Over the past week, smart contract cryptocurrencies have been breaking barriers, trading at astronomical prices. It begs the question of why this space is doing so well amongst other spaces such as the NFT (Non-Fungible Token) and DeFi (Decentralized Finance).

What are smart contracts?

A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties or government regulatory authority. You can compare smart contracts to vending machines.

Naturally, before going into a contract, you would need lawyers to draft up the agreement for the parties to sign before the contract becomes legally binding. Smart contracts, however, take away the need for lawyers to help in drafting documents. They help you exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman.

READ: Ethereum Miners earn a staggering $1 million in 1 hour

Top 3 smart contracts

Based on market capitalization, the top 3 smart contract cryptocurrencies are:

• Ethereum (ETHER)
• Cardano (ADA)
• Chainlink (LINK)

Benefits of smart contracts

The smart contract space or “Industry” is growing at an exponential rate because of the various use cases available. Jerry Cuomo, the vice president for blockchain technologies at IBM, believes smart contracts can be used across the chain from financial services to healthcare and insurance. Here are some examples:

Government: Smart contracts can be used to conduct free and fair elections, particularly in developing nations where there is high prevalence of election rigging and voter fraud; because decoding the system requires a significant amount of computing power that may not be easy to amass.

READ: DeFi crypto market value gains over 1000% from June

Management: Naturally, business operations have a lot of back-and-forths which includes waiting for approvals and for internal or external issues to sort themselves out. Smart contract-based systems provide a single ledger as a source of trust and shaves possible communication and workflow issues because of their accuracy, transparency, and automation. They cut out discrepancies that typically occur with independent processing.

Real Estate: Smart contracts remove the need for middlemen such as advertisers and agents, thus, saving costs. All you do is pay via a cryptocurrency and encode your contract on the ledger for everyone to see.

Healthcare: Personal health records could be encoded and stored on the blockchain with a private key that would grant access only to specific individuals. If you have a health challenge while you are in another country, the healthcare professionals in the said country can access your medical records and this is particularly handy if a patient in unconscious.

READ: Cardano suffers spiral fall amid record profit taking

Also, with smart contracts receipts of surgeries can be stored on a blockchain and automatically sent to insurance providers as “proof-of-delivery.” The ledger, too, could be used for general healthcare management, such as supervising drugs, regulation compliance, testing results, and managing healthcare supplies.

Ethereum

Ethereum is a decentralized open-source blockchain system that features its cryptocurrency, Ether. ETH works as a platform for numerous other cryptocurrencies, as well as for the execution of decentralized smart contracts.

ETH is ranked as #2 in the cryptocurrency space and #1 in the smart contract industry with a market capitalization of $454,912,432,116 (currently trading $3,912.33). It has a circulating supply of 115,824,963 units.

It recently broke to a new all-time high of $4,165.06 with returns of 419.41% YTD.

Although in recent times, the Ethereum network has been facing a lot of congestions which is causing a significant increase in gas fees (transaction fees), the “EIP 1159 London Hard Fork Upgrade” which will launch in July 2021 is expected to solve these challenges. This news has made the coin bullish. Ether broke all-time high 9 days in a roll last week.

Cardano

Cardano is a proof-of-stake blockchain platform that says its goal is to allow “changemakers, innovators and visionaries” to bring about positive global change. The open-source project also aims to “redistribute power from unaccountable structures to the margins to individuals” helping to create a society that is more secure, transparent and fair. ADA token, which is the currency of the Cardano blockchain, is designed to ensure that owners can participate in the operation of the network. Because of this, those who hold the cryptocurrency have the right to vote on any proposed changes to the software.

ADA is ranked as #7 in the cryptocurrency space and #2 in the smart contract industry with a market capitalization of $52,173,030,872 (currently trading $1.63). It has a circulating supply of 31,948,309,441 units and a maximum supply of 45,000,000,000 units.

ADA also recently broke to a new all-time high of $1.83 with returns of 750.10% representing the largest return on investment of the top 3 smart contract coins YTD.

The recent spike in the price of ADA is in anticipation of the “Alonzo Testnet” that is expected to launch in May 2021. The long-awaited smart contract launch has promised lesser congestions, little to no service downtime and significantly reduced gas fees. It is expected that people will move from the Ethereum network to the Cardano network which would mean fierce competition for Ethereum.

Chainlink

Chainlink is a blockchain abstraction layer that enables universally connected smart contracts. Through a decentralized oracle network, Chainlink allows blockchains to securely interact with external data feeds, events and payment methods, providing the critical off-chain information needed by complex smart contracts to become the dominant form of digital agreement. The Chainlink Network is driven by a large open-source community of data providers, node operators, smart contract developers, researchers, security auditors and more. The company focuses on ensuring that decentralized participation is guaranteed for all node operators and users looking to contribute to the network.

LINK is ranked as #12 in the cryptocurrency space and #3 in the smart contract industry with a market capitalization of $19,321,512,696 (currently trading $45.66). It has a circulating supply of 419,009,556 units and a maximum supply of 1,000,000,000 units.

LINK broke to a new all-time high of $52.88 with returns of 268.62% representing the lowest return of the top 3 smart contract coins YTD.

It is May madness for LINK as it has a series of updates and events this month. There are 9 updates and events according to coinmarketcal. The most significant of all is the “AMA with Cardstack” where a major partnership is expected to be announced.

The smart contract space is still in its infancy and more exponential growth is expected. The 3 coins have become the pioneers of the smart contract ecosystem, adapting and inventing as the world progresses.

A significant number of investors in the crypto market have recorded losses amid the sudden drop seen in many crypto assets across the market spectrum.

For the day, about 247,084 investors had their accounts worth $1.74 billion liquidated. The largest single liquidation order happened on Huobi-DOT valued at $8.51 million.

Ethereum at the time of writing this report broke below its all-important $4000 price levels, trading at $3,888.57 on the FTX exchange with a daily trading volume of $66 billion. Ethereum is down 5.44% for the day. However, it is still the second most valuable crypto with a market value of about $450.4 billion.

READ: 3 Cryptos doubling returns for investors in 7 days

The flagship crypto lost as much as $3,000 within some hours amid record selling pressures in the cryptoverse. Bitcoin traded around the $55,000 price levels with a daily trading volume of $73 billion. Bitcoin is down 6.98% for the day.

At press time the reason for such a violent dump in many crypto assets wasn’t immediately clear, but it is important to keep in mind that Crypto assets are notoriously volatile.

Market commentators have long fretted that a stimulus-supported economy has fuelled these crypto assets to prices that defy the thinking of mainstream financial analysis, but such fears have been unable to pause their bullish trend.

READ: Dogecoin investor loses $12 million on Binance as Doge suffers violent dump

Recall that some days ago the Bank of England Governor, Andrew Bailey disclosed his bias on Crypto-assets saying they have no intrinsic value and investors in these assets should be prepared to lose all their funds.

In his words:

That doesn’t mean to say people don’t put a value on them, because they can have extrinsic value. But they have no intrinsic value. I’m going to say this very bluntly again, buy them only if you’re prepared to lose all your money.”

Some crypto critics envisage the crypto market is in a bubble waiting to burst, on the bearish sentiments that there are little fundamentals behind many of these digital assets.

Leading Crypto-assets like Polkadot, XRP, Cardano Litecoin were down by more than 10% while dogecoin recorded losses of about 20% of its value.