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Industries set to use Bitcoin network as a smart contract platform

by James Davis — March 23, 2017 02:53

With the rise of contract-centric platforms like Ethereum in the year 2016, Smart Contracts quickly gained prominence among top financial institutions. The potential of these platforms in helping to build innovative applications played the central part in this trend. However, Ethereum didn’t pay attention to security as much as it focused on flexibility. In fact, practically, the absence of such security measures can put the complete network at risk.

With the availability of myriad technologies within the Bitcoin ecosystem, experts have considered using it as the platform for Smart Contract. Lightning Network is an emerging technology which is modeled after Blockstream’s payment channels as well as the work of Mike Hearn, the former Bitcoin developer. The concept behind this innovative technology is similar to the traditional contract. By allowing the Bitcoin to process similar agreements, the HTLC is able to utilize the smart contract platform, allowing the users to transact money before availing a cryptographic proof.

The evolution of the Lightning Network is considered as one of the best smart contract projects to have emerged out of the Bitcoin ecosystem. One of the major advantages of the Lightning Network is that it enables a contract to be processed with numerous transactions without conflicting with the verifying times for the transactions. For example, if two individuals carry out multiple transactions among themselves, then all the dealings will be merged together for the miners.

Another emerging concept is the one that uses united side-chains to process the settlement of the contracts. This is done by converging the alternative networks with the primary Bitcoin network. This model allows for the users’ direct interaction with the technology, without following the Bitcoin’s stringent requirements.

With various Smart Contracts concepts in the lineup, technology enthusiasts are counting on 2017 as the year when financial institutions will start testing out the Bitcoin network for the settlement of contracts. 

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