Many crypto enthusiasts nowadays believe that smart contracts are the best part of Blockchain. Well, let’s figure out are they right after all or not.
Throughout the history of public contracts, there was a need for middlemen to guarantee the security of these contracts. The real estate seller wants to be sure that the buyer has the money. The buyer, in turn, wants to be sure that the contract has no pitfalls. This security needs lawyers, notaries, banks and so on. However, even the presence of middlemen does not guarantee the full security — you must believe in the authority of these middlemen. That’s why we needed smart contracts.
Smart-contract, aka a self-fulfilling contract, is a part of the code that executes an agreement between people with more security and efficiency than a traditional transaction, and no middleman required — it happens automatically and secured by the blockchain. Also, once smart-contract is downloaded to the ETH Blockchain, the developer can’t affect it in any way.
This idea was first formulated and described in 1993 by computer scientist Nick Szabo as some kind of digital vending machine. He described how users could input data or value, and receive an item from a machine, but not a snack or a coke can, but, for example, a house or car. Ethereum is a blockchain that’s designed especially for creating smart contracts and allows developers to build their own ‘autonomous agents’, as the ethereum white paper defines them.
The main functions of smart-contracts are:
- Function as ‘multi-signature’ accounts, so that funds are spent only when a required percentage of people agree
- Manage agreements between users.
- Provide service to other contracts.
- Store information about an application.
Here are only a few examples of how smart-contracts can be implemented:
Voting
Every election in every country is full of rumors about vote rigging. Smart contracts can provide a 100% secure system here. Firstly, Ledger-protected votes would need to be decoded and require extreme computing power to access. Secondly, smart contracts could increase low voter turnout. Much of the voter’s laziness comes from a system that includes dressing up, going somewhere under the rain, showing your identity, and completing huge forms. With smart contracts, all can be done online in a few minutes.
Real Estate
If you wanted to sell your apartment to someone, you’d need to pay a middleman who will take all the legal red tape and ensure the deal. Smart-contract here cuts your costs and make the deal secure. All you do is pay and encode your contract on the ledger.
Healthcare
As well as the others, healthcare is one of the most promising fields of blockchain implementation. The ledger could be used for global healthcare management, such as managing drugs, testing results, and controlling healthcare supplies. Personal health records could be saved on the blockchain with a private key which would allow access only to specific individuals. Receipts of surgeries could be automatically sent to insurance companies as proof-of-delivery.
There are much more cases of smart-contracts usability, in fact, spending in almost any field can be reduced with this technology. That’s why we saw such an insane amount of ICO projects for the last few years.
If you like our articles, don’t forget to subscribe to our Medium. Next week we will post about the most promising blockchains besided Bitcoin and Ethereum.
