This is a [day](https://inleo.io/@leoglossary/leoglossary-day) that many have been waiting for.


It is safe to announce that [smart contracts](https://inleo.io/@leoglossary/leoglossary-smart-contract) are [nOW](https://inleo.io/@leoglossary/leoglossary-negotiable-order-of-withdrawal-account-now) live.  There was a [video](https://inleo.io/@leoglossary/leoglossary-video) posted by the @vsc.network [account](https://inleo.io/@leoglossary/leoglossary-account) explaining what is taking place.


We are to the point where any developer can create smart [contracts](https://inleo.io/@leoglossary/leoglossary-contract-real-estate).  This is operation as of this writing meaning that a new phase in the Hive evolution is taking place. 


<center> https://ideogram.ai/api/images/direct/oHIoK1d3Qki0FtAKuNc2Ng.png 
Image generated by Ideogram </center>


# Hive Smart Contracts Live


For those who haven't been following alone, in this instance, Hive refers to the [ecosystem](https://inleo.io/@leoglossary/leoglossary-ecosystem-digital) and not the [blockchain](https://inleo.io/@leoglossary/blockchain).  This smart contract [technology](https://inleo.io/@leoglossary/leoglossary-technology) is not on the [base layer](https://inleo.io/@leoglossary/leoglossary-base-layer-blockchain).  It is resident on a [sidechain](https://inleo.io/@leoglossary/leoglossary-sidechain), named VSC.


The idea here is to provide better scaling, keep the base layer as condense as possible, and provide enhanced [security](https://inleo.io/@leoglossary/leoglossary-security).


A lack of a robust smart contract platform was a hole in Hive's [infrastructure](https://inleo.io/@leoglossary/leoglossary-infrastructure-computer).  That is no longer the case.


Before going any further, here is the video for those who have not seen it.




https://inleo.io/threads/view/taskmaster4450/re-leothreads-knartt8p


A few key takeaways from the video.


To start, at the moment the programming is using Assembly.  This will be expanded to utilize other languages in the future such as Rust.  This means we are dealing with more than just [Solidity](https://inleo.io/@leoglossary/leoglossary-solidity) which is what the EVMs use.


The second point is it can run in the local environment.  


Finally, for now creating smart contracts is free.  However, in the future, there will be a fee, probably 10 HBD.


As a side [note](https://inleo.io/@leoglossary/leoglossary-note), this is a recurring theme with VSC.  The [Hive Backed Dollar](https://inleo.io/@leoglossary/leoglossary-hive-backed-dollar-hbd) (HBD) is appearing in many areas within the network.  Not only will it be the [stablecoin](https://inleo.io/@leoglossary/leoglossary-stablecoin) for all [transactions](https://inleo.io/@leoglossary/leoglossary-transaction), it is also going to be required by [nodes](https://inleo.io/@leoglossary/leoglossary-node) as [collateral](https://inleo.io/@leoglossary/leoglossary-collateral).  There is also discussion about creating a [Resource Credit](https://inleo.io/@leoglossary/leoglossary-resource-credits-rc) type system by having people stake HBD, thus eliminating the direct transaction [costs](https://inleo.io/@leoglossary/leoglossary-cost).


This is a fantastic way to generate demand for HBD and, ultimately, HIVE.


## What This Provides


The toolbox of developers is about to get a lot more powerful.


Without smart contracts, the ability to develop is limited.  [Applications](https://inleo.io/@leoglossary/leoglossary-application) and games are basically limited to the [features](https://inleo.io/@leoglossary/leoglossary-feature) provided by the blockchain.  Anything beyond that requires integrating components from outside the [ecosystem](https://inleo.io/@leoglossary/leoglossary-ecosystem).


How often has we seen initiatives utilizing BSC or [WAX](https://inleo.io/@leoglossary/leoglossary-wax) for different things, especially [NFTs](https://inleo.io/@leoglossary/leoglossary-non-fungible-token-nft), since none of that was possible on Hive?


That is rapidly changing.


VSC is expanding the potential for both [gaming](https://inleo.io/@leoglossary/leoglossary-gaming) and [finance](https://inleo.io/@leoglossary/leoglossary-finance).  The entire [DeFi](https://inleo.io/@leoglossary/leoglossary-decentralized-finance-defi) [world](https://inleo.io/@leoglossary/leoglossary-world) is built upon smart contracts.  This is why [Ethereum](https://inleo.io/@leoglossary/leoglossary-ethereum-blockchain) tends to be the leader.  It was the one with smart contract on scale, something that provided the first mover advantage.


