Introduction
Blockchain evolved with powerful concepts of decentralization. Bitcoin was the first decentralized crypto that promised to modernize the traditional industries. But, it lacked the concept of automation. With the invention of Ethereum- the second-generation blockchain technology, new techniques raised like Smart Contracts. This new technique brought automation to the entire blockchain arena. To enable developers to write smart contracts, Ethereum introduced scripting. Scripting is a process through which smart contracts are written. Solidity language was used to write smart contracts. But, over a span of time, many other languages were also used to write smart contracts.
What are Smart Contracts?
Smart contracts are self-executing digital code that has a pre-defined agreement, that is followed by both the parties involved in trading. The execution of the agreement is controlled by the code available on a decentralized distributed network. Transactions executed are immutable and are irreversible. Transactions are completed without the presence of a central authority and complete anonymity.
Characteristics Of Smart Contracts
Automated
Smart contracts are known for bringing the automation process into the blockchain arena. It assists in computing the trading system without any interruption of a third party.
Security
Smart contracts are encrypted to run on blockchain networks with immutable data that can be altered. Thus data is secured.
No downtime
Once the smart contract starts functioning, it will run without any interruption.
Trustless
As smart contracts run on a blockchain network, it does not require trust. Thus, the entire ecosystem runs on a trustless network.
Cost-efficient
Smart contracts negate the role of any intermediary in the transaction process. Thus, transactions are cost-efficient.
High Performance
Smart contracts have automated the entire process, eradicated the role of intermediaries in the process, and agreement is pre-defined. Thus, it enhances the performance of the ecosystem.
Error-free
If codes are written correctly in the script then it will function without any error.
Some Of Finest Smart Contract Usage
Digital Identity
Smart Contract usage provides digital identity to the assets. Protects from threats and offers smooth KYC. Thus, enhancing interoperability resilience, and compliance.
Financial Security
When smart contracts are deployed then the role of a third party to clear is eradicated. Payments are automated, dividends are distributed automatically, liabilities are managed, and much more.
International Payments
Smart contracts usage can assist in smooth international transactions by leveraging Letter Of Credit. It can also assist in resolving legal complications among different parties.
Financial Services
Financial services can be improved by ensuring error-free transactions, mortgages, and loans. Two parties are connected automatically, where once the payments are completed the properties are released. The visibility of both parties is also maintained because of the integration of smart contracts.
Data Recording
Smart contracts record all transactions records and data in a completely transparent and accurate manner. Thus, it reduces auditing and reporting costs.
Governmental usage
Smart contracts can assist governing bodies to automate and manage operations like elections, digital identity, and much more.
Supply chain management
By leveraging smart contract attributes a business can track its inventory records, decreases fraud, reduces the verification process, etc. Thus, improving transparency in business operations.
Insurance
Smart contracts are used to settle the insurance. It automatically checks if all documents are in place and all the conditions are fulfilled to get the work done with complete transparency and authentication.
Conclusion
Automation is the necessity of all decentralized ecosystems. Thus, the implementation of smart contracts in decentralized projects and businesses would automate it and solve some unavoidable problems with ease. So, if you have a decentralized business that lacks the attributes of automation, you need to integrate smart contracts. Nu10 is a blockchain consulting company having hands-on experience in the world of blockchain technology. It has a team of developers who is here to help you out in the most unique ways.
About Author
Gururaj Potnis
Gururaj Potnis – has 18 years of experience in various entrepreneurial ventures at Erasmic Consulting, Manthan and Idea Bubbles. Gururaj is an alumnus of Indian Institute of Management Calcutta and Indian Institute of Technology Delhi
