Smart Contract Platform Investment Thesis

Time to formalize my decision making process on whether or not a smart contract coin will be worth something in the future.

What’s the big question you have to ask yourself to determine whether this coin will be worth something in the future?

  1. How likely is it that the next dapp unicorn will be on this platform?
    Which language will the next Facebook be written in? Who could predict that Python would take off for ML and not Ruby/Julia? It’s quite impossible to predict this one, just like it’s impossible to say which language the next killer program will be written in.
    So this isn’t the right question to ask.
  2. Is this a platform that you can see yourself using if you were to build a dapp?
    Being a Layer 1 developer, I’d translate it as this: is this a programming language you can see yourself or others using for something (big and complex/small and easy)? Maybe the platform won’t be super popular, but will it at least become more valuable and not die out?

This feels like the better question to ask. I imagine you can think of smart contract platforms as programming languages tightly coupled with a “cloud” execution service a la AWS/Azure/Digital Ocean/whatever IBM’s cloud thing is.

Dimensions to evaluate platforms on

Ease of use
How comfortable/easy is it to program/develop for? Will developers find blockchains easier to program on than DAGs (IBM Cell programming)? Since dapps could be mission critical, how easy is it to ensure correct behaviour?

Technical Due Diligence
Being a developer myself, I’ve got a handle on this. Frequent, substantial commits, not just by one person, and the code quality must be up there too.

Marketing
This is the most important one. How many influential friends does the project have? Are they marketing savvy at all? Microsoft only got Windows everywhere because they had a strong platform partner in IBM. Ethereum languished for a long time at 40EUR and jumped up to 250EUR after Microsoft or some other big corporate announced they’d join the Ethereum Enterprise Alliance.

Financials
A Layer 1 is a very large, long term project. You’ve got to have staying power. Decred and ZCash have a developer’s reward. Huge ICOs are useful, but since it’s a one time event, spending must be wise. Unfortunately, it’s quite impossible to judge that.

Future expectations

x86/ARM/RISC-V
With EWASM, I expect that people will soon realize that having smart contract platforms decoupled from the actual programming language is a very good idea. Then you can compile any language down to whatever the blockchain will execute, which makes the blockchain similar to a x86/ARM/RISC-V situation. Even though you can compile higher level languages to different architectures easily, there are still some details which you have to be careful of, and besides, x86 is cheaper. So economics of effort and money are king here, first mover advantage should be huge.

AWS/Azure/Cloud
Or we can think of smart contract platforms like cloud platforms. Here, the decision depends less on which is cheaper, but which platform works better with your workflow/ideology. Also “everyone’s using AWS” applies, because the time cost to explore alternatives is just so high.

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