Why smart contracts aren’t so smart

Or why they should be rather called persistent scripts?
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Full transcript of this episode is available here.

After a basic introduction to the crypto world and an explanation of its most-used terms, we are here again for a second crypto episode! David Stancel, our cryptocurrency expert here at Vacuumlabs, and CTO at Fumbi, returned to join Banking on Air host Helene Panzarino. This time, they focused on smart contracts, Ethereum, and platform interoperability.

To start with, what exactly is a smart contract? 

“A smart contract is an application(a piece of code) that runs simultaneously on thousands of computers on a decentralized network. Anybody can join and participate in the network by running these applications. However once they are deployed on the network, it is almost impossible to remove them, stop them or tamper with the code. This is a unique trait of crypto and blockchain.” – David Stancel

And, as mentioned in our first episode, this is one of the main reasons why crypto and blockchain were created.

Where then, can smart contracts be used? Mainly, they are applied in financial services (DeFi – decentralized finance, exchanges, lending platforms,…), but also in the logistics, trade, and  healthcare industries.  Smart contracts run on blockchain networks like Ethereum, which is a decentralized, open-source blockchain.

“The Ethereum network stole the show by enabling developers to write “smart contracts”. While this was  also possible on Bitcoin, it was in a very limited way.” – David Stancel

However, using the name “smart contracts” wasn’t the best choice. It turns out that they aren’t so smart after all. 

“It’s because of their architecture. These kinds of programs are just a regular piece of software. The more accurate term would be “persistent scripts”, because they are deployed on decentralized architecture which is censorship-resistant.” – David Stancel

As already emphasized, it is almost impossible to change the code on blockchain, which prevents contracts from being interfered with.

Of course, Ethereum has lots of competitors – many new platforms are being created that are able to replicate the Ethereum virtual machine. In some cases, it is easy enough to transfer from one platform to another, using the same smart contract. But what is still questionable is interoperability – platforms still require third parties, so-called bridges, to enable communication with each other. According to David, we have approximately two years to wait until platforms will be connected in a way that won’t require third parties to be involved.

If you’d like to learn more about smart contracts, Ethereum and related topics,don’t miss our second crypto episode with David Stancel. You can listen to it on Apple Podcasts, Breaker, Google Podcasts, Overcast, Pocket Casts, Spotify or here:

WHERE TO LISTEN    

Full transcript of this episode is available here.

Here’s a rundown of the episode:

  • 02:00 What is smart contract and examples of use
  • 07:25 Why was Ethereum created and what does it do?
  • 14:10 competitors of Ethereum
  • 15:50 Interoperability of various crypto platforms

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David studied Economics at Masaryk University in the Czech Republic and did his Master of Science in Digital Currencies at the University of Nicosia in Cyprus. He then co-founded Blockchain Slovakia – an NGO focused on education, research, and policy advocacy in the area of cryptocurrencies and blockchain technology. David also lectures courses on cryptocurrencies at the Slovak University of Technology and the University of Economics in Bratislava, and he regularly speaks about cryptocurrencies at conferences, seminars, forums, and universities. He has consulted to multiple crypto-related startups and initiatives all over Europe, and currently serves as CTO at Fumbi Network. He writes regularly about the development of the crypto world in his newsletter – CoinStory.tech


‘Banking on Air’ is the official Vacuumlabs podcast covering the challenges, opportunities, perspectives and opinions that matter to our community. The podcastlooks under the hood of the changing face of tech: the acceleration of all things digital, the impact of regulation (and disruption), the need for collaboration – and the spectrum of businesses competing to be fintech and financial service suppliers around the world.

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