Which blockchain is ideal for smart contracts, and why?

People frequently question, « What is the best blockchain for smart contracts, and why? » The choice of blockchain will rely on a variety of criteria, including the particular use case, performance needs, and security concerns, thus the answer is never simple. Nevertheless, while assessing a blockchain for smart contracts, there are a few qualities and characteristics that are essential to take into account.

A revolution in data storage, sharing, and exchange has been triggered by the development of blockchain technology. Blockchain presents a new paradigm for trust and transparency in online interactions because of its decentralized and unchangeable nature. Many blockchain platforms now include smart contracts as a crucial component since they are self-executing and enforceable agreements. Smart contracts provide unmatched speed, security, and efficiency across a wide range of businesses by automating procedures and doing away with the need for middlemen.

The significance of smart contracts cannot be emphasized in the age of massive data and real-time interactions. Smart contracts are revolutionizing how we conduct business in a variety of sectors, including banking, insurance, and voting. They provide a means of cutting expenses, speeding things up, and enhancing accuracy, all while guaranteeing that parties may trust one another without depending on conventional middlemen.

The subject of which blockchain is the « best » for smart contracts grows increasingly complicated as the number of blockchain platforms and smart contract languages increases. In the end, it will rely on the particular use case and the application’s needs. Performance, scalability, security, privacy, development tools, and governance all have an impact on whether a given blockchain is appropriate for using smart contracts.

We will dig into the arena of blockchains in this post and examine the many kinds of smart contract-related blockchains that are available. In this paper, we want to offer readers with the information and tools required to make educated decisions about which blockchain to adopt for their specific use case by analyzing the important aspects that affect the appropriateness of a particular blockchain for smart contracts. Join us as we explore this fascinating and fast changing ecosystem, whether you are a developer, a company owner, or just someone curious in the potential of blockchain and smart contracts.

What is blockchain technology?

Blockchain technology is a decentralized, distributed ledger that securely, openly, and permanently records transactions. It is a database that keeps data in a sequential chain of blocks, each of which has a series of transactions that are cryptographically encrypted and connected to the block before it. Without the use of middlemen, peer-to-peer transactions are made possible by blockchain technology, which offers a safe and impenetrable system.

What Smart Contracts are

Self-executing computer programs known as smart contracts automatically enforce a contract’s terms when specific criteria are satisfied. They are digital contracts that operate on the blockchain network and can help with contract negotiation or execution by facilitating, verifying, or enforcing it. Smart contracts may be used to automate complicated company procedures, get rid of middlemen, cut expenses, and boost efficiency and transparency.

The significance of selecting the appropriate blockchain for smart contracts

A number of factors must be taken into consideration while selecting the best blockchain for smart contracts:

Smart contracts’ performance and usefulness may be impacted by the characteristics of various blockchains, including speed, scalability, security, and governance.
Smart contracts are not supported by every blockchain, and some of them have a limited feature set or need a lot of development work to deploy.
The compatibility and interoperability of smart contracts with various platforms and systems may differ depending on the chosen blockchain.
The cost and complexity of creating, implementing, and administering smart contracts can be influenced by the blockchain technology that is used.

Various blockchain types for smart contracts

For smart contracts, there are primarily three types of blockchains: public blockchains, private blockchains, and hybrid blockchains.

Public blockchains

Public blockchains are decentralized, public networks that anybody may join and use. In most cases, they are protected by a consensus algorithm like proof-of-work (PoW) or proof-of-stake (PoS), and all members have the same access privileges to the network. For applications that need security and trust, public blockchains are the best choice since they are transparent, unchangeable, and censorship-resistant. Public blockchains that allow smart contracts include, for instance:

Ethereum: With the largest ecosystem of decentralized applications (dapps) and tools for creating, evaluating, and deploying smart contracts, Ethereum is the most widely used blockchain for smart contracts. Ethereum now employs a PoW consensus algorithm, however with its planned Ethereum 2.0 update, it will switch to a PoS algorithm.

Binance Smart Chain (BSC): A high-performance blockchain that operates concurrently with Binance Chain and is intended to support smart contracts and decentralized finance (DeFi) applications is known as Binance Smart Chain. BSC employs a Proof of Staked Authority (PoSA)-based modified PoS consensus process.

Polkadot: Polkadot is a sharded blockchain that permits communication between various networks and blockchains. Through the Substrate development framework, it allows smart contracts and makes use of a PoS consensus process.

Private blockchains

Private blockchains are permissioned networks that only allow approved parties or members to access them and participate in their activities. Internal use cases like supply chain management, identity verification, or asset monitoring are the norm for these systems, which are often administered by a single company or consortia. Although they may give up some of the advantages of decentralization and security, private blockchains are more scalable and adaptable than public blockchains. Smart contract-compatible private blockchains contain some of the following:

Hyperledger Fabric: Hyperledger Fabric is an open-source platform for creating blockchain products that are suitable for use in businesses. It offers fine-grained access control and privacy capabilities and supports smart contracts written in a number of different programming languages. A number of significant businesses and organizations have adopted Hyperledger Fabric, which is maintained by the Linux Foundation.

