##Before we begin: a recap of the last 12 months of Bitcoinmania in the blockchain space.
This time last year, the fever pitch of Bitcoinmania saw the price of a single bitcoin token surge to $1200.
At its peak, while breathless admirers such as the Winklevoss twins claimed that the currency would reach $40,000 per Bitcoin, a number of other currency-based protocols emerged which offered, or purported to offer, additional functionality above and beyond it on their single Bitcoin-like blockchains. Among these was the idea that a blockchain could be married up to a scripting language so, much as Bitcoin manages what is in effect an automated, uni-directional clearing system, additional coded complexity could be introduced to allow multi-directional, and multi-party, communications through cryptographically-secure scripts called smart contracts.
Efficient, secure, distributed, no fixed physical infrastructure - what a system that would be!
But those solutions were flawed. Some companies claim to offer “smart contract” functionality, but at a fee - meaning that these were not smart contracts at all, just front-end consumer facing platforms that charge you to use their transaction logs. Still other projects were forced by the “cryptocurrency” design paradigm to go fully decentralised with no central oversight at all, making regulatory compliance impossible.
Bitcoin was a pretty big deal. We don’t think it can - or should - be repeated.
##So we followed another path.
At Eris Industries, we were cautiously skeptical during Bitcoinmania. Don’t get me wrong, we like Bitcoin as much as anyone else. And if Bitcoin were the only successful blockchain network in existence, ever, then it might have made sense to go out and buy as many as we could and hope it went up in price.
That was too easy. We knew that if we could crack smart contracts, it would be possible to secure a distributed blockchain without needing to follow Bitcoin’s security model.
If one peer-to-peer blockchain is hailed as a revolutionary financial innovation, what would you have if you multiplied its properties and put blockchains everywhere - a world where hundreds of millions of blockchains were deployed, each customisable and updatable on command, automatically regulating tasks for which they were custom-built, and operated on a peer-to-peer basis with no reliance on servers and very low reliance on other hardware or infrastructure?
What if you could get all of the positive security qualities of a blockchain database, except you would control and administer it, would not have to “mine” to secure it, and could operate it in full compliance with applicable regulations, without ever setting foot in the cryptocurrency space?
What would the world look like then?
Could such a thing even be done?
You’re damn right it can.
So we cracked smart contracts on a blockchain. Without creating a cryptocurrency. We also figured out that once a blockchain database has an administrator, they become far more useful. So designed them so you can administer them, too.
Through an ordinary web browser. Thanks to our Decerver web browser core.
With our open-source DOUG and Eris Standard Library smart contract templates, and our Thelonious blockchain design, you can now obtain the efficiency and security of the blockchain right inside the core of your business, efficiently tracking real assets and obligations without needing to go fully-decentralized or creating a cryptocurrency.
Because you control the system, you can comply with any and all legal or regulatory obligations.
All you need to do is give your best developers and data scientists the resources to get the job done.
###1. So what’s the difference between a smart contract and a legal contract, anyway?
Smart contracts are scripts on a blockchain database which automatically manage data-driven relationships on distributed networks on a peer-to-peer basis, without servers. They can change their parameters and meaning over time, meaning a system upgrade is as simple as broadcasting a signal to the network - instead of purchasing additional hardware.
Smart contract-enabled blockchain systems are a form of distributed computing architecture which is capable of operating over the public internet which employ public-key cryptography to render the possibility of a successful malicious attack exceedingly low. They can carry out and manage any data-driven interaction a developer can define, and if widely enough distributed, are nearly indestructible. With Eris Industries’ Thelonious design, administrators of these databases - unlike existing blockchain databases - can quickly update their consensus and security parameters at will through the broadcast of the relevant private key.
Legal contracts, on the other hand, are legal fictions which, if breached, give rise to further imaginary critters known as choses (things) in action. They are customarily evidenced in writing. The threat of enforcement compels their performance. The rights and obligations they create become real when a court orders their enforcement.
It’s really that simple. As such:
###2. Smart contracts govern data, or data-driven relationships. Legal contracts govern legal (equitable, statutory, etc.) relationships.
Blockchains aren’t magical money machines. They’re just databases with some very unique properties.
Smart contracts can help you to administer a blockchain database, and control who interacts with your distributed application software stack - and how. That’s where the most immediate efficiency gains from blockchain technology are to be made in the financial services space.
This means that you don’t need to call in the lawyers to make efficiency gains with smart contracts. You need to get hold of your developers, engineers and data scientists. Smart contracts help you manage your data.
Existing legal arrangements relating to your current database architecture (e.g. clearing system membership agreements) should continue to apply to an Eris database.
###3. Smart contracts aren’t about asking third parties to run hosting services that codify and interpret standard-form legal agreements. That’s just silly.
We at Eris Industries understand, unlike other firms in the blockchain space, that a hosted fee-paying solution operated by a third party is not what you want.
We get your business. That means we understand that what you want is an in-house business process efficiency solution that is tailored to address and automate specific pain points arising from your existing back- and middle-office administration. And you want to be able to iterate and customize that solution, over and over again, for new business problems you face, without spending vast sums on new infrastructure.
In the long-term, though, automating legal agreements is definitely going to be a ‘thing.’ We’re sure of that. And those can be smart contractified with Eris too, if you can define them.
With Eris, you can start developing bespoke blockchain-based solutions to those pain points right now, using your own developers - who know your needs and your systems better than anyone in the world.
###4. Code away all manner of infrastructure with the blockchain.
Our product is a platform - you know your needs better than we do. All we know is that you need a secure way to automate your business processes. So we designed a system for you to build blockchain-backed distributed applications for enterprise with ease. Call up your best devs and see what you can define:
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FX confirmation, clearing, and settlement. Literally everyone is complaining about this. Why doesn’t everyone get together and solve it - before a challenger does?
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Want to codify the ISDA Master Agreement and create a negotiation module built on our platform that provides you with a verifiable record of who selected what terms and when? Go right ahead.
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Want to automate bond Ts and Cs and integrate them with the custodian’s computer systems so, instead of a bondholder meeting, you could just automatically consult them by pinging a signal through a smart contract - and know how they responded, and that it was they who responded, without even needing to know who they are? You could do that too.
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Want a customer-facing mobile banking platform in, say, a developing country where you don’t want to spend much by way of infrastructure while gaining a lot by way of security? Knock yourself out.
And we won’t charge you a penny to use it.