Chapter 5 of John Greene’s “Cardano for the Masses” falls squarely in the middle of the book’s ~380 pages. At 50 pages, it is also the book’s longest chapter - and to be honest it felt like it! After four chapters of background, introduction, and blockchain basics, this chapter dives into the deep end, with detailed explanations of smart contracts, metadata, native tokens, and UTXOs.
This is important, meaty content. Smart contracts and native tokens are the flexible, functional tools that make Cardano more than just a 1-dimensional financial ledger. With them, users can do so much more than send each other money. Mint NFTs, tokenize real-world assets, and deploy tokens of your own design, for your own purposes. Fundraising, auctions, games, crowdsourcing, blockchain art projects, decentralized exchanges (DEX), important stable coins and silly meme coins all become possible with smart contracts and native tokens.
Smart Contracts: Just the Tip of the Iceberg
The title of the chapter is “Goguen (Smart Contracts)” but the first 40 pages of the 50-page chapter hardly mention Smart Contracts. Greene gets us ready to read about Smart Contracts at the same slow, methodical pace that Cardano’s builders employed to create them in the first place. To get there, we first dive into UTXOs, metadata, and Native Tokens on Cardano. Technical experts looking for depth will find it here, with endless rundowns of every scenario under the sun. Reading through these details made my eyes burn a little, but left no doubt as to the level of brainpower that went into designing the system. Those who are more interested in user-level understanding can skim for the phrase “for example…” where Greene frequently inserts practical illustrations of how otherwise abstract ideas may be implemented. Greene also connects with less technical readers by including a multi-page FAQ section that effectively summarizes the preceding 30 pages of deep content about native tokens into a punchy list of quick takeaways.
What’s in a Name?
On the topic of Smart Contracts, Greene gives some space to the apparent debate about the naming of the tool. These include a quote Tweet from Vitalik Buterin, saying he regrets the name “Smart Contracts”, and wishes he had called them something more “boring and technical.” This is already an odd wish in my opinion, but I was curious what depth of reason might be behind the motion to rename Smart Contracts. So I visited one of the referenced links, a NetGuru blog article titled “Neither Smart Nor Contracts: Smart Contracts need a Rebrand.” The article is an interview with “world renowned thought leader David G.W. Birch”. In the interview Birch points out that traditional contracts contain subjective legalese which sometimes requires human interpretation, whereas Smart Contracts are utterly objective. He also posits that calling them “Smart” means that they have to be able to learn and adapt. He compares it to calling smart phones “smart” when (in his view) cell phones are not actually smart.
To this jumble of protestations, all I can say is: Surely the definition of terms and conditions of execution in a contract is more at the heart of the matter than the involvement of experts to interpret legal jargon? And, we DO call smart phones “smart,” and we’re all pretty used to it. And anyway the name is “Smart” Contracts, not “Artificial Intelligence” Contracts, so calm down. And a rose by any other name would smell as sweet. Or as Greene succinctly puts it: “let’s not be pedantic…”
“A smart contract is just a brief program whose inputs and outputs are blockchain transactions.”
“Smart contracts are self-executing and dependable, requiring no third-party intervention or presence. The smart contract code is kept on a decentralized blockchain network and spread throughout it, making it transparent and irrevocable. Smart contracts are immutable because they cannot be modified, the are distributable and tamper-proof, they are quick and cost-efficient because there is no middleman, saving money and time, and they are secure because they are encrypted.”
Teamwork makes the dream work
It’s a book about Cardano, so the author gives lots of attention to the things Cardanians are proud of. Out of 18,000 cryptocurrencies around today, only 70 have smart contract abilities. Another distinction is the programming language used to build Cardano: Haskell. Numerous programming languages are used to create blockchains. The choices are not at all homogenous, and the reasons for each choice are varied. Cardano fans like to point out that Haskell is rooted in math, and as such it is uniquely secure and verifiable. Introducing smart contracts to a blockchain makes it hypothetically much more useful, but in practice it often introduces security risks. Some of the famous blockchain hacks and debacles are evidence of this. Cardano has yet to be humbled by any comparable security flaws, which many attribute to the reliability of its Haskell code.
At the same time, Greene is careful to loop in the pillar of Cardano that reminds us that Cardano does not claim or aspire to be the one and only blockchain of consequence. The pillar in question is “interoperability.” The concept is that the technology will succeed as a whole when many networks are able to work together. So we read about the UTXO Alliance, a multi-chain partnership of blockchains that are working together to expand the research, development, and education in the space. One of the objectives is to build bridges between blockchains, with the shared goal of providing everyone access to fair and accessible financial tools. The keystone concept is summed up in a quote from IOG technology chief Romain Pellerin:
“Mainstream blockchain adoption will pass only through the interconnection of networks, similar to how the Internet was built by the interconnection of intranets and extranets”