We all know that 2017 was the year of the cryptocurrency. Bitcoin and the so-called “altcoins” underwent one of the most dramatic price rises the world has ever seen.
The value of Bitcoin rose from just over $900 in January to $20,000 by early December. Altcoins such as Ethereum and Ripple underwent even more dramatic prices rises, netting many early investors massive profits.
This led to a surge of interest in cryptocurrency investment as well as in the blockchain technology that underwrites them.
Relatively few of these people are aware that 2017 was also a great year for the ICO. ICOs or Initial Coin Offerings netted companies a staggering $6 billion in 2017. While this might seem impressive, this figure was surpassed in just the first 4 months of 2018. So perhaps 2018 will be the year of the ICO.
It is blockchain-based smart contracts that make these ICOs possible. In this article, I intend to examine the top 5 smart contract platforms for 2018.
While the temptation for any company who is planning to develop their own smart contracts is to stick with the golden standard, Ethereum, this list should at least give developers a better idea of what is out there and why Ethereum is not always the best choice.
Smart Contracts: The Real Blockchain Revolution
I know that among blockchain enthusiasts I am still in the minority, but I’ve never considered cryptocurrencies anything more than a new type of payment system that will one day replace the likes of Paypal, and more importantly, expensive international payments.
There is absolutely no way that any government anywhere is going to hand over control of the money supply. The only way cryptocurrencies will become an actual currency is if they can be controlled by governments or if they facilitate payments in new markets that are themselves regulated.
The really exciting thing about the advent of the cryptocurrency is blockchain technology. One of the most interesting uses to date has been the smart contract.
Smart contracts are a truly revolutionary tool. They have the potential to decentralize many of the processes that we all rely on today. The exciting thing is that they have the power to dramatically improve on existing solutions without being a direct threat to governments.
This means they can and, in my opinion, will succeed.
Everything from the free exchange of labor to automating the process that hospitals rely on to buy drugs can be made dramatically cheaper and more efficient by using smart contracts.
How Do Smart Contracts Work?
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Smart contracts are digital contracts that allow two or more separate parties to enter into an agreement. The beauty of a smart contract is that they don’t require any outside or third party to control transactions. This has an obvious cost and speed advantage.
Instead, smart contracts are blockchain-based and use a network of peers to process and maintain the database. For practical reasons, companies are not likely to want to pursue setting up their own network but instead rely on those already being operated by smart contract organizations like Ethereum.
These companies allow literally anyone to set up smart contracts on their network. To make money they charge ‘gas” fees which are normally payable in the form of tokens. These fees relate to how much processing a particular smart contract requires. The logic being, the more complex the smart contract the more expensive it is to process.
Smart contracts can be generic (as in the case of ICO tokens) or designed from scratch to suit a company’s particular needs. While the latter does require programmers to code the smart contract, it does allow for a huge amount of variables can be built into the final contract.
The Best 5 Smart Contract Platforms
While most people are aware of the Ethereum Project through its token, Ethereum or Ether or ERC-20, many are not aware that this is one of the most exciting startups in the last decade or two. It is the world’s leading smart contract platform and is the top choice for most developers.
The platform first went live in July 2015. Since then it has grown by leaps and bounds and now facilitates smart contracts for everything from online games to ICOs. In fact, the vast majority of ICOs now use the ERC-20 token standard to facilitate their offering.
The beauty of Ethereum’s smart contract platform is the degree of standardization and support it offers. Ethereum has published a set of clearly defined rules for developers to follow, making smart contract development easier and less risky.
On the support side, apart from having the biggest market capitalization of all the smart contract platforms, Ethereum is completely dedicated to improving the way that smart contracts are created and operated.
To this end, they have even developed their own smart contract programming language, Solidity, which not only helps with standardization but also makes setting up contracts much easier too.
There are a few drawbacks to Ethereum, however. In recent years a number of security issues have exposed serious flaws in the platform. A recent study by researchers from Singapore and the UK found 34,000 Ethereum based smart contracts that were vulnerable to bugs.
While Ethereum has been quick to address many of the bugs in its own code, including releasing ERC223 and ERC777 updates, a big problem still remains with the code being written by smart contract developers using the platform.
That said, Ethereum is widely considered to be the best general use smart contract platform. It can be used for everything from ICOs to facilitate smart contract use with almost any kind of decentralized application.
A final concern is Ethereum’s success itself. Its network has been recorded as frequently running at 100% capacity, something that may worry application developers who need the guarantee that their contracts will always be processed quickly.
Ethereum Smart Contract Platform Features:
- Free to setup. Contract transactions are charged in gas.
