Recently, Cuban commented about blockchains such as Ethereum that totally jive with what I’ve said for some time. It’s as if we’ve been communicating with each other about the subject.
Alas, I don’t know Cuban one iota except for the odd episode of Shark Tank. I always thought he was the brightest of the cast members. And, let’s face it, he is entertaining. But I digress.
Cuban pointed out to CNBC Make It that smart contracts are what sets one cryptocurrency apart from another.
“Most people look at speed and cost compared to BTC or ETH,” Cuban told CNBC Make It. “While those things can be important, I look at blockchains as networks with development platforms via smart contracts.”
In other words, Cuban is all about utility. If a crypto’s got utility, it’s got a shot. I couldn’t agree more.
Ethereum and Utility
The best way to evaluate Ethereum’s utility is to understand how it makes or saves time and money. I write about financial investments—mostly stocks. My wife owns a commercial and residential construction/renovation business. She and her business partner get involved in a lot of different projects.
Needless to say, there are a lot of balls in the air. Ethereum’s utility depends on how it’s able to make or save us time and money.
Ethereum.org defines smart contracts as “a program that runs on the Ethereum blockchain. It’s a collection of code (its functions) and data (its state) that resides at a specific address on the Ethereum blockchain.”
It uses the example of a digital vending machine to explain smart contracts.
Specifically, if you want a snack from a vending machine, you drop in your money and select your snack. When it comes to smart contracts, you enter the details and variables of the contract, and Bob’s your uncle, you’ve got a smart contract.
I found an article online entitled Smart Contracts: The Blockchain Technology That Will Replace Lawyers. I don’t know about you, but I think that’s a killer headline.
Who isn’t drawn in by the possibilities?
Ethereum: Real World Possibilities
Blockgeeks.com contributor Ameer Rosic wrote the smart contracts article I mentioned in the previous section. He quotes Bloq co-founder Jeff Garzik’s real-world example.
“UPS can execute contracts that say, ‘If I receive cash on delivery at this location in a developing, emerging market, then this other [product], many, many links up the supply chain, will trigger a supplier creating a new item since the existing item was just delivered in that developing market,’” Garzik’s example states.
In my wife’s business, she could create a smart contract with her bank that states, “When XYX Corp. reaches x% of project completion — verified by video, etc. — the remainder of agreed-upon construction financing is automatically forwarded to her company checking account.”
The If-Then premise allows for a far more efficient process than getting someone to physically go out to the property and confirm the work done. This is a win/win for both parties. The bank saves time that it could use for other, more important jobs of commercial bankers, while my wife avoids having to visit the job site with the banker or his or her representative to confirm the completion.
Rosic’s article goes on to list all of the reasons smart contracts are awesome. And while I’m sure many will view the article as a puff piece meant to push smart contracts, I can see why people are so excited about them.
A brilliant and wealthy friend of mine used to say about lawyers, and I’m paraphrasing: “You tell a lawyer exactly what you want to be done. No more than that. If you allow them to freewheel it, that’s when it begins to cost you.”
Smart contracts enable you to do that.
Nothing Is Perfect
Rosic finishes the article with a quote from Ethereum Chief Technology Officer Gavin Wood.
“The potential for [smart contracts] to alter aspects of society is of significant magnitude. This is something that would provide a technical basis for all sorts of social changes, and I find that exciting,” Wood stated.
Without speaking for Cuban, I would guess that he would be 100% in agreement with Wood’s statement. I know I am.
I like Ethereum’s possibilities despite the fact it’s not perfect. I like Cardano’s (CCC:ADA-USD) even more. Cuban’s 100% on the money.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.