San Francisco-based Ripple Labs, a startup focused on building payment and digital assets networks, has unveiled a comprehensive plan for the development of a new smart contract system.
Called Codius, the proposed system will be programming language agnostic and will be able to work with existing monetary and contractual systems.
There are a few projects in the works for building smart contract solutions that involve cryptography. But Ripple Labs‘ Codius effort is perhaps a framework that many in the cyrptocurrency space have been searching for in order to build asset structures.
Stefan Thomas, Chief Technology Officer at Ripple Labs, told CoinDesk that programmable contracts in digital form will be ubiquitous someday – and that the company wants to be a steward for this technology.
“[Smart] contract logic decides who should receive the money. It can query any internet server to do so, including crypto networks, web services, etc. Based on the decision, the contract hosts will allow a transaction sending the money to that recipient to succeed.”
It relies on the use of what is known as an oracle, which is an instance that can sign a cryptographic key pair if or when a condition is met, hence the concept of a “smart” contract that can execute by itself when it has proper inputs.
“Oracles sign things and the signatures trigger actions in the distributed networks,” said Thomas.
The Codius project calls these “smart oracles”, in the sense that they will be able to operate on an untrusted codebase. This means that there will be open access to this project for most developers since it will not require the use of a specific programming language.
Smart oracles handle the sandboxing, identification and even hosting of these digital assets. As well, the system will be able to integrate with a number of different systems of value: bitcoin, Ripple’s XRP or even fiat money.
The smart contract economy
Ripple Labs believes an entire industry will be built around smart digital assets – just like what is happening in the cryptocurrency realm. One of the earliest business ventures besides the actual creation of smart contracts might be hosting platforms for them.
“You run somebody’s code and they pay you for it. I could see hosting companies starting to add contracts offerings,” said Thomas. “Hosting VMs [virtual machines] is a very similar business model.”
The bitcoin mining sector might find value in getting into the smart contract business as well.
Generating new coins is profitable in bitcoin right now, but this may not be the case in the future for some mining operations. In addition to generating revenue for confirming transactions, miners may find that hosting smart contracts is another lucrative venture down the road.
“Essentially miners are performing a validation function for the network in exchange for a reward, again a very similar concept as running a Codius host and being paid for running contracts.”
The use of smart contracts could solve not only the antiquated problems of using paper for legal purposes. It could also make legal systems around the globe more efficient should this technology be adopted.
Greg Kidd is Ripple Labs’ Chief Risk Operator, and worked at Promontory Financial Group prior to joining the company. He told CoinDesk:
“We see smart contracts as a layer between the contracting parties and the legal system. Right now, if anything goes wrong with a contract, you have to go to the legal system, which is extremely slow and expensive.”
Companies spend billions of dollars every year on various legal costs. Smart contracts might not be a solution for any sort of disputed situation. But Kidd, who previously worked with the Board of Governors at the Federal Reserve, thinks that the technology has promise to improve the broader legal system.
- ^ Ripple Labs (www.coindesk.com)
- ^ blog post (ripple.com)
- ^ whitepaper on GitHub (github.com)
- ^ researcher Nick Szabo’s early work (en.wikipedia.org)
- ^ “smart” contract (en.bitcoin.it)
- ^ Codius (codius.org)
- ^ Bitcoin Wiki (en.bitcoin.it)
- ^ Doingbusiness.org (www.doingbusiness.org)
- ^ Ethereum (www.coindesk.com)
- ^ Coinprism is still trying to advocate its use (www.coindesk.com)
- ^ Coinalytics (coinalytics.co)
- ^ Google’s Native Client (code.google.com)
- ^ read our most recent report on the company here (www.coindesk.com)
- ^ Technology and human image (www.shutterstock.com)
- ^ Codius (www.coindesk.com)
- ^ contract enforcement (www.coindesk.com)
- ^ Native Client (www.coindesk.com)
- ^ Nick Szabo (www.coindesk.com)
- ^ programmable contracts (www.coindesk.com)
- ^ smart contracts (www.coindesk.com)