The operating system of the future encrypted digital world: smart contracts

In this lecture, I will share with you the second sub-category in the " mature field of the blockchain industry ": "smart contracts". That is, some basic public chain projects that everyone often says.

1. What is a smart contract

A smart contract is simply a computing protocol that spreads, verifies, and executes contracts in an information-based manner. Smart contracts allow credible transactions without a third party, and such transactions, once executed, are irreversible.

In layman's terms, once the smart contract machine is turned on, it will never stop, and it will operate in the way set at the beginning.

The public chain supporting smart contracts did not exist in the early days of bitcoin's development, but it began to attract everyone's attention after Ethereum went online in 2015.

In fact, for a period of time after Ethereum went online, about what is a smart contract, what is its use, and what can Ethereum do, everyone just stayed at the theoretical discussion level without using and experiencing it in practice.

Until the ERC20 token standard appeared on Ethereum (in popular terms, anyone can issue coins), the industry accidentally discovered that the use of ERC20 for ICO financing has significantly better efficiency and cost than traditional investment and financing methods. This makes everyone realize the value of Ethereum. The core of Ethereum's ability to improve efficiency and reduce costs on ICOs lies in the key role played by its smart contract system.

Since then, the outbreak of ICO has ushered in a big bull market for digital currencies, and after the ERC20 token standard was released, another new token standard ERC721 on Ethereum was born. The advent of the ERC721 standard gave birth to Ethereum and the first game in the blockchain world: CryptoKitty. The birth of Crypto Cat set off a frenzy among players.

If ICO is just to show speculators and industry people to see the power of Ethereum, then the popularity of crypto cat games has made gamers who are less concerned about blockchain technology see the power of Ethereum. And this is essentially the power of smart contracts.

The success of smart contracts in ICOs and crypto cats has made everyone see a disruptive encrypted digital world. In that world, once all rules are formulated, they will be automatically executed, open, fair, fair, and external forces cannot interfere and destroy.

Does this sound a bit like the computer-dominated virtual world in the Matrix? In theory, the future world governed by smart contracts is like that.

At this point, the industry has been completely impressed by the performance and disruptive significance of smart contracts, so after Ethereum, a large number of digital currencies supporting smart contract functions have emerged.

2. Why say "smart contract" is just needed

The emergence of smart contracts for the first time has extended the application of blockchain from pure payment transfers to all business logic. This is also the case. For the first time, people have seen the operation of business logic in a completely decentralized world. China's operation, thus putting forward the concept of "decentralized autonomous organization".

In the future, there will be more and more decentralized applications running on the blockchain, and these applications must be carried by digital currencies that support smart contracts. The continuous improvement and development of digital currencies supporting smart contracts is the only way to achieve a complete decentralized world. Therefore, the field of smart contracts is a newly needed field of blockchain.

Three. Mainstream coins in the field of "smart contracts"

There are many digital currencies supporting smart contracts, and new projects are emerging from time to time. Some of these new projects claim to use new technologies to solve the "impossible triangle" of the blockchain; others claim to have special advantages specifically for specific business areas and application scenarios.

But in my opinion, this is actually a field full of racetracks. Although the latecomers are powerful, the chances of eventually being able to stand in this field are not high.

So what's the current status of this circuit? Why do I think the latecomers have little hope?

I think there are three main factors that determine the final winner of this track:

1) Whether to improve the TPS on the basis of insisting on decentralization. (TPS means: transaction volume per second. Can be understood as the efficiency of processing data)

2) Whether the construction of token standards in the system is complete.

3) Ecological operations, that is, how many decentralized applications are running on this public chain.

First look at the first point, whether to improve TPS on the basis of adherence to decentralization. At present, the biggest technical problems facing digital currencies supporting smart contracts are low TPS and poor performance; this has led to insufficient application scenarios of the blockchain.

Recently, the academic community has found a solution in theory. The sharding technology, the second layer extension, and the state channel are all very promising to solve this problem. At present, several leading public chains on the track are actively developing these functions, so it is only a matter of time to solve this problem. Latecomers who want to technically overtake corners are less likely.

