Altcoins Velocity’s Demo Invites Users to Try ‘Simple’ Smart Contracts
Jon Southurst · @https://twitter.com/southtopia | Oct 02, 2016 | 14:58
Distributed derivatives platform Velocity went live this week with a product demo version. The “simple” smart contract invites users to speculate on price for Ethereum’s native token ether.
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Velocity Making ‘Financial Building Blocks’
Velocity‘s aim is to provide a blockchain-based smart contract alternative to existing derivatives, built on Ethereum. The demo version currently runs on Ethereum’s testnet.
Chief architect Vignesh Sundaresan indicated where the financial industry could use his products:
“Derivatives are financial building blocks if you think about it. They are everywhere around us. If you look at insurance, if you look at portfolio management, derivatives are very important.”
Velocity presented its demo before an audience at the recent International Blockchain Week in Shanghai. The event ran concurrently to Ethereum’s own annual industry conference Devcon2.
Derivatives and Predictions Are Great Smart Contract Use Cases
Derivatives are also similar to “prediction markets,” though regulatory issues often prevent companies using this specific term. The theory goes that users will bet more money on a more likely outcome, giving a clearer indication of what will happen.
Existing prediction and derivatives markets are popular tools for indicating asset prices, likely sports and election results, and even entertainment awards. While not always accurate, they tend to be more so than opinion polls and expert pundits.
Blockchain-based platforms with no third-party clearing house, such as Ethereum, are a popular platform for developers looking to disrupt the financial and insurance industries.
These smart contracts still rely, however, on a third-party source of information (a.k.a. an “oracle”) to verify the outcome.
Velocity’s demonstration is a simple option contract, based on an ether price feed. As well as predicting ether price, it may also gauge general sentiment surrounding Ethereum.
Ether, Ethereum’s native currency, has a market cap over $1 billion, making it the second-most valuable cryptocurrency after bitcoin.
Potentially Lucrative Market
Sundaresan said the OTC derivatives market is worth over $16 trillion in the US alone. “And in the cryptocurrency industry there is now a trend towards margin trading,” he added.
To access the demo contract, users must have Ethereum’s Metamask Chrome browser plugin. Velocity hopes that giving people hands-on smart contract experience will get them used to the idea. Once accustomed, they’ll be eager to try more advanced contracts in future.
Are you smart-contract curious? What’s your opinion on Velocity and other similar platforms? Let us know.
Images via Shutterstock, Velocity
