Thursday, October 26, 2017

WTF are Smart Contracts and why "Bitcoin" will be huge

I'm always slightly annoyed by the ignorance that all cryptos are lumped together and labelled "bitcoins".

Bitcoin is the first application of distributed ledger technology (DLT) which uses blockchain technology and decentralized distribution principles.

Bitcoin is NOT blockchain.
Blockchain is NOT distributed ledgers.

Bitcoin also is not able to handle smart contracts natively (requires RSK or oracles if I am not wrong). But Ethereum can. There is a recent burst of development of oracles - both centralized and decentralized ones - and their interaction with smart contracts, which are giving rise to more and more ways for external data of state confirmation to enter the blockchain and execute smart contracts. This means that the execution clauses are getting more broad and more easy to coded for execution. And this is a huge leap forward technologically.

The infographic below is an EXTREMELY good primer on what are smart contracts and why they are useful, beneficial and valuable.

Maybe before you read the infographic, let me share this youtube video to show a real use-case application of smart contracts to give you an example for you to reference to:




Three quarters down there is a section called "Another level of complexity".

Bitcoin ONLY operates on the 1st and most basic level.
Ethereum currently operates from the 1st all the way to the 5th level.

The 6th level of DAOs are currently being developed and the first DAO should be launched sometime around the end of this year, or early 2018.

I've long believed that "middle men" will be put out of businesses just simply due to the progress of technology. The power and rise of blockchain makes me even more confident of that happening, and faster too. Property agents and insurance brokers are already slowly showing their way out of the door. Many roles, companies and even industries that rely on being a third party are going to be radically disrupted, to either the point of obsoletion, or be reduced to handle very niche circumstances.

One of the main reasons why I strongly believe that Ethereum will be significantly more valuable than Bitcoin is because of smart contracts, alongside decentralized applications and other decentralized ideas.

Whether I can convince you that the insane technological leaps of blockchain tech is a game changer or not, this train is already steaming full speed ahead. I'm on the train already. Waving at you.

Bye bye.

2 comments:

Observe the house rules.