Smart Contracts Makes a Platform Worse for Payments
A few days ago, in a series of tweets, David Schwartz shared the discussion he had with Stefan Thomas, the co-creator of Interledger, on an episode of Block Stars. There, he stressed the reason they decided not to build smart contracts on XRP Ledger.
According to the Ripple CTO, the decision not to build smart contracts on XRP Ledger was right because it makes platform worse for payments. He also thinks it could cause fee instability, performance issues, and make the ledger vulnerable to attacks.
He, however, pointed out that Ethereum was right to a reasonable extent with the smart contracts built on its network, due to the success it has recorded so far.
In a series of tweets, David Schwartz wrote:
“I recorded an episode of Block Stars today with my colleague, Stefan Thomas and it was awesome. It will probably wind up being two episodes because we covered so much.
“One interesting thing we talked about was why we decided not to build smart contracts into the XRP Ledger. And we did something that it never occurred to me to do before.
“Ethereum, of course, made the opposite choice. They build smart contracts into their blockchain directly. We decided not to. So, with the benefit of everything we know now and with Ethereum for contrast. We thought through the reasons we made our decision and looked at Ethereum to see if we were right or wrong. And the answer is very much both.
“We were right that adding smart contracts makes a platform worse for payments. And we were right that it would introduce fee instability, performance issues, and have lots of attack surface.
“But, obviously, Ethereum was wildly successful and for good reasons. So in that sense, we were wrong.
“I also discovered a few things that I knew but didn’t really knew that I knew because I never got a chance to look back and process them. One thing was the path of smart contracts leading us to Codius which led to ILP, which led to web monetization and Coil.”
Meaning of a Smart Contract
A smart contract is a self-executing contract that has terms of the agreement between buyer and seller written into lines of code directly. The code and the agreement exist across a distributed and decentralized blockchain network.
Smart contracts allow trusted transactions and agreements to be carried out among anonymous parties without any interference from a central authority or government.