The current study examines the challenges associated with smart contracts and their overall concept and offers a resolution that can effectively address all the prevailing issues. Moreover, it advocates for a shift in the current architecture employed in smart contracts and blockchain. The study identifies the problems, conducts an analysis, and presents a solution that expounds on how the proposed changes can enhance the performance of smart contracts based on a new architecture, boost their scalability, change the IoT world, and promote an eco-friendly environment by reducing pollution of natural environment and conserving energy.
TopIntroduction
For more than a decade, blockchain has been recognized as a technology that serves as a distributed database (Bernstein & Lange, 2016) used for keeping track of financial transactions involving various types of cryptocurrencies, such as BTC and ETH (Daniel R. L. Brown, 2016). All payments or financial transactions are conducted through a peer-to-peer network, which decentralizes the network participants and grants them equal privileges from the network's perspective. This network architecture differs from the regular client-server architecture wherein all clients rely on the server. If the server is down, no client can connect to it and conduct any type of transaction (Heuvel, 2014).
The introduction of the blockchain technology also introduced a new term, “smart contracts,” which were initially proposed in the 1990s by Nick Szabo (1997). The concept is simple: smart contracts are computer programs that verify different conditions and determine which function(s) to perform based on those conditions.
A typical schema of blockchain is shown in Figure 1.
Figure 1. A typical schema of blockchain
The first widely recognized cryptocurrency was Bitcoin, despite the fact that the first one emerged in the early 1990s (Li et al., 2017). The Bitcoin blockchain solely contains financial transactions and no other data. ETH, the second well-known cryptocurrency in this field, introduced the concept of “smart contracts” to the blockchain world. A smart contract can be viewed as a small program that runs on a blockchain when it receives a request (Nguyen, 2019). Smart contracts enable users to add additional logic not only to financial transactions but also to create simple games. From a technical perspective, a smart contract is regarded as a user that can receive and send transactions. This “user” maintains a record of various states, known as variables, which can be modified and/or read when stored in a blockchain. Although reading blockchain data is free for users, it remains quite sluggish.
The sluggishness of reading data from a blockchain can be attributed to various factors, one of which is the sheer size of the blockchain. As more data is added to the blockchain, the processing and verification requirements also increase, which can result in longer transaction times and slower data retrieval. Additionally, the consensus mechanism employed by the blockchain can have an impact on the speed of data retrieval. For instance, some consensus mechanisms, like proof-of-work, mandate that nodes in the network perform intricate mathematical computations, which can be time-consuming and impede the overall performance of the blockchain. While the decentralized nature of the technology also contributes to the sluggishness, the scalability and speed of blockchain technology are being enhanced through the implementation of sharding and other scaling solutions.
The alteration of variables, also known as state change, is a costly process (Zhang, 2020). The reason behind this is that every state change necessitates the expenditure of funds, referred to as gas in the Ether world. Moreover, it takes a substantial amount of time to complete the transaction, process it, and construct a transaction block that includes a new value for a smart contract. Prior to the hard fork in the Ether world, it took 21 seconds to create a new block, and even after the hard fork, it still takes 12.5 seconds, which is a considerable amount of time in the realm of information technology (Mkrttchian et al., 2019).
Different crypto-currencies use different approaches to process the transactions, as listed below: