The Benefits of Deploying Smart Contracts on Trusted Third Parties

TL;DR

This paper argues that deploying smart contracts on Trusted Third Parties can be more practical than on-blockchain solutions for certain applications, simplifying engineering challenges and offering pragmatic benefits.

Contribution

It highlights the advantages of on-TTP smart contracts over on-chain ones and illustrates this with a hypothetical car insurance use case.

Findings

On-TTP smart contracts can simplify engineering problems.

Certain applications benefit more from on-TTP deployment.

On-TTPs offer pragmatic solutions where decentralization is less critical.

Abstract

The hype about Bitcoin has overrated the potential of smart contracts deployed on-blockchains (on-chains) and underrated the potential of smart contracts deployed on-Trusted Third Parties (on-TTPs). As a result, current research and development in this field is focused mainly on smart contract applications that use on-chain smart contracts. We argue that there is a large class of smart contract applications where on-TTP smart contracts are a better alternative. The problem with on-chain smart contracts is that the fully decentralised model and indelible append-only data model followed by blockchains introduces several engineering problems that are hard to solve. In these situations, the inclusion of a TTP (assuming that the application can tolerate its inconveniences) instead of a blockchain to host the smart contract simplifies the problems and offers pragmatic solutions. The intention and contribution of this paper is to shed some light on this issue. We use a hypothetical use case of a car insurance application to illustrate technical problems that are easier to solve with on-TTP smart contracts than with on-chain smart contracts.