If you keep tabs on the blockchain industry at all, you’ve definitely heard the term smart contracts thrown around. Within a movement that’s already turning many conventional industries on their heads, smart contracts are supposed to be the next big thing.
However, it might surprise you to know that smart contracts aren’t that new at all. They were first proposed by Nick Szabo (rumored founder of Bitcoin) in 1990 and actually underly some key crypto players.
Smart contracts can open a lot of doors for keen blockchain entrepreneurs. They can help you find that next big idea that sets you apart and, along with a marketing strategy and a guest posting service, set you up for success.
But, before we get ahead of ourselves, what exactly are smart contracts? And, how can they be used?
So, what are blockchain smart contracts?
A smart contract is a self-executing program that stipulates the conditions of a contract and acts appropriately when certain conditions are met. The terms of the contract are written in code, and copies are distributed over the entire network. Just like a cryptocurrency ledger, all computers on the network reach a consensus over whether the conditions on the contract are met.
A party can draft its own smart contracts using the software and then send it to another party to sign. As soon as both parties entered the contract, the protocol will automatically verify and enforce the performance of the contract.
This means that there is no central party or middleman that acts as a facilitator between the two parties, like a lawyer. There is also not just one single copy of the contract, and the records can’t be altered or destroyed.
Smart contracts can have as complex logic as needed to satisfy all the possible conditions of a real contract. The nature of blockchain technology means that all transactions will be traceable, transparent, and irreversible.
How can smart contracts be used?
There’s nothing about the underlying technology that restricts where and how smart contracts can be used. Because it’s just a normal contract written in code and distributed over a blockchain network, any transaction or agreement in any industry where a contract is used is fair game.
So, we’ll look at the most important and plausible uses:
Smart contracts can ensure that government tenders are awarded according to the correct procedures. This can help weed out corruption and ensure a fair bidding process. The same goes for inter-departmental activities and the distribution of public funds.
Using smart contracts, elections can be made free and fair from the comfort of your home. By giving each voter a key, similar to social security, you ensure everyone has only one vote. The computing power required to hack and alter the distributed voting ledger will be nearly impossible to get.
The best of all is, no one will have to leave their home to queue or re-register to vote. It’s not just voting for a government, but all other forms voting that can benefit from this technology.
Smart contracts will help organizations practically with faster and more secure recordkeeping. The veracity of records will be ensured by the decentralized blockchain network.
Smart contracts can ensure organizations stick to the rules by destroying customer data when requested or after a certain period. The same goes for auto-renewing or releasing records. The healthcare and lending industry are prime examples of where this would be useful.
A Bitcoin, or any other cryptocurrency, the transaction is the execution of a very simple smart contract. The recipient specifies how much money they should receive, the payer looks it over and agrees, and the money gets transferred.
Ethereum is one cryptocurrency that’s’ heavily involved with the use of smart contracts. Smart contracts can help facilitate complex transactions like outsourcing, hiring teams for projects, or selling online goods. It’s even been used to launch ICO’s.
Are you ready for the smart contract revolution?
With such a wide playing field, smart contracts are set to disrupt almost every industry there is. Form healthcare to insurance to government and even to personal security – all can benefit from this technology. Unlike its blockchain cousin, cryptocurrency, it seems to have attracted much less negative publicity, and its obvious advantages are leading to speedy adoption.
The time is now to learn how to leverage this technology so you, or your business, can create the next big thing.