4 ways to Get Smarter about Smart Contracts

BLOG: Smarter smart contracts are key to the future of blockchain

Kurt Pfluger — 22 February 2018

Smart contracts are becoming an increasingly popular way to execute agreements. Removing the need for third party verification and/ or execution can significantly reduce costs and create time efficiencies.

But smart contracts are only as smart as we make them — and as interest in smart contracts grows, there’s a risk that the desire to push technological boundaries may actually dumb them down. And if smart contracts become too dumb, it will start to erode their trust, reputation, and blockchain adoption.

In this blog post, we’ve outlined 4 things to make your smart contracts smarter — and how the Crowd Machine platform can help you on your journey.

1. Smarter contract design

The level of sophistication of a smart contract varies — from simpler, pre-defined contracts for interacting with cryptocurrencies like Bitcoin, to more complex contracts defined by developer using languages like Solidity.

The relative immaturity of smart contracts as a whole is an issue that you can’t ignore. Unlike their legal cousins, smart contracts are still evolving, which means we don’t have a universal — or even national — set of templates to work from. Starting from a blank sheet of paper is slowing adoption for some; and is creating unnecessary duplication of effort and expense for others.

It’s a chicken-and-egg kind of challenge that no one can solve instantly, but at Crowd Machine, we’re doing our best to help. By working with a variety of clients exploring use cases across different industries, we’re gaining exposure to a broad range of smart contract designs, and are able to provide guidance on smarter contract design. And as we continue to grow our client base, we are committed to collaborating with them to create vertically-focused best practice examples.

2. Smarter contract development

In most instances, smart contracts are created by developers, using languages specifically created for this purpose, like Ethereum’s Solidity. But as smart contract development is relatively new, developers are still very much finding their feet with it — and mistakes can be costly. For example, in late 2017, a developer deleted a smart contract library module, and accidentally locked away US$150M of Ether as a result!

Developers play an important role in blockchain, but it can be tricky to bridge the gap between what you want a smart contract to do in the business world, and the code that gets created. To make it easier, our platform enables you to create smart contracts by using natural language expressions — no coding skills or developers required. This means it’s fast and easy for you to create the conditions in terms you understand, avoiding any miscommunications.

3. Smarter contract execution

The second factor is the method by which consensus is achieved — in other words, how the contract secures proof that a clause has been complied with. While there are a number of different methods available, not all will meet your business needs.

Proof of Work (PoW) is the example most people are familiar with, because it’s the method used to mine Bitcoin. In PoW, miners compete to add the next block (a set of transactions) in the chain by racing to solve a extremely difficult cryptographic puzzle; the first to solve the puzzle is paid a small fee for their efforts. PoW does the job, but it’s not perfect. It’s very slow, taking between 10 and 60 minutes to complete a single process; doesn’t scale very well; and is incredibly energy-hungry, using about 215KWh — the equivalent to the amount of energy your house uses in a week — to complete a single transaction.

While PoW is well-known, it’s a poor fit for using with decentralized apps (dApps), which demand both speed and scale. Instead, we recommend Proof of Execution (PoE), a method of consensus that is very well-suited to commercial dApps, because it was specifically designed to enable smart contracts to be executed quickly, and at scale.

PoE does this by breaking smart contracts down into single contract clauses, or “statements”, and seeking consensus on these individually, rather than the entire contract as a whole. Processing these smaller units uses minimal computational power that widely available, meaning it takes seconds to process, not minutes.

4. Smarter app development

In the absence of existing templates, business stakeholders and developers alike are learning as they explore the possibilities of blockchain and create new smart contracts. And as they learn, there’s a desire to wholeheartedly embrace blockchain, putting absolutely everything on it. But the harsh reality is that while the languages that create smart contracts are fit for that purpose, they are ill-suited to other purposes, such as creating complex apps.

We understand that dApp and smart contract development are absolutely linked, and that successful outcomes rely on an integrated platform that supports those linkages. And that’s what we’ve built the Crowd Machine platform to support — putting the necessary information on the blockchain of your choice (yep, we’re blockchain agnostic), olding in additional data feeds to tie things up both on- and off-chain, and creating great dApps that bring this together in the real world.

Smarter smart contracts are key to the future of blockchain

Smart contracts are still in their infancy, but have already shown great commercial promise. The challenge now is not to get caught up in the excitement of the technology, and trying to find new technological boundaries to push.

Indeed, if we want smart contracts to fulfil their promise as an efficient and ubiquitous means of execution, the challenge is to focus on making smart contracts as smart as possible. We need smarter smart contracts to deliver real commercial results. This, in turn, will build buy-in with business users, create trust, and significantly accelerate the adoption of both smart contracts, and blockchain technology as a whole.