Smart Contracts: What are they and how do they work?

Smart contracts are on the cutting edge of innovation. They are self-executing digital contracts that are stored on a blockchain network. Smart contracts contain the terms of an agreement between two or more parties and are automatically executed when specific conditions are met. The self-executing nature of smart contracts eliminates the need for intermediaries like lawyers or banks to enforce the terms of a contract.

Smart contracts operate using conditional statements, also referred to as IF and THEN statements. An example of how this works in a smart contract is, for instance, to determine if a buyer has paid the required amount for a product. The smart contract could have an IF statement that checks if the buyer has sent the correct amount to the contract’s address. If the condition is met, the THEN statement would execute, transferring the ownership of the product to the buyer and releasing the funds to the seller. If the condition is not met, the THEN statement would not execute, and the funds would be returned to the buyer automatically.

It’s important to note, that once a smart contract is deployed on the blockchain, it cannot be altered or tampered with, thus providing a high level of security and transparency. Smart contracts have the potential to revolutionise a wide range of industries by enabling the automation of trustless transactions and reducing the need for intermediaries.

Bringing smart contracts to the Electroneum blockchain

Electroneum’s implementation of the Ethereum Virtual Machine (EVM) is a significant development that allows developers to utilise their existing knowledge of popular programming languages to build and deploy smart contracts and applications on the Electroneum blockchain.

With the ease of development provided by EVM compatibility, the number of developers interested in building on the Electroneum network is expected to increase. Moreover, this development also opens up new opportunities for both individuals and organisations to leverage the benefits of the Electroneum blockchain, including 5-second transaction speeds with instant finality and the potential for even lower transaction fees.

The fee for EVM interactions on the Electroneum blockchain is expected to be a number of orders of magnitude cheaper than Ethereum’s current fee. This, in turn, will aim to provide a low-cost route to market for developers, particularly for those still in education where cost is a vital criterion for deciding upon which platform to build their application.

Overall, by reducing the technical complexities of blockchain development and lowering the cost of deployment, Electroneum’s EVM compatibility could potentially increase the adoption and proliferation of blockchain technology across various industries in the long term. Ultimately, this could lead to a more vibrant and robust ecosystem for blockchain-based applications and services on the Electroneum blockchain.

What are the possibilities of smart contracts and how can they be used?

1. Internet of things (IOT): new technologies introduced today now often sit within a network of other interconnected devices that are designed to collect and exchange data. Devices can range from everyday objects like thermostats and home appliances to industrial machinery and vehicles. Smart contracts can enhance the capabilities of IoT-enabled devices by enabling automated and secure interactions between them. They can help facilitate seamless data exchange by enforcing predefined rules and conditions and enabling autonomous decision-making among IoT devices. Ultimately, the aim is to improve data integrity, privacy, and interoperability, whilst improving efficiency, scalability, and reliability. Smart contracts in IoT could pave the way for more innovative applications and services across various domains, such as smart cities, energy management, and supply chain management.
2. Supply chain management refers to the coordination and control of the various activities involved in the production, procurement, transportation, and distribution of goods and services from their source to the end consumer. Smart contracts could one day play a crucial role in enhancing supply chain management. They can automate and enforce contractual agreements between different parties, such as suppliers, manufacturers, distributors, and retailers, ensuring transparency, traceability, and efficiency, whilst potentially enabling greater real-time tracking of goods, verification of product authenticity, and streamlined payment processes. By leveraging smart contracts, supply chain management could become more secure, auditable, and reliable, driving improved collaboration and optimisation throughout the entire supply chain.
3. Non-Fungible Tokens (NFTs): unique digital assets that represent ownership or proof of authenticity of a specific item or piece of content. Smart contracts enable the creation, issuance, and transfer of NFTs in a secure and transparent manner. These smart contracts define the specific attributes and properties of the NFT, including its ownership, provenance, and any royalties or rights associated with it. Through the use of smart contracts, NFTs could revolutionise ownership as we know it, allowing for greater levels of provable scarcity and traceability. NFTs have the potential to impact so many industries where traceability is a key priority, be that in the automotive industry, fashion sector, or the physical collectables space.
4. Metaverse: a digital world where people can engage in immersive experiences and interact with each other and virtual objects in real time. Smart contracts play a crucial role in enabling verifiable ownership of digital assets, facilitating decentralised governance, and establishing trust among participants. The concept of a metaverse promotes inclusivity, as it allows people from different locations and backgrounds to connect and interact on a global scale. It also has the potential to revolutionise sectors such as education and healthcare, where a more immersive and data-driven solution could enhance what is possible with today’s technologies.

We’ll address some of these potential use cases in greater depth over the coming weeks, but in conclusion, smart contracts have immense potential to transform various industries by automating contract execution and removing the need for intermediaries — or at least, the sheer quantity of intermediaries some sectors are reliant upon. With the implementation of EVM on the Electroneum blockchain, a new environment for developers is being established to create and deploy smart contracts and blockchain applications. As the technology continues to evolve, we hope to see even more innovative use cases emerge, creating a more transparent and efficient economy, both online and in the physical world.