Ethereum Was the First to Do Distributed Smart Contracts

The crypto-currency world enthusiastically engaged with the Ethereum foundation almost out of the gate. Taking a page from the Bitcoin Foundation’s manifesto, they still trumpet to young developers about the nature of Ethereum and how you can make code that will run forever and be impervious to censorship.

This appeals to the libertarian in all of us and sparks the imagination.

Recent Troubles

Even I was fascinated by this new network, although I didn’t jump on the bandwagon like some others did. The coin – Ether – proved to be high risk. If you don’t know the history of the DAO (Distributed Autonomous Organization) fork on Ethereum, why it was done, or who it was done by, you should really do some reading. 1

In addition, I’ve watched from the sidelines closely in the past few months. While there have been some incredible bull pushes related to the price of ETH, they were accompanied by concerns about code governance:

Ethereum is Changing its Consensus Algorithm to POS (Proof-of-stake) 2

A specific type of Initial Coin Offering configuration can cripple the Ethereum network 3

Both of these developments pointed to possible trouble with code governance; the first one purely because it usually takes years to prove that a new consensus algorithm is solid enough to secure an entire crypto-currency network. But yet it seems like the investors are not getting their due in voting on whether this should happen or not. In fact, even though Ethereum has a foundation it’s not clear how much power they actually have in opposition to its creator, who seems a benevolent dictator.

The second one indicates that not enough testing is being done on new code prior to its release. Good testing requires iterative rounds of scenarios that should take into account malicious actors.

Competitors Emerge

Hyperledger Fabric version 1.0 was published just days ago on July 11. 4 This is the Linux foundation’s attempt at publishing code that will allow any organization to create their own crypto-currency, and it supports smart contract executables written in any language to be run on each ledger’s “channel”. Not only is this a direct competitor to Ethereum, but it doesn’t use any native currency out of the box, and should scale much more easily than Ethereum:

“The blocks of transactions are ‘delivered’ to all peers on the channel. The transactions within the block are validated to ensure endorsement policy is fulfilled and to ensure that there have been no changes to ledger state for read set variables since the read set was generated by the transaction execution. Transactions in the block are tagged as being valid or invalid.” 5

XRP is the third-most-popular crypto-currency.

It does payments better than any other distributed network, and scales to the performance of centralized networks such as VISA. 6 It performs cross-currency settlement faster than any other method that exists on the planet – and for near- zero cost. Banks are using the XRP Ledger, and more are adopting it worldwide as part of one of the largest bank consortiums in history. 7

For a brief time in May, XRP surpassed Ethereum in market capitalization.

Now we’ve learned that not only are XRP smart contracts on their way, but they are being done differently, more flexibly, and integrated with the fastest payment network in existence. A former employee of Ripple is heading up the effort and has provided his latest status updates directly to the XRPChat Community. 8

As a bank that’s implemented the XRP Ledger, wouldn’t you want to do smart contracts in a way that would support usage of the world’s fastest payment network? Absolutely.

Final Thought on Ethereum

Ethereum might have been first to market, and this will always guarantee it a deserved share of the market for smart contracts, but it’s not going to own the space completely like its adherents originally thought.

XRP will eventually rise to take its place as the number one crypto-currency, and on its way will pass Ethereum for the second time – only this time it will be a lasting shift in the market driven by production usage of XRP not only for global cross-border and in-country payments, but also for smart contract execution.

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