SmartBCH: Exploring an Exciting, More Decentralized Alternative to the Ethereum Blockchain

smartbch

Smart contracts are a fundamental part of crypto, especially in the world of decentralized finance (DeFi). They fit perfectly into the crypto puzzle as they are trustless, autonomous, decentralized, tamperproof, and transparent. For those unfamiliar, a smart contract is a piece of code that automatically executes instructions. These instructions then get verified on the blockchain where they remain permanently. 

Smart contracts first appeared long before crypto, in 1994 by computer scientist Nick Szabo; however, their real-world use was popularized mainly by Ethereum. On a side note, Szabo was also responsible for theorizing a digital asset in 1998 known as Bit Gold, a precursor to Bitcoin. Since then, other popular smart contracts such as Solana, EOS, Polkadot, and Binance Smart Chain have emerged as competitors to Ethereum, all with distinct characteristics. 

However, after years of development, a new smart contract has emerged on the scene: Smart Bitcoin Cash.

Smart Bitcoin Cash, or SmartBCH, recently went live to provide “a decentralized, high-throughput, low-cost, and easy-to-use infrastructure for cryptocurrency” according to the SmartBCH whitepaper. In essence, the developers believe SmartBCH will offer the same benefits as ETH 2.0 in a much shorter time.

To understand the reason for SmartBCH, let’s first understand the components of the Ethereum network and some issues associated with the blockchain. 

One major issue users of the Ethereum blockchain experience at times are high gas fees, which discourages the average user from participating in various decentralized applications (dApps).

 

Problems with Front-Running

Ethereum has low throughput, which means only a low number of transactions can pass through on-chain. This allows miners to choose the order that blocks go onto the blockchain, and if users are not willing to pay higher gas fees, they have to wait for long periods. Users have reported that they have experienced significant delays causing them to wait days, let alone hours, for transactions to process.  

The process in which miners prioritize the blocks with the highest gas fees to earn an extra profit is known as front-running. With such high fees, it only makes financial sense for wealthy individuals or institutions to participate in DeFi activity at scale, which shifts the dynamic of the Ethereum network to a more “whale” dominated ecosystem. When you use a decentralized exchange (DEX), it’s common to see gas fees between $200-300. This process goes against the ideological foundations of crypto, which was designed to be decentralized with low barriers to entry. 

SmartBCH attempts to solve this problem of high transaction costs in two ways. The first is utilizing an extremely high throughput on the SmartBCH blockchain so that large amounts of data can quickly pass through transactions, reducing the transaction time.

SmartBCH aims to reduce transaction fees by reordering the transactions in a “pseudorandom” way to make the prioritizing process more complex. The aim here is to prevent the validators from front-running blocks. 

 

Gas Fees

smartbch gas fees

Another factor that increases gas fees is that executing smart contracts costs more in gas fees from storage costs than computation power. The SmartBCH whitepaper blames MPT, which is Ethereum’s storage engine. SmartBCH aims to develop “MoeingADS” to replace MPT, which is meant to be faster, resulting in cheaper fees.

One important aspect of sending transactions on the Ethereum blockchain is the off-chain “Queries per Second,” or QPS. QPS inquires the blockchain about its condition and transaction history to confirm all the information is running smoothly and correctly. These inquiries happen multiple times rather than a transaction, which only occurs once. QPS, however, requires developers to become full nodes, which is very expensive.

For example, private companies such as Infura are hugely popular amongst developers as an infrastructure provider. It provides developers and enterprises access to the Ethereum network by offering computing and storage services without requiring users to become full nodes. While this increases access to the Ethereum network, it heavily centralizes power to private companies like Infura. Furthermore, if Infura experiences any issues, such as on 11th November 2020, all the dApps that use Infura would fail. 

SmartBCH’s whitepaper argues its development of “MoeingDB” will have a high QPS Web3 API, which essentially means it will deliver the best performance for the blockchain’s workload. This would also be open source and hopefully, make the Web3 API market more decentralized. This would also benefit Ethereum and potentially further reduce the need to rely on third-party private companies such as Infura to expand the blockchain.

 

Multi-Chain Blockchains

smartbch blockchains

The current Ethereum blockchain is a single chain that allows for zero latency and atomic interoperability between smart contracts, as they are on the same chain. Ethereum 2.0 will attempt to solve scalability issues with the addition of sharding. 

Sharding is when a blockchain has parallel chains to improve scalability and the speed and efficiency of a chain. Think of it how the line at the supermarket is much quicker when multiple cashiers are carrying out transactions rather than just one. 

While this would reduce the backlog of transactions, it would negatively impact latency and interoperation, taking away from the benefits of the single-chain experience. While SmartBCH will also have parallel chains, MoeingEVM is designed to address the issues of multiple chains and maximize transaction parallelism through a process called “enforced-bundle parallelism.”

Now that we understand the types of issues associated with the current Ethereum blockchain and potential problems on the Ethereum 2.0 blockchain and the ways the SmartBCH developers plan to solve these issues, let’s break down the additional components of SmartBCH that make it an attractive alternative.

 

Other Components to SmartBCH

EVM Compatible

SmartBCH will be EVM compatible, meaning it is compatible with the Ethereum blockchain so that Ethereum apps can run on the SmartBCH blockchain. This will allow Ethereum users to participate in the same protocols or dApps; however, instead of spending hundreds of dollars on transaction fees, they will only need to pay cents – a fraction of the cost. 

 

SmartBCH Tokens

SmartBCH tokens are called “Smart Evolution Proposals,” or SEP20 for short. The native token for SmartBCH is unsurprisingly Bitcoin Cash, or, BCH, which is also used to pay for the gas fees. Although SmartBCH BCH is an SEP20 token, it is simply referred to as BCH. There will, however, be a gateway to transfer BCH to the SmartBCH Chain as a gas token.

This is different from Ethereum as ETH is not an ERC20 token. The gas fees collected on the network will be divided to make BCH more deflationary: half will be burned while the other half will be rewarded to validators.

CoinFLEX is aiming for flexUSD to be the first stablecoin on SmartBCH. First mover advantage is extremely important for mass adoption in crypto. If flexUSD becomes the best stablecoin to use on SmartBCH, a positive feedback loop would require other users to buy flexUSD. This means they won’t need to buy USDC or any other stablecoins. 

 

Proof of Work (POW) and Proof of Stake (POS) Hybrid

SmartBCH uses the speed and efficiency of PoS technology to improve speed in voting while basing the voting power off of PoW. The hash power for voting on SmartBCH also uses the dSHA256 network, which CoinFLEX argues is the “most powerful and decentralized computer network in the world.” This combines the DeFi ecosystem of Ethereum, which can be used on a powerful, decentralized, and cheap blockchain network.

 

Conclusion

While SmartBCH has outlined potential solid solutions to solving issues on the Ethereum network, as well as unique features that differentiate the blockchain from other Ethereum competitors, it’s still in its infancy. Only time will tell as crypto pioneers attempt to expand the world of DeFi to different smart chains. 

 

О Coinflex

Founded in 2019, CoinFLEX is the Home of Crypto Yields and is committed to providing institutional and retail investors an easily accessible platform to earn and trade crypto.

CoinFLEX creates innovative solutions to bring investors and crypto markets together through intuitive yield products such as flexUSD, the world’s first interest-earning stablecoin, and AMM+, the most-capital efficient automated market maker in the world. CoinFLEX is backed by crypto heavyweights, including Roger Ver, Mike Komaransky, Polychain Capital, and Dragonfly Capital.

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All content expressed is purely for entertainment and educational purposes only. This is not financial advice. Do your own research before investing or trading. 

Author: Adam Diaz

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