- Ethereum token standard or ERC-20
- Own smart contract programming language Solidity
- Clear guidelines for developers
- Cutting edge development community
- Lots of literature/help available
- Smart contract developers nearly always have experience using Ethereum
Drawbacks to the platform:
- Network frequently overloaded
- More expensive than other platforms
- Developers have found a number of security issues with the Ethereum code. Added to this, poor quality smart contract code has left many contracts exposed to hackers.
Top of the list of Ethereum’s competitors is Hyperledger Fabric. The Hyperledger project began in December 2015 and was set up by the Linux Foundation. It is an open source project that has the stated goal of supporting the development of blockchain-based distributed ledgers.
There are now several different frameworks being developed under the Hyperledger banner. These include Hyperledger Burrow, Hyperledger Fabric, Hyperledger Sawtooth and Hyperledger Indy.
Hyperledger Fabric is an excellent smart contract platform that has proven itself a really viable Ethereum platform alternative. Co-developed by IBM, it is a permissioned blockchain infrastructure that facilitates the execution of smart contracts or “chain codes”.
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Finally, Hyperledger is a permissioned network meaning that all the participants in the network have known identities. This makes it the go-to choice for companies who wish to create smart contracts but need to comply with data protection laws that require them to be known.
Hyperledger doesn’t have its own token system. Though this does have some advantages it does limit the kinds of smart contracts that can be easily deployed via its platform. For those companies who wish to develop smart contracts that include the need for some form of payment transfer (ICOs for example) then they will be better off sticking to Ethereum etc
Hyperledger Smart Contract Platform Features:
- Open Source and free to use
- Permissioned membership
- Supported by IBM
- Allows contracts to be coded in a variety of languages
- Reliable Performance
- Supports plug-in components
- No token system
Nem was launched on March 31, 2015. It is favored by some developers because it is written in Java, one of the most used programming languages in the world.
This makes it super accessible since it doesn’t require programmers to have to learn platform-specific programming language such as Solidity etc.
A second thing worth noting is that Java is far more developed and therefore has fewer security vulnerabilities than the newer platform-specific languages like Solidity.
Nem recently released the Catapult or Mijin v.2 update, which according to numerous security experts, has made it the most secure smart contract platform out there.
Not only does is this update an “improvement to the NEM blockchain. It is an industry milestone that opens up new capabilities for blockchain database functionality.” – Source NEM.io Foundation President Lon Wong
The biggest selling point of Nem is that it is highly scalable. Also, whereas Ethereum can manage around 15 transactions per second, Nem is able to manage 100’s. It is for this reason that developers are increasingly jumping ship from other platforms like Ethereum.
Nem Smart Contract Platform Features
- Created in Java so easy to use
- No platform specific programming language
- Excellent performance
- Smaller development community than other platforms
- Less tools available
- NEM uses code off the blockchain which makes it less decentralized
Stellar was founded back in 2014, making it the oldest smart contract platform on this list. It is maintained by the Stellar Development Foundation and has been repeatedly heralded as one of the most exciting blockchain startups out there.
A slew of recent good news stories that involve large companies deciding to implement the Stellar platform into their existing infrastructure has convinced industry experts that the Stellar network is really going places.
One of the key areas where companies are looking to implement Stellar is in facilitating international payments. In late 2017, it partnered with IBM and KlickEx to offer a new low cost way to transact cross-border transactions in the South Pacific region.
When it comes to the best platform for smart contracts, Stellar is arguably simpler and easier to use than Ethereum but perhaps not so straightforward as Nem. However, it is really designed to facilitate simple smart contracts such as ICOs.
This is because Stellar is primarily a money exchange and so operates along those lines. If you are planning to develop more sophisticated smart contracts for Dapps, for example, then this is not really the platform to use. When implemented for more straightforward smart contracts, Stellar outperforms rival Ethereum both in terms of speed and security.
The average cost for a transaction with Ripple is $0.0000002. To give you an idea of just how great value this is Ethereum costs around $0.094 for the same transaction.
Nem Smart Contract Platform Features
- Ideal for ICOs
- Very inexpensive when compared to Ethereum
- Simple platform
- Good performance
- Well regarded within the industry
- Not really suitable for more complex smart contract development
Another one of the best alternative smart contract platforms, Waves was launched in June 2016. It is an open source platform that aimed to address many of the existing barriers that stand in the way of more mainstream blockchain implementation, namely speed and scalability.
Much like Ripple, Wave has positioned itself as a platform to facilitate token operations. As such it is another excellent platform for ICOs. It takes just a few minutes to create your own tokens on the platform, something which is so easy to do that it requires next to no technical knowledge.
For more on Waves smart contact development, you can read their whitepaper.
Waves Smart Contract Platform Features
- Ideal for ICOs and corwdsales
- Requires very little background knowledge to create own tokens
- Not a very versatile platform
- Still a relatively small userbase
For a complete smart contract platforms list, click this link.
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