Smart Contract Blockchains at a glance
Smart contracts, after initially benefiting the Bitcoin Blockchain, have now evolved to add value to
Who will win the battle for market share in blockchain platforms with smart contracts?
Smart Contract Blockchains — Smart contracts, also often referred to as digital contracts, are based on the blockchain. They are individually programmed by developers and contain predefined rules and standards. Automatic processing allows events and transactions to be executed without human interaction.
Overview of Smart Contract Blockchains
Smart contracts, after initially benefiting the Bitcoin Blockchain, have now evolved to add value to industrial value creation. The smart contracts allow certain conditions to automatically come into effect. They work similar to an “if…then” formulation and can be monitored in real time.
By dispensing with middlemen, smart contracts offer enormous savings potential. Their use is possible across all sectors and makes sense in many industries.
As a decentralised data store, the blockchain offers the optimal conditions for their use. That is why numerous providers of platforms and blockchains are striving to secure a good market position in time.
The battle for the smart contract blockchain is particularly evident among the current leading providers of the technology.
Smart Contract Blockchain Ethereum
Ethereum’s platform has shaken up classic business models because it offers possible applications along value chains and thus in one of the emerging growth markets of digital transformation. The software can itself check whether the parties involved have fulfilled the conditions laid down in the code of the smart contracts.
The conclusion of the contract currently has no validity in the civil law sense, as PWC also emphasises. But their relevance is constantly increasing and sooner or later, politics will have to deal with the topic.
In the ETH manuals for developers, Ethereum provides interesting information and essential background knowledge on the smart contracts running on the platform. First of all, it is important to know that unlike Bitcoin, Ethereum does not focus on payment. The platform focuses on controlling and developing smart contracts.
The internet-based contracts continuously check themselves for the previously defined contract conditions. Fast and cost-efficient contracts are created on the basis of the Ethereum blockchain. The collection of programme code and data is located at a specific address in the ETH blockchain.
Ethereum also describes smart contracts in its technical documentation as a kind of Ethereum account that has a credit balance and can send transactions over the network. However, this user account is not controlled by a user, but is provided on the network and executed as programmed in advance by blockchain developers.
By sending the transactions, these user accounts enter into a digital contract. Basically, anyone with sufficient knowledge of the programming languages used can create the smart contracts.
Developers for smart contracts on EVM
The developer must also have enough ETH to make the contract available on the platform. The fees are much higher for smart contracts on the Ethereum blockchain than the usual transaction costs.
The Solidity and Vyper programming languages are available on the Ethereum blockchain. The smart contracts need to be compiled before deployment so that the virtual machine (VM) can interpret and store the contract. All smart contracts on the Ethereum blockchain are public, they can be considered an open API.
This allows developers to call other smart contracts in their digital contract and potentially extend it. There is even the possibility of a smart contract providing other smart contracts.
Smart Contract Blockchain Polkadot
Another blockchain that allows smart contracts is Polkadot. By its own account, the protocol has two goals:
- Providing shared security
- and the collaboration of all relay chains using XCMP
While it used to take years to publish a new relay chain, this time is now limited to weeks or even just days. Polkadot distinguishes between parachains and smart contracts. The application possibilities are different for both.
The Polkadot platform does not inherently support digital contracts. But the parachains on the Polkadot blockchain support smart contracts. In addition, Polkadot can be integrated into the ETH VM. Projects from this model framework are Edgeware, Moonbeam and Frontier.
On Polkadot there is a so-called contract platform, the Contract Module. It offers various functions for the term of the contracts. For this purpose, the module adds smart contracts functions to accounts based on their currency feature.
The interaction between accounts with the same currency is also secured for the smart contracts. These smart contract accounts can create digital contracts and call other contract and non-contract accounts.
The smart contract code is stored once in a code cache and can be retrieved later via its code hash. This means that multiple smart contracts can be created from the same code cache without replicating the code each time.
A smart contract is like a user account
When a smart contract is invoked, the associated code is retrieved and executed using the code hash. This invocation can change the smart contract account’s memory entries, create new digital contracts and invoke other smart contracts.
Smart contracts are executable programmes that exist only in a single chain and are limited in complexity. This allows them to work smoothly with other smart contracts in the same chain. However, they are severely constrained and limited by the properties of the chain.
Parachains and parathreads
In Polkadot, smart contracts include not only smart contracts, but also parachains and parathreads. The developer must decide which smart contract is suitable for each specific project based on Polkadot’s documentation.
Smart Contracts are controlled by the technology “Substrate” at Polkadot. The development of a local contract platform is still in progress and will only be released when the technology is mature.
Substrate is responsible for linking to the ETH VM and integrates it there via a frame library. However, Substrate can also provide the code of the EVM-based smart contracts so that developers can also use tools based on Solidity or Vyper via Polkadot.
Here, too, smart contracts must of course have credit and pay transaction costs. When the credit is used up and the contract is no longer in use, its code is deleted from the memory.
To build a local test environment for smart contracts, blockchain developers should start with one of the two platforms Edgeware or Moonbeam and develop and deploy the smart contracts in a live environment by connecting Substrate to a Node. Polkadot already provides an Edgeware Contracts Workshop.
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