Let's look at the second point, whether the construction of the token standard in the system is complete. The establishment and improvement of the token standard is crucial to the development of the smart contract ecosystem.

Ethereum's two phenomenal application ICOs and Ethereum cats have been detonated by the birth of new contract standards. The establishment, practice and development of standards, rules and systems in the smart contract system require time to polish and test. In this regard, Ethereum is far ahead, and other public chains have made few achievements, let alone latecomers.

This is a process that must be gradually accumulated based on time and practice. It cannot overtake in corners.

Finally, the third and third point is the operation of ecology. In this respect, it also takes time to accumulate. Existing giants have inherent advantages in this regard. Even if latecomers have the opportunity to enter the market, it is questionable whether they can attract applications to operate within their ecosystem. It's also difficult to overtake in a corner.

Therefore, according to these three standards, even if latecomers have strong technological innovations to catch up on the first point, it is very difficult to catch up with the current oligarchs on the second and third points, so I think this There are currently only two oligarchs on the track: Ethereum and EOS.

4. Risks of mainstream currencies and competitors

1) Ethereum

Ethereum is the first digital currency in the blockchain field to implement smart contracts. Its significance is second only to Bitcoin, and is widely recognized by the industry as "Blockchain 2.0". Ethereum has created a glorious past in the history of blockchain development.

But the biggest problem of Ethereum at present is that its TPS is too low. Among several public chains that support smart contracts, its TPS is the lowest.

Ethereum's next development plan is Ethereum 2.0. In this plan, Ethereum will use sharding technology, POS consensus mechanism, state channel, second-level expansion, etc. to greatly improve its TPS on the basis of further decentralization. Its prospects are quite promising.

But if these developments of Ethereum are severely hampered, or even stalled on the existing foundation, it will greatly threaten its existing status, and may even give up the position of the leader of this field. This is the biggest risk of Ethereum.

2) EOS

EOS is the most influential public chain in the industry after Ethereum. Now EOS's TPS is much higher than Ethereum, and it carries a large number of decentralized applications. There is a tendency to throw away Ethereum in ecological construction.

However, the biggest problem of EOS is that it has sacrificed the decentralization feature in order to improve TPS. It only selects 21 nodes for block packaging. The disadvantage is that it not only has security risks but also seriously affects its credibility.

3) TRON TRX

Tron is the top 15 currency in terms of total market capitalization. Its appearance rate in the news media is quite high, and it already has a certain ecology, the main reason is that its technology is very rough, it is difficult to be competent as the basic public chain must have the performance and background.

TRON can reach today, and the marketing and operation capabilities of the project party have played an absolutely dominant role. However, the competition of the blockchain public chain is not a sprint but a long-distance race, so I don't think this model can persist in this long-distance race.

There are other public chains in this field, such as the quantum chain, NEO, and ontology. Many of them have been online, but the standard construction and ecological construction in the system are far from Ethereum and EOS. So I don't think they have too many opportunities.

Digital currencies supporting smart contracts have not been around for a long time. Most of them appeared during the last bull market and created a miraculous yield at the peak of the bull market, and then experienced a plunge in a bear market. The tests they have gone through are still not enough.

Their predecessors, Bitcoin, Litecoin and Ripple, are veterans who have been in the field for a long time. They can survive the repeated polishing of the market, and their vitality has been severely tested.

With reference to bitcoin, many digital currencies of the Litecoin generation that have gradually disappeared in the same period, I think that most of this large number of digital currencies supporting smart contracts will gradually be marketed like the stars in the "digital currency" Eliminated, from a dozen rankings, dozens to gradually ranked several hundred, after a thousand.

Digital currency in the field of smart contracts will develop into an operating system in the encrypted digital world in the future, similar to the operating system we use in our lives today. For example, when we go to work, we use the Microsoft Windows operating system when we turn on the computer. When we pick up the phone, we use the Apple or Android operating system.

In the future, when we use various applications based on the blockchain, these applications will run on these digital currency systems that support smart contracts, so this field is of great significance for the future development of the blockchain.