• Smart contract applications go beyond being smart and being contracts
  • A new study shows that cheap-fee blockchains like Tezos, EOS and Ripple actually have very little use to transfer value

Away from Bitcoin markets, we look at those altcoins that purportedly were improvements on Bitcoin transacational capacity and on smart contract application. According to major blockchain firm Blockstack, smart contract positives and applications actually are much bigger than what their name might suggest. Blockstack CEO Dr Muneeb Ali said that smart contract technology would have a lot of implications for a very broad range of industries, much like how cloud computing found application away from finance.

He even argues that the terminology for them is too limiting, since these were actually verifiable programs that could not have existed in the era of cloud computing. His own firm has collaborated with blockchain network Algorand to support and adopt the Clarity smart contract language, which was specifically built for more secure smart contracts than existing coding languages. Dr Ali explained:

“Our industry needs a predictable, secure, open-source alternative to current approaches like Solidity. While we anticipate that the value locked up in smart contracts could eventually number in the trillions, our industry would not have been ready for such growth.”

And according to the firms working together on Clarity, this unpreparedness comes from the fact that developers have really been coding on a fork of JavaScript, hence a language with many security vulnerabilities since it really was an all-purpose language used to build websites. Smart contracts, on the other hand, are specifically built to eradicate human error by self-executing their own software codes, very much unlike their counterparts in computer programs and websites. The Blockstack CEO says:

“They need to be verifiable programs for high-stake operations. General purpose languages can be dangerous here…. [they need to be] a decidable language that is safe and mathematically predictable ahead of a smart contract’s execution.”

And this for him, goes well beyond financial services, likening the ability to write verifiable code as a “superpower for developers”. If used widely, it could even determine how the internet verifies and distributes software, or even how code contributions are paid, and how internet service access is granted.

Speaking of smart contracts, we now examine how a new paper published by researched from Imperial College London and University College London found that the vast majority of transactions on smart contract platforms EOS, Tezos and XRP Ledger (XRPL) actually carry little or no value transfer.

Done over a seven-month period ending in April 2020, the paper meant to dig deeper into transactional statistics of these platforms, which had a far higher transactional capacity than Bitcoin. The paper, ‘Revisiting Transactional Statistics of High-scalability Blockchain’, by Daniel Perez, Jiahua Xu and Benjamin Livshits, discovers that after all, even with Bitcoin’s low transactional capacity, its use to transfer value far outstrips those platforms with supposedly higher capacity. The authors note:

“Our analysis reveals that only a small fraction of the transactions are used for value transfer purposes. In particular, 96% of the transactions on EOSIO were triggered by the airdrop of a currently valueless token; on Tezos, 76% of throughput was used for maintaining consensus; and over 94% of transactions on XRPL carried no economic value.”

This was in fact a follow up to two previous versions of the report, this time containing many more months of data. The findings have caused a lot of debate right now, particularly because it seems to prove that high-throughput blockchains are solving a problem they don’t have: and that transfers are actually all between the same parties. One more thing the study highlights as well is that blockchain transparency doesn’t necessarily make it easier to read the data, as data can even obscure what’s really happening.

Imperial College London PhD candidate wrote:

“When the level of spam activity is very high, the size of the history gets disproportionately large given the amount of useful activity on the network. This makes such blockchains much more difficult to analyze and reason about.”

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