Some blockchains record the transactions and address the ownership but it does not allow the users to have a permanent and immutable collection of code (smart contracts). This advanced feature is highly momentous in the evolution of blockchain and more modern blockchains like Ethereum carries this feature. A smart contract runs on the blockchain and it is self-executes and handles enforcement, the management, and performance of agreements between users. Ethereum allows people to run the code on the blockchain and its ledger stores the assets, the transactions and the code. Vending machines technology are thought to be alike smart contract implementation.
The Bitcoin protocol is a weak version of the smart contract concept as defined by computer scientist and cryptographer Nick Szabo. Ethereum white paper describes Ethereum as “A Next-Generation Smart Contract and Decentralized Application Platform”.
The following are the alternative applications of blockchain technology:
- Colored coins: Using on-blockchain digital assets to represent custom currencies and financial instruments
- Smart property: The ownership of an underlying physical device
- Namecoin: Non-fungible assets such as domain names
- Smart contracts: Complex applications involving having digital assets being directly controlled by a piece of code implementing arbitrary rules
- DAOs: Blockchain-based decentralized autonomous organizations.
Ethereum white paper mentions “Ethereum intends to provide is a blockchain with a built-in fully fledged Turing-complete programming language that can be used to create “contracts” that can be used to encode arbitrary state transition functions, allowing users to create any of the systems (Colored coins, Smart property, Namecoin, DAOs) as well as many others that we have not yet imagined, simply by writing up the logic in a few lines of code”.