This is a digital agreement provided by computer code. Refer to our previous reviews if you want to learn more about what a smart contract is and what it can do. And today we will try to identify a child prodigy from the world of Smart contract.
Although the Bitcoin protocol has supported smart contracts for many years, the popularity of them was brought by the creator and co-founder of Ethereum Vitalik Buterin. In 2013, he came up with the first blockchain in which smart contracts play a primary role. Many consider Vitalik to be a genius and a true pioneer.
Initially, Ethereum smart contracts did not have a specific purpose, it appeared only a few years later. Now smart contracts play an important role in these trends:
- Decentralized Finance (DeFi) is an umbrella term for a range of new, decentralized technologies. These are financial applications that work with smart contracts.
- Non-interchangeable tokens (NFT) are cryptocurrency tokens that are unique, and which, according to the blockchain, belong to you.
- Decentralized autonomous organizations (DAOs) are organizations that operate completely autonomously, and in which business agreements are recorded in smart contracts.
- GameFi is a combination of the words Gaming and Finance, also called play-to-earn. These are games with which you can earn NFT and cryptocurrency.
It is clear that new trends will soon appear in which smart contracts will play a decisive role.
Also a smart one
After Ethereum, a number of first-generation blockchains with smart contract capabilities were quickly developed.
NEO, also known as Chinese Ethereum, was founded in 2017. The main aim of NEO was to use smart contracts for effective distribution of digital assets. This is probably why NEO should be considered as a DeFi predecessor.
EOS that was released in 2018 represents an operating system for decentralized applications (DApps). The variety of dApps through the EOS network is amazing. EOS is similar to Ethereum, but the founders of EOS sought to compete with the disadvantages of Ethereum – slow and expensive transactions.
The first blockchains such as Bitcoin had a highly decentralized devision-making on design and development This led not only to a lack of diversity and flexibility, but also to a fork of the blockchain. That is why Tezos (XTZ) launched in 2018 decided to design a network in which the process of decision making is in the hands of users. The future of the network is democratically determined by Tezos DAO.
DAO is a perfect concept. Over time, this will completely change organizations. And all this due to smart contracts.
With the development of blockchain and smart contracts, you see more and more spicializations such as DeFi, NFT, DAO and GameFI. After the first generation, second and third generation blockchains appeared, such as Cardano (ADA), Solana (SOL) and Polkadot (DOT). These blockchains are much more scalable, faster and cheaper than their predecessors.
But the first generation blockchains such as Ripple (XRP) launched in 2013 and Iota (MIOTA) launched in 2017 were also expanded with smart contract opportunities. This is great that old blockchain projects continue to develop.
Differences and similiarities
Thus, there are more and more different types of smart contracts. But basically they have the same properties as Ethereum smart contracts. One of the main differences is the type of blockchain on which the smart contract works. The Proof of Stake (PoS) blockchain is much faster and cheaper than the Proof of Work (PoW) blockchain.
Where smart contracts are definitely different is in the programming language. Each smart contract of blockchain has its own programming language. Ethereum has Solidity, and Cardano has Plutus. Solana smart contracts can be written in any programming language, which is automatically translated into Solana code. How easy!
The smartest one
Is Solana the child prodigy? Perhaps.
It is a protocol for writing a smart contract in any programming language for any blockchain. In addition, programming languages are becoming increasingly compatible with the Ethereum Virtual Machine (EVM) so that they can interact with the Ethereum blockchain. This is a great design but there are obstacles..
The Biggest Obstacle to Mass Adoption of Cryptocurrencies
Mass adoption of cryptocurrencies, in fact, can be called the holy Grail. As soon as cryptocurrencies and applications based on them begin to be widely used around the world, this will lead not only to higher prices, but also to a fairer and more transparent global economy. However, last week we were again convinced that we still have a long way to go.
We came to the conclusion that Solana is the smartest smart contract, but not that smart.
A vulnerability in the Wormhole code allowed a hacker to steal a huge amount of Ethereum (ETH). Wormhole is a so-called cross-chain bridge (cross-chain bridge) that allows users to move digital assets between different blockchain networks.
The hacker managed to do this by bypassing the Wormhole contract verification. This allowed him or them to create 120,000 wrapped Ethereum (wETH) on the Solana (SOL) side of the bridge. The hacker then sent some of them to the Ethereum network to get ETH.
When we talk about cryptocurrency, we are talking about value. And this, of course, attracts a lot of malicious people. Remember the people who disable entire IT systems of companies, and (anonymously) demand cryptocurrency as a ransom. Or hackers who discover vulnerabilities, and sometimes successfully pocket millions, as mentioned above.
Anyone can create and launch smart contracts on the blockchain, such as Ethereum, Cardano and Solana. These include developers who lack experience or simply don’t notice a small error in the code. And since it’s about real value, it really hurts when something goes wrong.
In the Wormhole situation, fortunately, no user money was lost. The reserves have been replenished, and the error has been corrected. But, unfortunately, this happens quite often, and investors lose money. Obviously, such hacks scare people away from entering the world of cryptocurrencies.
Therefore, vulnerabilities in smart contract codes are one of the biggest threats to the mass adoption of cryptocurrencies. Fortunately, it seems that more and more attention is being paid to this problem. “Many of you are tired of the incredible cost, lack of clarity and poor quality of application production in the DeFi space,” the founder of Cardano recently said, for example.
The technology is developing, and new solutions are emerging in matters of security and a high level of professionalism of developers. At the same time, hackers have less and less chance of success.
And smart contracts will not take long to wait, and will find innovative applications.