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Ambisafe Co-founder on The Limits to Coding Smart Contracts

As I stood packed in a smelly Blue Line Trolley for San Ysidro during rush hour on a Friday, heading from San Diego to Tijuana, I knew I’d be late.

Oleksii Matiiasevych, Ambisafe co-founder, and Griff Green, Giveth co-founder, would be speaking at a new fintech coworking space opened by Alibre.io, a Tijuana-based financial services firm. I didn’t want to miss it.

But, to my delight, I arrived just on time. Tijuana Beer, mixed drinks , and tacos flowed. After the talks Tras/Horizonte, a local restaurant specializing in seafood, served tacos.

Mr. Matiiasevych started working in blockchain in 2015. He was an early team member of Tether, which created a token at a one-to-one ratio with the US Dollar. He is co-founder of Ambisafe, a blockchain infrastructure provider.

“The life of an application depends on the life of its server,” he said during his speech. “If at some point in time all the servers are broken, then the application is dead.”

Mostly, he discussed some central differences between development of centralized software applications versus decentralized ones.

While centralized apps can be hacked, according to Mr. Matiiasevych, decentralized ones are less susceptible. “With smart contracts nobody can do that, because its controlled by fixed code and the changes are controlled by protocol and consensus, which means everyone agrees on changes,” he elucidated.

On centralized systems, application owners need to ensure they get enough traffic to make the app financially viable. Smart contracts, however, are usually paid by users. In order for someone to use a smart contract, they need to pay a fee for interaction with it. On Ethereum, this fee is paid in so-called “gas” – the execution fee for every operation made on Ethereum.

Mr. Matiiasevych at the Alibre fintech coworking space in Tijuana.
Mr. Matiiasevych at the Alibre fintech coworking space in Tijuana.

It is easy to know the history of a centralized database, says Mr. Matiiasevych. “But, there is usually some time between the snapshots,” he says. “When you’re working with the smart contracts, every single change can always be accessed. If somebody runs a full node the entire history is verifiable.”

While problems with code can easily be fixed on a centralized application, this does not hold true for decentralized applications. “Smart contracts have fixed code, so if you have a problem, you have a problem with it forever,” he said.

With a centralized application, you can add new functionality over and over again. “With smart contracts, you have fixed code,” said Mr. Matiiasevych. “So, you put everything inside it, and make sure it will be good for forever.

If you want to move a centralized application onto a new database, you can move it to another server. “With a smart contract, you cannot really move it,” said the dreadlocked coder.  “The smart contract is always online, and nobody can stop it. If there is a problem, you just cannot stop it.”

On a payment provider like PayPal, if a change made to an account balance is incorrect, you can easily go back and fix the code. “With smart contracts you have consensus, so everything moves in one direction,” he said. “In the case that something breaks in the middle, it will be broken forever.”

In a centralized app, programmers can conceal data to keep it private. “You can take sensitive data from users and make sure to store it in a secure and concealed way, so that nobody has unauthorized access to it,” said Mr. Matiiasevych. “With a smart contract, it becomes public to the world right away. So, you have to be careful with what you put into smart contracts, and remember it will always be public.”

Complex applications from Google and Facebook have tons of code – that’s how they become more useful over time. But, with smart contracts, shortcomings persist. And Mr. Matiiasevych admits that even he doesn’t know what the future of blockchain holds.

“With smart contracts we have limited code, because we cannot ask all the participants on the network to run something so big,” said Mr. Matiiasevych. “Their machines will not be powerful enough. That’s why you have a limited amount of logic you can put into a smart contract. This is the cost.”

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