Smart contracts are seen as a trend-setting technology that could reduce bureaucratic structures. But what are smart contracts about?Crypto currencies are booming, conceived as decentralized means of payment, and have since attracted financially strong investors who are hoping for further gains in price. Since this form of investment is relatively unregulated, there are hardly any short-term risks that this pyramid play is prevented.In recent years, after the creation of Bitcoin and the launch of its first version in 2009, there have been many interesting projects that have been appearing, bringing new ideas and decentralized solutions to many of the processes or centralized applications that we all use today. Do you read smart contracts?This new article will be divided into three parts. First of all we will talk about the origin of smart contracts, later we will analyze the current situation and in the third place we will present some of the most important alternative projects to Bitcoin that are fully focused on smart contracts.What is a smart contract?To understand a smart contract we must first remember what a contract means. A contract is nothing more than an agreement between two or more parties, an environment where what can be done is defined, how can it be done, what happens if something is not done .
.. That is, some rules of the game that allow all the parties that accept it, understand what the interaction they will perform will consist of.Until now the contracts have been verbal documents or expensive written documents, subject to the laws and territorial jurisdictions, and sometimes requiring notaries, that is, more costs and time.
Something not accessible to anyone. And this is not the worst: the contents of the contracts may be subject to interpretation. Hold on!On the other hand, an intelligent contract is capable of being executed and enforced by itself, autonomously and automatically, without intermediaries or mediators. They avoid the burden of interpretation by not being verbal or written in the languages ??we speak. Smart contracts are “scripts” (computer codes) written with programming languages, the terms of the contract being pure sentences and commands in the code that forms it.On the other hand, a smart contract can be created and called by individuals and / or legal entities, but also by machines or other programs that work autonomously.
A smart contract is valid, without depending on authorities, due to its nature: it is a code visible by all and can not be changed by existing on the blockchain technology, which gives it a decentralized, immutable and transparent nature.Do you realize the potential of this?It is important to point out that, being distributed by thousands of computers, it is avoided that a large company keeps them, which eliminates bureaucracy, censorship and the great costs / implicit times of this process that, incidentally, until now it is the daily one.If we combine the principles of a smart contract with the creativity of many developers on the planet, the result is never-before-seen possibilities, accessible to all and at costs bordering on gratuity. Ecosystems without authoritarian figures that subject their members to their will. We speak of a more just world.Imagine a self-driven Tesla car, bought in a group, capable of self-managing and renting by itself but without a Uber-type company behind taking 10%.
Welcome to the world of smart contracts.Current situation of smart contracts in BitcoinLet’s not forget that when we talk about Bitcoin we are talking about a new ecosystem, dynamic and in constant process of growth, but also, as we have indicated before, of smart contracts. New implementations of Bitcoin smart contracts are appearing little by little but, nowadays, it is already applied in some features that will probably sound to you, such as multi-currency purses, in which two or more parties must approve the completion of a transaction before the funds are released.Along with the multifirm addresses, double deposits are one of the functions that facilitate the correct functioning of intelligent contracts of this type. It was introduced by BitHalo and is innovative because it eliminates the need for a third party to act as arbitrator. It basically consists of the parties, say for example a buyer and a seller, making BOTH a deposit transaction linked to an intelligent contract. The contract program has a certain time before it expires. If the people involved in the agreement do not resolve it in said period of time, the funds of the deposits will be burned, that is, they will be sent to an address where nobody knows the private key, which forces the parties to make an effort to maximum in the search for solutions.
Although Bitcoin has a programming language to add logic, there are those who think that sometimes it falls short. This is the reason why solutions have been created that bring smart contracts to new horizons, with complete Turing languages.Before introducing some of the platforms and projects that also make use of smart contracts with their own alternative currency, it is important to highlight the role of the Counterparty project and one of the newcomers, Rootstock, who want to take the new generation smart contracts to BitcoinApplications of Smart contracts: What is Counterparty?Counterparty was born in 2014. It is an open source platform where you can develop peer-to-peer applications, initially oriented to the financial sector, on Bitcoin’s blockchain: Currently the protocol implements and supports the creation of assets, the issuance of bonds of those assets, payment of dividends, the trading of assets using a decentralized market, binary bets, and contracts-for-difference (CFD).
Its open source protocol, in addition to allowing the creation and operation of digital assets, also allows writing intelligent contracts, allowing to transform many of the real-world actions into code that work automatically without the need for intermediaries and resistant to failures.In Counterparty there is also a token (or cryptocurrency) called XCP. This is used to offer some possibilities that are not technically possible at the moment using BTC (bitcoins).Although the interest in more powerful smart contracts has been announced since the beginning of the project, it is recently when it has been confirmed that the Ethereum EVM will finally be introduced within Counterparty, which will allow the execution of smart contracts identical to those of Ethereum but over the Bitcoin network, allowing a huge variety of applications such as Decentralized Autonomous Organizations (DAOs), identity systems, voting systems based on consensus, among others. As of this chapter of the Bitcoin Guide, the Ethereal Virtual Machine (EVM) is operational only in the Counterparty test network. How is it possible that they could reuse the free software EVM? Counterparty uses the same intelligent contract programming language, called Solidity.
According to Trevor Altpeter, director of the Counterparty Foundation, EVM will now be able to do everything Ethereum does, only in the Bitcoin blockchain.In order to execute the contracts, the currency of Counterparty, the XCP, is used.What is RootStock?Rootstock, known as the Bitcoin Ethereum, is another platform trying to bring smart full turing contracts to Bitcoin to take advantage of Bitcoin’s network effect and security without having to create something from scratch (it has been published that the platform is also going to be compatible with Ethereum). It is an open source platform for creating smart contracts that will reward miners who participate actively.
Its main objective is to add value and functionality to the Bitcoin ecosystem by activating secure smart contracts in the network, adding options for instant payments and greater scalability. To do this, RootStock, uses side chains, connected to the Bitcoin chain, and its token (Roots), which will only be exchanged for bitcoins.Despite being relatively new, Rootstock has already achieved $ 1 million in its latest round of financing from the Digital Currency Group (DGC).Smart contracts in EthereumBefore starting with Ethereum, we want to warn that in this article Ethereum is not going to be compared with Ethereum Classic, we are simply going to limit ourselves to describing the objective of its software whose token or asset could be Ethereum, Ethereum Classic, Classic Ethereum or Ethereum Origin (among others that have emerged after the problems of TheDAO).Ethereum takes the Bitcoin smart contracts to another level and is the one who, mainly, has inspired other solutions, such as Counter Party or Rootstock, that want to achieve the same thing but on the Bitcoin network.