This is a collaborative post.
Smart contracts have taken on a new life in the past four years. They are now an integral part of many companies’ ecosystems. So, which platforms are currently on top? The first version of Ethereum, ETH1, is still by far the most popular and widely used smart contract platform. However, ETH2 is right around the corner, and Polkadot may become a real competitor in the near future.
But what is the difference between traditional blockchain platforms and the ones that not only are related to cryptocurrency but are utilizing smart contracts? Let’s see in this article.
What is a smart contract?
Smart contracts are an integral part of the blockchain ecosystem, providing the trustless transactions that other blockchains lack. They are a set of conditions and rules that automatically execute a transaction once the pre-defined conditions have been met — which means that you know a smart contract will execute as intended every time. They are essential for future blockchains and should be implemented wherever possible.
Imagine you want to buy Dogecoin but you cannot trust the other party. With smart contracts, both parties are “tied,” meaning the other party should release the goods once you release the money. When both conditions are met, this is when we consider it a complete transaction.
Smart contracts are another layer of trust on top of the faith we already get from blockchains and cryptocurrencies. Smart contracts serve as a way to automate tasks within a DeFi ecosystem so that developers can build decentralized applications (dApps) that allow us to do things like make quick loans, receive collateral on loans, or earn dividends when we stake tokens.
Top 5 best smart contract platforms
But which are the best ones in the business? Does it matter or is every platform just as good? Let’s find out.
Ethereum is a decentralized blockchain platform that provides smart contracts and its own virtual machine to run them. It was co-founded by Vitalik Buterin, who developed Ethereum as a response to the lack of a platform that could handle decentralized applications. As an open-source project, Ethereum is operated by the Ethereum Foundation, which employs several developers and runs its own online forums for community discussions.
Ethereum is currently working on ETH 2.0, which would see the platform move from Proof-of-Work to a Proof-of-Stake network, which will be a dramatic difference and elevate speed and reduce transaction costs incrementally. Ethereum blockchain is the reason why great new projects like Apple Money are given life.
Ethereum is the biggest smart contract platform and the second biggest blockchain network, only behind Bitcoin. Its market cap is $386bn as of today.
The Solana team is made up of former engineers from hardware and software giants who have spent the last decade building some of the most advanced, secure, and meaningful software products. The Solana team has also been advised by none other than Sam Bankman-Fried, the CEO of FTX and Alameda Research.
Solana is a scalable blockchain platform with the potential to support 65,000 transactions per second. The project can accomplish this thanks to its unique Proof of History consensus mechanism — a protocol that involves broadcasting and storing each block’s Merkle root on a separate chain. Solana’s ambitious goal is to create an extremely scalable blockchain platform that can rival the largest centralized systems out there.
Over the last year, it managed to climb up the rank and is currently ranked 7th with just under $70bn market cap.
Polkadot is a blockchain network founded by Gavin Wood, one of Ethereum’s co-founders. After realizing that Ethereum is nowhere close to reaching its imagined state as a secure and scalable protocol, Wood decided to create a blockchain network of his own.
The Web3 Foundation is an independent organization that provides financial and technical support for Polkadot, a next-generation innovative contract platform.
Polkadot’s parachains provide an open-source framework for building, bootstrapping, and managing a distributed heterogeneous multi-chain ecosystem. Smart contracts exist on the parachains and will not be able to change the main blockchain.
Polkadot’s central promise is to create a platform for developers to build upon. It gives access to new chains with different properties, like security and decentralization levels.
Polkadot is just 4 positions after Solana with a market cap of $19.3bn and it has a huge potential.
The crypto-economy is no longer just an experiment. Disruptive technologies are being embraced by major players in the space — from Fortune 100 companies to banks and governments — and it’s clear that blockchain technology represents a paradigm shift in global economics. Their adoption of Ethereum has been particularly significant, as it’s the largest smart contract platform in the world. The future looks brighter than ever.