An Introduction to Blockchain’s Most Promising Application

Technology in 2017 will be memorable for a number of moments; from Japanese scientists demonstrating the first robotic drone bee to pollinate flowers to IBM announcing an initiative to build quantum computing systems, the year provided an introduction to technology that may have a profound effect on our collective futures. However, many people may say that the most immediately impactful moment in technology last year was the economic boom of cryptocurrencies. Specifically, the rapid rise of Bitcoin. On July 16, 2017, the price of one Bitcoin stood at a modest $1,889.94 USD. A mere 5 months later, the price of one unit of Bitcoin had skyrocketed to an astonishing $19,267.90 USD. Most know that since that time, Bitcoin has come back to Earth, falling to approximately $6,200 USD. Although the hype around Bitcoin’s prospects of being a potential alternative to fiat currency has taken a hit, the increased spotlight on blockchain technology has revealed what may be its most impactful application, smart contracts.

What Are Smart Contracts?

Smart contracts, simply put, are the most advanced and secure mode of executing transactions between two parties. Using cryptographic code, smart contracts digitally verify the outcome to terms outlined in a transactional agreement, allowing the performance of credible transactions without the use of third parties. In the future, smart contracts will replace the need for a notary, or any other middleman employed to oversee the validity of a contract. Utilizing the same verification technology used to verify Bitcoin transaction, these transactions become trackable and irreversible. Through the use of blockchain technology, terms of a contract are programmed as code onto the blockchain. When the triggering event described in the terms occur, the contract automatically executes the outcome as outlined in the contract as originally programmed.

So How Will Smart Contracts Be Shaping The Future?

Applications of this technology could be seen in both the real estate and healthcare industries. In real estate, smart contracts would allow people to pay rent using a cryptocurrency and encoding the agreement on a blockchain ledger, allowing for fully transparent automatic payments without the use of a middleman. The healthcare industry will find value in blockchain with this technology enabling the process of encoding and storing health records on the blockchain. In this case, only a private key would allow anyone access to said records. For example, we may see surgery receipts getting stored on blockchain only to be automatically sent to health insurance providers as proof-of-delivery. It’s only a matter of time before smart contracts gain mainstream success, and that time could be sooner rather than later with the technology already being implemented at a corporate level.

Current Cases of Smart Contracts

Depository Trust & Clearing Corporation: In 2015, the DTCC implemented a blockchain ledger to process 345 million securities transactions amassing over $1.5 quadrillion worth.

Barclays: The Barclays Corporate bank utilizes smart contracts to track the changes of ownership and automatically transfer payments to financial institutions upon arrival.