From vending machines to complex algorithms which have driven humans off the trading floor of the New York Stock Exchange, business logic codified in software has been automating and transforming the world around us, long before the emergence of cryptocurrencies. In essence, smart contracts are already here.
The question now is can smart contracts operate outside a private system and free of central authority? If yes, what can decentralized smart contracts offer us which centralized logic cannot? Are new business models possible?
Bitcoin is proof that smart contracts can function in a public environment. Bitcoin’s simple scripting language based around cryptographic primitives enables the currency itself to exist. It would be quite reasonable then to expect Ethereum and its fully-fledged programming language (Turing-complete) to open up a world of possibilities.
However, I believe there are fundamental challenges facing smart contracts on public blockchains. Until these hurdles are overcome, don’t…
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