Adam Krellenstein, co-founder at Symbiont, a New York-based blockchain startup focused on institutional clients, recently published a post which reflects on the ongoing development of cryptographic digital assets as the 10 year anniversary of the release of Bitcoin’s (BTC) whitepaper approaches.
As many other crypto industry professionals have pointed out, Krellenstein wrote that “token systems are more useful than smart contracts when layered on a public blockchain consensus protocol.”
The Hampshire College physics and mathematics graduate explained that the Bitcoin whitepaper only outlined the basic idea of how to develop and deploy tokenized economies using permissionless distributed ledger technology (DLT).
However, the crypto industry that bitcoin kick-started has now evolved as there are currently thousands of blockchain projects.
Arriving At The Same Conclusion
While it’s usually beneficial to explore the various potential aspects of any new invention, or technology, Krellenstein argues that after a considerable amount of experimentation over the past decade, we have arrived at “what we knew all along.”
He explained:
A blockchain is a way for multiple parties in a decentralized computer network to see a consistent view of the world, so blockchain technology can primarily be valuable either when replacing a consistent centralized system with a consistent decentralized one (the way bitcoin replaces fiat currency), or when turning an inconsistent decentralized system into a consistent decentralized system.
Smart Contracts Only Effective On Permissioned Ledgers
According to Krellenstein, smart contract developers are basically trying to introduce more consistency into what he describes as “inconsistent” decentralized networks. The automated business logic that many smart contracts try to implement is aimed at effectively “replacing [the] fragmented [crypto] financial markets infrastructure”, Krellenstein wrote.
He also thinks that token systems, which are “the simplest possible smart contracts”, must be “widely accessible” in order to be useful. However, other more sophisticated types of smart contracts may only be useful on permissioned ledgers.
Specifically, Krellenstein believes that smart contracts can only function effectively and achieve high-performance, such as being “fast, cheap, and easy to use”, when they are deployed on private DLT platforms. This type of implementation will allow them to achieve their objective, which is to effectively “solve a particular business problem in a deliberate and controlled manner.”
As CryptoGlobe covered in early October, there is currently a widespread, or common, misconception that smart contracts alone can help reduce costs and eliminate intermediaries. This might not be true as Bitcoin developer, Jimmy Song, has pointed out that a closer examination reveals that learning to write “normal” legal contracts takes “years of study” – which is acquired by attending law school.
Many companies have employed people who may have the experience to develop software programs, however, they are not legal experts. That’s why they might not have the necessary skill set to write proper smart contracts.
