The future is here now, and even if you don't know much about blockchain, you might have probably heard of Ethereum. Ethereum is one of the most popular cryptocurrencies right after bitcoin with a market cap of about $44 billion and it runs on smart contract technology. Ethereum doesn't boast only as a digital currency, but it is a platform that allows other applications to be built on it. The Ethereum blockchain works just like the bitcoin blockchain and because of its growth recently in the crypto space it has left the curious ones asking, “what are smart contracts?”, “how do they work?”, “what other uses can they be implemented too?”.
What are Smart Contracts?
Smart Contracts are platforms that help you exchange shares, properties, money, or any item of value safely and transparently without the help of a mediator. To describe further, you can use this to compare it to a vending machine. Without smart contracts, you would visit a notary or a lawyer and pay them then wait for your documents. Also, not only does a smart contract set the rules and regulations around an agreement, but it also makes sure that that agreement is honoured as well.
In a more complex term, Vitalik Buterin, the 22-year-old founder of Ethereum explains when smart contract technology is used, a currency, asset, or payment is transferred into a system, and this system runs a code that automatically upholds a condition, and it also automatically determines whether the payment goes to another person or back to the original person who sent it or a calculated split of it. As this happens, the decentralized platform also stores and replicates the decision which gives it a sense of security.
What is the technology that smart contracts are based on?
About 25 years ago, Nick Szabo, a cryptographer, had the idea of recording contracts using computer codes. This coded contract would be able to be automatically approved when several conditions were met. This in turn would eliminate the need for a third-party presence and you no longer need them when you make a transaction. Rather, the transactions(contract) are self-enforcing on a private or public network which is automatically controlled by a PC. The problem was that no platform could support this program.
In 2009, the world was introduced to the first cryptocurrency, bitcoin which was running on blockchain technology. About 6 years later, Ethereum, the second-largest cryptocurrency, was introduced. Smart contract technology is built and run on several blockchain platforms such as NEO and Ethereum. Ethereum is the most common choice for developers, and they are developed using Ethereum’s original coding language called Solidity.
How do smart contracts work?
The smart contract code is replicated across multiple nodes of a blockchain hence immutability, security, and permanence are offered. The replication also makes it possible for new blocks to be added into the chain and then the code is then executed. If users at each end have signalled the system by initiating a transaction, and certain required parameters have been met, the code will trigger the next step of the contract to be executed. If there is no transaction, the code would not be triggered.
Right now, the instructions and parameters which are programmed in smart contract technology have to be direct and specific. For instance, if “A” takes place, then execute “B”. So, the tasks that smart contracts do right now are very primitive such as moving an amount of cryptocurrency from one wallet to the other when the terms are satisfactory. As more businesses adopt blockchain, and more digital values and tokens are created, smart contract technology will grow to carry out more complex transactions.
What are Smart Contracts used for?
Experts believe that smart contract technology can be across businesses and services from healthcare, delivery services, to insurance and finances. Below are some of the ways you can use this technology:
Due to its automated nature, accuracy, and transparency, the blockchain does not only give companies a single ledger as a source of trust but also eliminates entanglements in workflow and communication among its employees. Normally, businesses go through a lot of “tos-and-fros” while waiting for both internal and external factors to be sorted out before approving. Using blockchain in your business can make this much easier and efficient.
Blockchain can store and hold records of individuals in the healthcare sector encoding them with a private key which would give access only to specific participants. Blockchain can also be used to make sure that research conducted follows the HIPAA law. Healthcare receipts can also be linked to the blockchain network and sent to insurance companies as proof.
Smart contracts provide an infinitely more secure system which makes it extremely hard to rig elections. Votes protected by blockchain ledger need to be decoded and it would need an infinite amount of processing power. Using smart contracts, people can do their voting online and more users would turn up to elect their choice.
With innovations such as Google smartphones, smart glasses, and smart cars, smart contracts are now in use more than ever. For instance, self-parking or self-driving cars use smart contracts to determine who is at fault in a car crash; either the driver, sensor or other different variables. This then helps insurance companies determine charge rates based on the conditions of the crash.
Companies such as the UPS can use smart contracts to track, deliver and monitor data and packages. Smart contracts cut out the need for paper-based systems which require numerous channels of approvals hence leading to fraud or loss of items. Using a smart contract provides a secure ledger across all chains while automating payments as well as deliveries.
What are the main advantages of Nexthash smart contract technology?
Using Nexthash Smart contract technology, your document/data is stored in a secured ledger so no one can tamper or lose it.
There is no need to rely on third-party intermediaries to confirm your transaction since you are the one signing the agreement. Smart contracts also knock out the need for manipulation from external sources since the process is automated.
With smart contracts, safety is guaranteed. Nexthash keeps your document and data safe using a cryptographic key which makes it hard to crack.
Imagine your business lost its whole data on finances. With the Nexthash Smart contract, every participant on your blockchain would have your back. Data and documents are replicated so many times.
Your business might probably be spending hours with manual paper processing and approval. With our smart contract technology, most of the tasks would be automated hence saving you a lot of time. It also saves you money since you don't need to pay an intermediary.
Smart contract automation is not just faster or cheaper, but it is also error-free. With our blockchain technology, your business avoids the errors that come with manually filling loads of forms.
As you can see from above, there are so many other ways Nexthash can transform your business. Visit us today to find out more!