Smart contracts are quickly gaining popularity and becoming essential in many industries. They utilize the amazing blockchain technology to store contract terms and self-execute when the predetermined conditions are met. That effectively eliminates the need for intermediaries when it comes to executing contracts saving more resources. Additionally, smart contracts increase trust and transparency since the records of the transactions are traceable on the blockchain, and no one can interfere with them.
Since the invention of smart contracts, many businesses have continuously explored smart contract applications and their potential for developing decentralized applications. The good thing is that smart contracts can streamline operations in firms that rely more on contractual relationships, such as supplier-retailer relationships and voting systems.
Using existing blockchain platforms like Ethereum and avalanche support smart contracts is feasible. But how is avalanche different from Ethereum? First, you have to keep in mind that the vendors of these platforms charge based on the level of power required for executing the deployed smart contracts.
Here are some of the considerations for choosing a smart contracts platform.
The network type
Three types of blockchains exist; private, public, and hybrid. A public blockchain system allows everyone to be part of the network and process transactions, while a private one accepts new members only by invitation. On the contrary, a hybrid blockchain system offers the best of both worlds. How smart contracts function depends on the level of privacy and transparency needed.
As you may already know, blockchain is a decentralized system, meaning no single authority oversees its workflow. When it comes to the governance aspect, two approaches exist: off-chain and on-chain governance. Off-chain governance features some elements of centralization, making some participants superior to others when making decisions. For example, nodes with more powerful equipment in Ethereum and bitcoin hold more power.
On the other hand, on-chain governance is based on democracy. Therefore the majority vote decides the volume of deposit and equipment power. Consequently, it is impossible to withdraw the question put to the vote, and the majority is not always correct.
A consensus algorithm is how the blockchain builds a consensus on transaction processing. Common ones include proof of work and proof of stake. With proof of work, whoever solves a complex puzzle first gets the right to add a block to the blockchain, and the winning node receives a crypto award. In proof of stake, all participants take part in doing a puzzle but staking a portion of coins beforehand is mandatory. Winnings are proportionate to the amount deposited.
You should consider all the necessary aspects to choose a smart contracts platform that will serve you best and suit all your needs.