The Oracle machine: Aeternity’s perspective on the future of smart contracts, privacy and scalability

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The Oracle machine: Aeternity’s perspective on the future of smart contracts, privacy and scalability

April 6, Aeternity public pre-sale has ended demonstrating huge support from the community for this new project with over $5 million collected in ETH and BTC.

ForkLog had an opportunity to get some insights of why Aeternity supporters are so excited about the project at recent BlockchainUA conference Kyiv. The project has been presented by its CEO and founder Yanislav Malahov during the Product Stage line-up. Below is the quick recap of his presentation.

Yanislav ‘Yani’ Malahov, early cryptoenthusiast and founder of Aeternity

What is Aeternity?

“Aeternity is a new blockchain for scalable smart contracts interfacing with real world data,” defined Malahov the inherent purpose of the project.

The world population numbering about 7.4 billion people needs a lot of transactions and a magnitude more will be needed if we count in the rising tide of new Internet of Things devices being created every day, explained Malahov. However, the existing blockchain infrastructure cannot keep up with the speed things around us are developing, and that’s why it is so important that new developments actually happen:

“Currently there are so many blockchains and let’s say smart contract or app, dapp projects which receive a lot of funding, but the existing blockchain technology really does not scale. It’s like trying to build Youtube in 2000. It’s just too early.”

The project is being designed to tackle such important issues as smart contract scalability and interconnection of digital and physical realities. These will be solved by moving the smart contracts into state channels while introducing the distributed oracles right into the consensus on the blockchain.

Yanislav also allowed the audience to take a peek behind the scenes. Apparently the project was initially started by a team of three – Yanislav Malahov, Zack Hess and Jack Peterson, all being veterans of blockchain industry with extensive experience in the field, with other team members joining afterwards. In the past Yanislav designed and built several software cryptowallets and claims to be one of the early masterminds behind Ethereum. Zack worked at Augur, a decentralized prediction market built on Ethereum blockchain, while Jack contributed to Synereo.

State Channels

The main technology enabling smart contacts secured by blockchain to achieve massive throughput is aptly named state channels.

“State channels are trustless off-chain transactions. Usually when you do a state channel transaction or even run a smart contract – so we can arbitrarily state updates inside a state channel – you would not write to the blockchain. We strongly believe this is the only way we can scale the blockchain technology while keeping the trustless properties as well as enhancing the privacy,” explained Yanislav.

Essentially, this technology allows to carry out conditional transactions between parties inside state channels, without involving the entire blockchain. The state channels technology is similar to one used in Lightning Network of Bitcoin, although smart contract functional has been added. This means that users will be able not only to transact in a regular way, but also to code all sorts of rules and conditions right into the channel as well as to keep track of contract’s current state off-chain.

Only in case of disagreement between parties, the blockchain gets involved as a decentralized arbiter in order to resolve it:

“Usually there’s no disagreement here between the counterparties. In case there IS a disagreement or in the worst case the counterparty disappears, you take your last signed state as well as the contract which is kinda locked into the state channel and publish it to the blockchain. Then the blockchain network enforces this smart contract and comes to the same agreement or the same conclusion as if everything was on-chain from the beginning. This is the way how we achieve higher scalability as well as higher privacy. Even in case the execution of a smart contract goes on the blockchain then only the part which is necessary for the execution would need to be published.”