts to streamline Industrial processes
  • Immutable ledgers enable more secure financial transactions
  • Blockchain Authentication for identity theft prevention

While the distributed ledger has great advantages, which can considerably affect the present technology, it is in a growing stage and is still being explored to bring the best out of it. However, the decentralized future has at least begun for real.