20 June 2022
There are many reasons why companies using smart contracts are changing the way businesses operate right now. So let us investigate how this all works. First, let's get the basics straight. Data recorded in a traditional database can be changed without a record of the change. This is in many cases necessary and in fact desirable, it's like writing your records in pencil, you can always rub it out and change something. But what if you want the record to be permanent? Well, you will write it in ink of course. Blockchain is the digital equivalent of writing your financial and other important records in ink. The information can’t be changed and its position in relation to other data also can’t be changed. This is done by adding each link (block) in the chain sequentially and baking the data into each link so the link before and after it validates and fixes the information in place in a way that the chain would need to be broken to go back and change something. This allows someone inspecting the data to trust, remote and anonymous parties in a financial transaction.
Not satisfied with creating a digital currency those smart crypto developers realized that each block does not have to contain just data, it can also contain code. So, on blockchains like Ethereum, it is possible to create a 'smart contact' which is a contact, including the terms of the agreement, between a buyer and seller. This contract is self-executing and written into the code on the blockchain. Companies using smart contracts can create trusted transactions between anonymous remote parties with no need for a legal system or central authority or any enforcement mechanism.
These contracts run 27/7 and are unstoppable, they are error-free and as there they are totally automated, they are so cheap they can deal with micro-transactions that would have been too small to bother with in the past, but they can process them at a massive scale. They are secure and private and totally autonomous. These attributes create the opportunity for a whole range of new businesses and use cases for companies using smart contracts.
First appearing on the Ethereum blockchain in 2016, smart contacts are now on many other chains, which one you choose to use depends on your use cases. Examples are Bitcoin, Cardano, EOS, Tezos, NEM Waves, NEO.
Dapps are decentralized apps; they are the front-end application that interacts with the smart contacts which in turn interact with the blockchain. So, in effect, the dapp is the human interface just like a website is and the smart contract is like the website backend or APIs that reaches into the database to read and write data and carry out the processing of that data.
There is already a whole constellation of businesses that have been transformed by smart contacts and there will be many more that have not been reached yet but will do in the future. These are some of the industries that have already adopted them or are in the process of doing so.
Auto and micro payments, financial security, Escrow, financial data recording, clearing, and settlements, insurance, loans and mortgages, auto dividend, commission, coupon, and royalty payments.
Digital identity, social security, population statistics, licensing, public records, voting,
Clinical trials, medical records, health data tracking, food industry data tracking.
Trade settlements and clearing, supply chain management, electric vehicle charging, and supply change documentation.
Energy usage tracking and smart devices, billing, and credits.
Of course, this list is by no means an exhaustive one that includes all companies using smart contracts, it just gives some illustration of how disruptive this technology is and how companies using smart contacts can revolutionize most industries.
If you have a legacy business and want to identify how smart contracts could fit in, consider if the following apply to you.
Companies using smart contracts remove many human interventions in a transaction that would have been required in the past. Making them directly between the 2 parties has huge and obvious savings, not least because all the humans involved in the past needed offices, computers, and many other resources as well. Now a few lines of code can replace them all and still do a better job.
A no-touch transaction also means it is fast, in most cases instant, not only that the code is running 24/7 and regardless of time zone there are no office hours involved for companies using smart contacts.
Companies using smart contracts can rely on code that is clear to both parties, there is no need to be concerned with human error or if you trust someone that may be anonymous and in another country. You can be sure that when the conditions of the contract are met, the operation will be executed or, if that is what the code specifies, the payment will be automatically sent.
If like many companies using smart contacts, you are thinking of implementing smart contacts into your business, speak to NextHash for a free consultation. Our team has the experience to help you design and implement your smart contact project whether it is a new business or if you are integrating it into an existing business in order to streamline your operations.
NextHash also provides a full suite of complementary services that will help with the implications of your smart contact project. We offer a full OTC trading desk for large crypto transactions and Nexinter our fully regulated exchange. We also offer coin development services and crypto consultancy.
Get in touch today and we will be happy to guide you through the processes.