Corda: Corda is a platform for distributed ledgers that was created specifically for contracts and business-to-business exchanges. It makes use of the novel « notary » consensus method, which allows for the selective publication and privacy of transaction data. With its ability to interface with several business systems and platforms, Corda enables smart contracts created in Java and Kotlin.

Quorum is an Ethereum fork designed specifically for private and consortium networks. It offers improved privacy and permission features, including private transactions and contract administration, and it supports Solidity-written smart contracts. J.P. Morgan created and maintains Quorum, which is utilized in a number of business and financial applications.

Hybrid Blockchains

In order to offer the best of both worlds, hybrid blockchains combine public and private blockchains. They can be used to connect various networks and ecologies or to provide various stakeholders differing degrees of access and control. Although hybrid blockchains could need more design and governance considerations, they may be more versatile and adaptive than pure public or private blockchains.

EOS: EOS is a blockchain that seeks to preserve some degree of decentralization and governance while offering great scalability and transaction throughput. It makes use of a DPoS consensus process, which enables quick block confirmation and minimal costs. EOS has been used for a variety of dapps and DeFi applications and supports smart contracts written in C++ and other languages.

Rootstock (RSK): Rootstock is a platform for smart contracts that is based on the blockchain of the cryptocurrency Bitcoin. It supports the Solidity programming language and makes use of a federated consensus process for smart contract execution that is quicker and more effective. Rootstock intends to enhance the capabilities of the Bitcoin network and open up fresh use cases including tokenization, micropayments, and decentralized banking.

Avalanche: Using the Avalanche consensus process, Avalanche is a scalable and interoperable blockchain platform. It can execute smart contracts securely and effectively in a variety of languages, including Java, Go, and Solidity. In order to facilitate the development of unique blockchain networks and applications, Avalanche additionally offers subnets and virtual machines.

How do you pick the top blockchains for smart contracts?

The technical capabilities of the platform, the required level of security and decentralization, the community support and developer ecosystem, the cost and scalability of transactions, the particular use case and requirements of the application, as well as the technical capabilities of the platform must all be carefully taken into account when selecting the best blockchain for smart contracts. The following methods will help you select the ideal blockchain for smart contracts:

Step 1: Specify the use case and needs for the smart contract application, such as the kind of data to be processed and stored, the quantity of users and transactions, the degree of privacy and permissions, and the preferred user experience.

Step 2: Assess the technical capabilities of the blockchain platform, including the programming languages and tools available, the consensus method and block confirmation time, the scalability and throughput of the network, and the security and readability of the smart contract code.

Step 3: Take into account the blockchain’s degree of decentralization, security, and governance, as well as the decision-making procedures involved. Private blockchains could provide greater control and privacy but may be less safe and less interoperable than public blockchains, which typically provide better decentralization and openness.

Step 4: Evaluate the developer ecosystem and community support of the blockchain, including the quantity and caliber of current projects and dapps, the accessibility and dependability of developer tools and resources, and the degree of participation and creativity in the community.

Step 5: Examine the cost and scalability of blockchain transactions, including the fees and gas costs related to executing smart contracts, the transaction speed and confirmation time, and the capacity to handle large amounts of traffic and data.

A list of platforms for smart contracts

Blockchains for smart contracts compared

Project ideas for smart contracts

The possibilities are unlimited, but we’ve included five intriguing smart contract project ideas below.

Decentralized insurance platform

Smart contracts may be used to automate the claims process and make settlements faster and clearer.
On the blockchain, customers may buy insurance policies and, when specific criteria are satisfied, automatically get payouts.
To assess if an event that might result in a payout has happened, the platform can use data from outside sources.

Platform for supply-chain management

Smart contracts may be used to follow the flow of commodities from the producer to the final customer, assuring responsibility and transparency.
The platform may use IoT sensors to gather information about the location, temperature, and other pertinent aspects of the merchandise.
Smart contracts may automate the payment and delivery process, obviating the need for middlemen and improving efficiency.

Decentralized voting system

A voting system that is both safe and transparent may be made possible through smart contracts, with each vote being permanently recorded on the blockchain.
The platform makes it possible to cast a ballot from any location in the world, lowering barriers to entry and boosting turnout.
Voters have the ability to confirm that their ballot was cast and that the results were correctly calculated.

Investing in real estate using tokens

Digital coins that signify ownership of real estate may be created using smart contracts.
These tokens are available for investors to buy and sell on the blockchain, providing fractional ownership and liquidity.
By automating the transfer of rental revenue and other gains, smart contracts may improve efficiency and transparency.

Decentralized platform for freelance

A platform where independent contractors may look for employment and be paid automatically can be made using smart contracts.
Customers may submit job requests and pay in bitcoin, which is held in escrow until the task is finished.
By automating the dispute settlement procedure, smart contracts can cut down on the need for middlemen and boost efficiency.

Conclusion

Returning to our initial question, which blockchain is ideal for smart contracts and why? The standard response is « it depends. » The precise needs of the use case, the required amount of decentralization, and the trade-offs between performance and security will all play a part in the decision on which blockchain to utilize. The blockchain that satisfies the requirements of the application and the people who will be engaging with it is ultimately the ideal blockchain for smart contracts. It’s an exciting moment to be researching the possibilities of blockchain and smart contracts given the rate of progress in this field.