In the blockchain world, a smart contract is a self-executing contract where the terms and agreement between two or more parties are written into lines of code, and recorded on the blockchain.
Smart contracts were first conceived by renowned cryptographer and legal scholar, Nick Szabo, in 1994. His research showed that a decentralized ledger could be used for smart contracts; although the technology (Blockchain) wasn’t around back then.
A smart contract works by enforcing contract agreement terms automatically between anonymous parties, though an event or action must trigger the execution. Smart contracts are used as a means for exchanging money, securities, assets, property, and anything of value in a transparent and traceable manner.
In summary, smart contracts perform the following functions:
- Manage agreements between users such as lease agreements, credit enforcement etc
- Store information about applications such as membership records and customer registration information
- Function as multi-signature accounts so that fund spending will happen only if a percentage of people agree
- Provide utility to other smart contracts
Today, it is possible to implement smart contracts across various blockchain platforms thanks to Solidity, the most popular object-oriented programming language.
Here, we delve deeper into top blockchain platforms best suited for deploying smart contracts.
Ethereum is probably the most popular smart contract platform, having been around for a while. It also boasts the largest and most active blockchain community across the globe, contributing to its growth. Ethereum is a blockchain-based platform that runs smart contracts through a decentralised machine called Ethereum Virtual Machine (EVM).
Ethereum based smart contacts are coded using Solidity, which was built to improve the development and operation of smart contracts. In addition, “gas’ is required to execute smart contracts via EVM. Gas represents the amount of computational power needed to run a smart contract on Ethereum blockchain.
The best thing about Ethereum smart contracts is that they offer lots of standardisation capabilities, allowing for the building of different types of applications. However, scalability issues are rendering the platform unsuitable for many real-world applications—Solidity only supports 16 parameters within a smart contract function.
2. Hyperledger Fabric
Hyperledger is an open-source enterprise business blockchain platform hosted by the Linux Foundation and contributed by IBM. It provides an enterprise-grade blockchain framework to enable businesses to develop usable applications. Hyperledger makes use of a modular approach to build blockchains, and this helps companies develop what works best for them. It also supports the plug-and-play version of membership services and consensus.
NEM uses off-blockchain code for smart contracts, which has led some to say that NEM is less decentralized than other blockchain platforms. Despite this, NEM is more scalable, faster and more secure than Ethereum. The platform can handle hundreds of transactions per second and it promises a simple smart contract technology that utilizes lighter programming code. Moreover, NEM provides on-chain features such as multi-signatures and smart assets which help to resolve the decentralisation problem.
The extreme functionality of NEM’s blockchain is provided via its powerful API, which permits the usage of any programming language (such as JS, Python, and others) to code smart contracts. These APIs are used to build “off-chain contracts’ which can be updated anytime, without communicating with NEM blockchain.
EOS is another blockchain smart contract platform that is increasingly growing in popularity mainly because the platform charges zero fees. It’s throughout is also high—EOS can handle millions of transactions per second. EOS Smart contracts are developed using C++ programming language, which boosts programming flexibility. However, developers must be well-equipped with C/C++ knowledge to build smart contracts on EOS blockchain.
Another interesting feature about EOS is that its smart contracts are deployed in the form of pre-compiled Web Assembly (WASM). This promotes faster execution of contracts when compared to Ethereum based smart contracts. EOS also utilises the dPoS (delegated proof of stake) consensus mechanism to provide a high level of scalability and zero transaction fees.
NEO is a smart contract platform most popular with the Chinese and the Asian crypto communities. It offers the opportunity to develop trustless smart contracts at very low fees. NEO also makes it easy to write smart contacts since coding can be done in a myriad of programming languages such as C#, F#, Java, Python, VB.Net, and Kotl.
The lightweight NEO Virtual Machine (NeoVM) executes smart contracts and allows traceability, transparency, and irreversibility of transactions. NEO recently released Smart Contract 2.0 which boasts support for complex data structures and arrays. Overall, NEO is a user-friendly platform, and hence building smart contracts is made simple.
There are unlimited options when it comes to building smart contracts to enhance business transactions. The five blockchain platforms discussed are among the widely-used and regarded as the best choice for developers and companies.