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The Future of Blockchain Technology: Smart Contracts

Despite the raising awareness of bitcoin as a digital currency or even as an alternative investment, the concept of blockchain technology is still unfamiliar by general public. Star Xu, the founder of OkCoin, Songxiu Hua, the president at Bitbank, and Zaiyong Yang, the founder of Beam Capital gathered at TechCrunch Beijing 2016 and led in-depth discussion on blockchain technology and something even more advanced and futuristic; smart contracts.


The point is ‘decentralization’

“World has evolved in a way that promotes decentralization and automization. Smart contract is a piece of software that stores rules of negotiating the terms of a contract, automatically verifies and executes the terms” said, Star Xu, Founder & CEO at Okcoin at TechCrunch Beijing this Tuesday. This seemingly complicated concept is basically enabled by the blockchain technology which is a decentralized shared database system where each transaction processor on the system maintains their own local copy of this database and the consensus formation algorithm enable every copy to stay in sync. Coupled with blockchain, smart contracts removes the reliance on traditional central systems such as banks and allows the direct transaction between or among parties which saves the intermediary cost and raises efficiency.

Invention of Etheraum was the real innovation

President at Bitbank, Songxiu Hua says that although blockchain technology still has much room for improvement, there certianly had been some innovative steps, one of which was the invention of Etheraum. Etherum is often coined as ‘upgraded version’ of bitcoin. Buterin, the inventor of Etherum realized that even the really smart people were having trouble creating generalized applications to the bitcoin protocol. So, he took a step back and said instead of trying to add some features to bitcoin protocol, it makes more sense to build a computationally complete virtual machine and install it in every node of every network. “Thanks to the release of Etherum, applications that facilitates the exchange of digital currency had been more rapidly developed than before,” Hua emphasized.

Essential for artificial intelligence era

This kind of decentralized, autonomous technology will find more application opportunities in the following years when robots and AI engage in most parts of our everyday lives. “When the day that everything is run by machines equipped with artificial intelligence, smart contracts will be necessary. In fact, smart contract brings us one step closer to full artificial intelligence.” said, Hua. Take Uber, the ride-sharing service, for example, sooner or later all Uber cars will be replaced into self-driving cars without human drivers. With smart contracts, Uber can become more ‘autonomous’ of humans. Payments of driving fees, filling its own gas, and repairing itself all can be done by the artificial intelligence inside the car itself since humans can keep track of smart contracts simultaneously which help them fully-aware of any single error on real-time basis.

From an investor perspective, still a little conservative

“Decentralization means to completely renovate the existing ways of doing business. So, it will definitely need a lot of patience to actually see smart contract procedures applied in real business.” said, Zaiyong Yang Founder & Partner at Beam Capital. Furthermore, for investors to fund the startups that work on blockchain or smart contract technologies, what they have not yet seen is the qualifiable business model that guarantees the profit structure for the companies themselves. Just as a lot of IT services such as sharing economy or O2O have not yet proven their business models to be working. A lot of investors are questioning the distribution of profits in businesses that have used smart contract technology.

Dream to become an operating system

“What we need is a comprehensive service operating platform for applications that implemented bitcoin and blockchain technologies.” said, Hua. For example, let’s say there is one such App just established. The startup does not have to care about the marketing or the sales method. As long as App is released in our platform, all the payments will be transacted through smart contracts and marketing/customer service will be done automatically by artificial intelligence.

Image credit: TechNode

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