While blockchain is still viewed as an immature concept thanks to its ongoing evolution, the blistering pace of change and new solutions emerging daily are helping to offset some of the drawbacks of this novel approach to decentralization. Most of the focus has been put on cryptocurrencies, largely due to their rapid appreciation in value which has led to rampant speculation. However, the actual value of the solutions themselves when it comes to matching their ambitions leaves much to be desired.
Take bitcoin, for example. In its early stages, bitcoin was envisioned to improve cross-border transactability with better speed and lower costs, replacing dated systems with a new, decentralized version of currency freed from institutional oversight. What has transpired since has shown that bitcoin on its own does not necessarily have the potential to transform the world in the way originally imagined.
Although bitcoin may never be able to live up to its aspirations, the incorporation and adoption of SegWit meant that it could one day see its potential match the accompanying hype. One valuable solution storming onto the scene is RSK, an open-source platform hosting smart contracts for the Bitcoin Network akin to those first implemented by Ethereum. Smart contracts are an extremely powerful tool, and by far one of the most valuable innovations associated with blockchain, thanks to the ability to create deals between two parties without the need for an intermediary.
Why Smart Contracts Matter
At their core, smart contracts could be the real momentum behind the crypto revolution considering their appeal as a contract automation solution designed to reduce overheads. Numerous use cases have already emerged, with industries far and wide able to find relevant applications for the nascent concept.
In bitcoin’s case, platforms like those built by RSK take on a new level of importance because they ultimately shift the focus of bitcoin from an asset for speculation to a viable currency solution. A few of the major complaints associated with bitcoin are the sluggishness of confirmation and high price of transacting on the network.
RSK seeks to overcome these concerns with smart contracts by accounting for scalability, thanks to the capability of processing 400 transactions per second. Plans are already in the works to eventually expand that capacity to 2,000 transactions per second by incorporating Lumino, a system designed to compete with the Lightning Network in terms of speed.
Furthermore, block confirmation will take 10 seconds, unlike the current 10 minutes associated with bitcoin, giving users a robust mechanism for exchanging and transferring value at substantially reduced costs. In addition to cutting down the lag time significantly, the substantial price volatility encountered by users during transactions can also be mitigated, ultimately benefiting bitcoin’s growing number of participants.
One surmountable issue facing legacy bitcoin users is the scaling debate that has created a great chasm within the community. However, as the adoption of SegWit accelerates throughout the bitcoin network, services like RSK present the solution that purists, seeking to maintain bitcoin’s blockchain in its original form, have long been awaiting. By bringing certain transactions off-chain with the sidechain functionality promoted by RSK, bitcoin will be able to compete in the services arena, ultimately helping improve its long-term viability and usefulness. Furthermore, it could help erode Ethereum’s dominance in the smart contract arena.
Does RSK Threaten Ethereum’s Smart Contract Hegemony?
Ethereum has become wildly popular as not only a cryptocurrency, but also a platform for building and distributing services on the same chain thanks to its built-in smart contract and tokenization protocols.
"Ethereum is much more than just smart contracts, and with their move towards POS and Sharding to solve scalability, community support and marketshare, they are in a prime position to become the eco-system of choice for decentralized apps," says Itai Malinski, founder of Cryptovest.com.
As a result, many startups interested in capitalizing on blockchain’s momentum flocked to the platform thanks to its perceived malleability. However, the advantages of hosting all activities on the same chain has not been without problems. For one, the high-profile DAO attack underscored the vulnerabilities inherent in Ethereum’s smart contracts.
In addition, the Ethereum chain has faced issues with the processing power associated with certain applications hosted on its chain, CryptoKitties congestion being a prime example. (See more: CryptoKitties Rule Traffic on Ethereum's Blockchain.)
One of the biggest benefits of a second-layer solution like RSK is that it operates on a sidechain, meaning it does not sap processing power from the main chain like Ethereum-based applications. Moreover, miners are incentivized to participate through the merge-mining feature which enables bitcoin miners to mine for both chains simultaneously, attracting more participants to the idea.
One of the most prominent aspects of RSK is its focus on security, using monetary bounties to help appeal to developers, hackers, and security professionals to identify vulnerabilities so the system can improve overall security for its numerous stakeholders. Although it may not necessarily cause an extinction moment for Ethereum, RSK does address many of the associated vulnerabilities, helping propel it is a viable form of competition.
Sparking a Second-Layer Transformation
Although it has taken considerable time for them to arrive, new second-layer solutions like RSK are ultimately going to improve the bitcoin ecosystem for the better thanks to a new set of services designed to improve transactability. At the heart of any currency’s function is the capability for speedy exchange.
With RSK, bringing in bitcoin to the smart contract equation means added value for the Bitcoin Network, but also its growing user base as they seek to harness the possibilities of blockchain’s decentralized architecture and bitcoin’s security. (See also: Can Bitcoin Be Hacked?)
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