Color Platform and the Future of Contracts
For thousands of years, people have been making and breaking contracts in basically the same ways. They get together, write a description of their deal on a piece of paper which they mark in some unique way and, when it comes time to pay up, use social pressure or legal enforcement to force the debtor into compliance. Enforcing contracts can be expensive, time-consuming, and a cause for resentment. These pain points arise from the fact that contracts require people to enforce them. Even if contracts could grow arms and legs to make someone pay up, there is still the problem of the debtor claiming that they don’t have the money and couldn’t pay up if they wanted to.
Smart contracts changed this situation drastically. A smart contract is essentially a computer program that assists users in interacting with blockchains. Contracts are agreements between two or more entities, usually one providing a good or service, and the other providing some form of payment. Smart contracts on the other hand, allow those contracts to be enforced by code, verified by the blockchain and its users. Before Smart Contracts, payments couldn’t be programmatically enforced and integrated with the goods and services that they were written about, but today, when the entire transaction takes place on the blockchain, the smart contract becomes self-enforcing.
This description might be a little confusing, so let’s examine how smart contracts can change the music industry, which is governed by a sprawling web of contracts, copyrights, and licensing agreements that could be simplified with a smart contract template. Today, music sales are about much more than paying the artist and those that help produce the artwork. Complex contracts are drawn up at every turn. Mechanical performance, sale and publishing royalties, as well as combinations of these that the laws aren’t even really clear on yet, have to be interpreted by combatting teams of lawyers. Many of these copyright laws were written before services like Spotify existed, for example, and are increasingly becoming out of date and harder to enforce. However, through Color Platform and Auto Smart Contracts, artists would be able to upload their music to Color Music, the Music platform. They irrevocably write their smart contracts on the Color Platform ledger. When fans pay for music, the smart contract registers the sale and automatically distributes the money from the fan to the artist and others according to the terms of their smart contract. Other contract terms and uses in the future such as royalties and the like could be included once more parts of the system enter the blockchain world.
Let’s look at a simple example for our base use case. Sally Songwriter writes a new hit song. She decides to give Color Music a try, so she uploads her song to the platform. She fills in a template which says that her song will cost 10 Color Coins, and the distribution will be 60% amongst her and her band members, and 40% between her promotion, recording and management agencies. On the back-end what is happening is a smart contract is being created automatically (Hence the Auto Smart Contract, mentioned above), and when each party digitally signs the agreement, it is then written to the Color Platform ledger, and the song is put up for sale. Freddy Fan is thrilled to learn that Sally Songwriter has released new content and hurries to Color Music and pays their 10 Color Coins for a copy of her new single. Immediately, 6 Color Coins are distributed between Sally Songwriter and her band, and 4 Color Coins are distributed between her promotion, recording and management agencies. Everyone gets exactly what they are owed right away. Artists get what they deserve and fans get to directly support the creation of content that they love.
Contracts have a long history and have remained largely unchanged because the challenges of enforcement have never been solvable by automation until now. With the increasing amount of assets being digital in nature, this only furthers the need for contracts enforced by code. Other blockchains have offered the ability to record contracts and of course allow people to exchange coins, but no platform until Color Platform has offered an all-in-one smart contract solution to allow users to quickly and easily write their own smart contracts. This is just one of the many exciting ways that Color Platform promises to improve the way that people interact with each other by smoothing over these age-old frictions.