I recently went over “Smart Contracts” in my last post, but I felt the topic was so important I give it its own article. For simplicity, a smart contract executes code when a buyer and seller agree on a transaction. The contract also enforces terms of the deal. Being able to exchange goods, money, property, or shares is possible due to smart contracts. If one party does not complete their side of the deal by the due date, and one party already sent assets, the party who sent the money automatically gets their refund. Here is a short example. Imagine there is a contract in place between a landlord and tenant. Both parties agree to a set date where the landlord sends the key, and the tenant sends the money. If the landlord does not send the key by a specific date, but the tenant already sent money, the tenant will get their refund. We can trust these contracts because they’re neutral no matter what.
Smart contracts hold and receive assets. If one half of the deal isn’t complete, assets go back to the other party. In that sense, the smart contract acts as an escrow and lawyer settling disputes while acting as a 3rd party for holding. What’s even better is transactions are transparent. Both parties find out when anything related to the code changes, and when disagreement arises, contract details make negotiations easier.
Because of the benefits of reliability, efficiency, and privacy, smart contracts prove useful in many industries. To include a few, here are some industries in which smart contracts are useful. Insurance, finance, real estate, science, and more. For example, in clinical trials, researchers’ main objective is to study data and distribute it to other institutions. With smart contracts, not only is privacy given, but, researchers and institutions can review data in a timely manner. This improves data sharing and efficiency between two institutions.
Let me give you an example on how smart contracts are beneficial to the insurance industry. Have you ever got into an accident and dealt with a bunch of calls? Well, with smart contracts, that’ll all change. If you get into an accident, your vehicle can execute verification, payments, and claims between two parties who get into an accident. Just thinking of this makes it easier for both parties dealing with a traumatic experience. But if we’re going to implement smart contracts into our daily lives, we have to understand which cryptocurrencies have smart contracts.
Here are 4 cryptocurrencies with smart contracts:
Cryptocurrencies with smart contracts are starting to become more popular, but the problem is, coins that’re adopting them aren’t as popular. NEO, formerly known as Antshares, is an example of this. Found by DA Hongfei and Erik Zhang in 2014, NEO is a smart economy coin that compares to Ethereum. With NEO, its possible to create a variety of decentralized applications making it possible to work with smart contracts. Having different forms of smart contracts; NEO offers validation contracts, function contracts, and application contracts. These different contracts all have common traits which include reliability, performance, and expandibility. Another benefit of using NEO is having the ability to generate dividends. With NEO, dividends come once you have gas, which I’ll talk about more in-depth later. In addition, NEO has a strong network to handle more transactions. If you’re looking for cryptocurrencies with smart contracts and an ROI, NEO is a good choice because it’s on track for huge growth. No wonder people are calling it the “Ethereum killer”.
Ethereum’s platform is suitable for smart contracts. With Ethereum, All smart contract execution takes place in the Ethereum Virtual Machine (EVM). When smart contracts execute, it uses energy known as gas. When gas is used for a transaction, it’s paid for with Ether. Its worth noting that there are limits when doing transactions with Ethereum known as upper bounds. The upper bounds were put in place to limit how much gas a transaction can consume, thus preventing a programming error. Ethereum is known to have a complex smart contract system. This can be both good and bad depending on your perspective. Now let’s find out what a simple smart contract system looks like.
Cryptocurrencies with smart contracts have come into play due to increase in security. Stellar emphasizes smart contracts, but their smart contract is different from Ethereum. Their approach to smart contracts is to keep most of the logic simple outside of the core system so Stellar can scale all over the world. And there are 2 components to achieve this goal of simplicity and scale. One, is multi-signature reports, the other, an ability to batch operations. Both components in tandem create an efficient and effective transaction system. While complex, Ethereum’s contracts take more gas and have slow transaction processing times. Stellar’s primary goal as stated on its website is to “facilitate issuing and trading tokens”. Their biggest feature is an exchange system where a token can be instantly traded without a 3rd party. Although it makes up for efficiency, having a simpler smart contract system along with an instant exchange raises questions of security and wonder how easy it is to hack the system. Although Stellar is new, raising $1.3 billion dollars in 2017 is nothing to scoff at.
One of the more exciting up and comers, IOTA is changing technology in more ways than one. Cryptocurrencies with smart contracts are just one factor when it comes to determining coins. But IOTA is different because it doesn’t have tradtional smart contracts. When IOTA does do smart contracts, it’ll be through Oracles. To explain, imagine a scenario where you make a bet with your friend on a sports game. Whoever wins receives IOTA coins from the other person. But to complete the bet, the ledger has to know who won the game, and that information is given from the Oracle.
What binds both parties is the smart contract, but what makes it complete is the Oracle and the information it delivers. This technology can get complex, and I don’t want to deep dive on this specific subject, but know IOTA combines three elements that make it stand out. It’s a cryptocurrency that combines blockchain and the internet of things all into one. This means transactions with IOTA can be done through your vehicle, television, or anything that connects to the internet. But that’s not all, IOTA’s blockchain is nothing to pass over also.
The conventional blockchain is like a teacher correcting a students homework and putting it back into the pile. With the Tangle ledger IOTA possesses, it’s like having students grading each others paper. Through this system, we can expect faster transactions and no fees making IOTA attractive to investors wanting to make passive income.
Cryptocurrencies with smart contracts is happening more often. Just like blockchain, smart contracts provide a sense of security for coin users. Another factor to consider is the different traits of each coin. IOTA is a combination of blockchain, cryptocurrency, and the internet of things. If we use our imagination, we can envision mining tokens while in our car because IOTA integrates to the internet of things. Heck, we can even start mining while we’re in the bathroom with our phones if the internet is strong enough. But keeping an eye out for the regulatory landscape is crucial. In my Bitcoin problems post, regulation is a game changer because there has never been a precedent set for virtual coins. With China banning Bitcoin earlier this year, prices to Bitcoin took a fall.. But on the other hand, we now have NEO which came from China and presents a huge opportunity to invest. Like I say in every post, do your research to minimize any risk possible so you can generate passive income.