Naturally, we know the issues with fees on that blockchain, something they are trying to [address](https://inleo.io/@leoglossary/leoglossary-address).


With Hive, there are no direct [transaction fees](https://inleo.io/@leoglossary/leoglossary-transaction-fee).  This means that we can see a feeless system used for [settlement](https://inleo.io/@leoglossary/leoglossary-settlement-financial).  As stated in the past, this is the opposite of what [Bitcoin](https://inleo.io/@leoglossary/leoglossary-bitcoin) is doing.  To circumvent the fees, the transactions are being pushed to the second layer.


VSC is going to feed into Hive due to the fact that we can settle all transactions without a direct fee.  Node writing to the chain will require [Hive Power](https://inleo.io/@leoglossary/leoglossary-hive-power-hp) since that is the [access token](https://inleo.io/@leoglossary/leoglossary-access-token).  


## Examples


Here are a few things that can be built:


* exchanges
* community [tokens](https://inleo.io/@leoglossary/leoglossary-token)
* games of chance
* lending platforms
* [futures contracts](https://inleo.io/@leoglossary/leoglossary-futures-contract)
* [wrapped tokens](https://inleo.io/@leoglossary/leoglossary-wrapped-token) (Bitcoin is already in development)
* [synthetic assets](https://inleo.io/@leoglossary/leoglossary-synthetic-assets)
* transparent voting systems
* supply chain management systems


Basically, anything that is transactional in nature can be done by building a smart contract and integrating it with the blockchain.


## The Impact On Hive


What can the impact on Hive be?


If we look at this through the layering framework that is common with [digital](https://inleo.io/@leoglossary/leoglossary-digital) platforms, we can see how this could have enormous impact.


As mentioned, the fact the base layer [coins](https://inleo.io/@leoglossary/leoglossary-coins) are going to be incorporated into the system means we are already looking at a direct link.   This means we can see a direct correlation between the success of VSC and it translating over to Hive.


Just focusing upon the finance for a moment, if there are millions of dollars in wrapped tokens, as an example, the nodes are going to require enough collateral to cover that.  Here is where the demand for HBD grows.


To transact, nodes have to be able to cover the monetary value flowing through, negating the [incentive](https://inleo.io/@leoglossary/leoglossary-incentivize) to act in nefarious ways.  This is the idea of collateralization.


Moving to the development side of things, here the impact is clear.  Essentially, Hive has joined the like of EVMs, [Cardano](https://inleo.io/@leoglossary/leoglossary-cardano) and others in having the ability to create applications utilizing smart contract technology.  The key is the individual [developers](https://inleo.io/@leoglossary/leoglossary-developer) can build what they need.  Over [time](https://inleo.io/@leoglossary/leoglossary-time), I am sure a [library](https://inleo.io/@leoglossary/leoglossary-library) of contracts will appear, accelerating the pace of things.


Imagine, if you will, CryptoKitties.  This game became highly successful on Ethereum but it also nearly broke the chain.  It simply could not handle the [volume](https://inleo.io/@leoglossary/leoglossary-volume).


With Hive, this is not a problem.  VSC is highly scalable being able to handle any volume of transactions.  Teams can simply add more nodes to run their contracts on.  They also get to choose which ones they run.


At the same time, movement of the [assets](https://inleo.io/@leoglossary/leoglossary-asset) has no cost.  Try this on Ethereum.  We know there are millions of NFTs basically locked up due to the fact the value is worth less than it costs in tx fees.


Finally, there is the long-term benefits which are hard to picture at this moment.  


We know blockchain is going to be involved in many areas in the future.  For example, what impact does it play in voting systems?  This is [speculation](https://inleo.io/@leoglossary/leoglossary-speculation) at this point.  However, [transparency](https://inleo.io/@leoglossary/leoglossary-transparency) is something that people are starting to consider.  What can be built with this technology in this regard?


Taking it in another direction, what about a digital identification system?  We know that our world is becoming more digital.  Hence, what type of ID will we be using in the future?  How can this be tied to the real world, providing the ability to prove who one is while also maintaining privacy?


Obviously, we do not know the answers to this.  It will be solved and may never operate on Hive.  That said, due to this, the ecosystem is at least in the game.  The potential exists for someone to create something like this.


For the end user, it will be some time until the development teams build these contracts and start to integrate them.  We will look for future updates from the VSC team as to how that is progressing.


___


<center> [What Is Hive](https://inleo.io/@leoglossary/leoglossary-what-is-hive) </center>


Posted Using [InLeo Alpha](https://inleo.io/@taskmaster4450/smart-contracts-are-live-on-hive)