Smart Contracts: Fad or Future?
Smart contracts might be an unfamiliar term to most people aside from some of the more die-hard crypto enthusiasts, but this little-known facet of cryptocurrency may soon be poised to revolutionize our lives across a variety of areas in the not too distant future.
While some might dismiss it as a fad that’s bound to fade, crypto contracts are bound to catch on and change our lives forever.
Ready to explore this exciting emerging technology and what it means for our future?
What Are Smart Contracts?
The first thing we need to address when discussing this technology is what exactly are smart contracts, anyway?If that was one of your initial thoughts, it’s a great question.
The first thing to know is that smart contracts are just like contracts in the real world. The only difference is, they’re digital.
More fundamentally, a smart contract is, in its simplest form, a tiny computer program that is stored inside of a blockchain.
And because smart contracts are stored inside a blockchain, everything is completely distributed. No one is in control of the agreement, the funds, or whatever else is being executed.
Why Should We Trust Smart Contracts?
There are two main reasons why this innovative agreement platform should be trusted as the ideal way to form and execute agreements between parties.
Smart contracts are what’s called immutable. This means that once a contract is created, it can never be changed again. No one can go behind another party’s back and tamper with the contract, ensuring that the contract maintains its integrity and is not subject to the whims of one of the parties.
By being distributed, this means that the execution of a smart contract is validated by everyone on the blockchain network.
No one can single-handedly force the contract to execute prematurely because everyone on the network will spot this attempt and mark it as invalid. Tampering with smart contracts, therefore, becomes almost impossible. This protects the integrity of the contract and ensures fairness throughout the entire process.
Potential Applications of Smart Contracts
With its revolutionary platform of drafting, executing, and protecting agreements of all kinds, this technology has nearly endless potential applications across many important areas of our lives.
Here are 4 of the best potential use cases that showcase the power and potential of smart contracts:
Banking & Financial Services
Intelligent agreements have the potential to upend the entire financial industry and permanently change the way we do business for the better.
This technology can be used to offer loans and mortgages, payments and settlements, and even deal with insurance claims. It can even replace escrow services, automating the entire process with buyers and sellers completely skipping the middleman and executing agreements through smart contracts.
Identity theft and the protection of data is a huge issue these days. With sites like Facebook igniting a debate by openly sharing your data with third-party companies, people are yearning for a way to protect their personal information and keep their identity safe online.This is where smart contracts come in.
They offer a tantalizingly powerful solution to what has been a hugely vexing and expensive problem.
One example is uPort, a smart contract-based open identity platform built on Ethereum that returns ownership of data back over to the user, giving them control over their own information.
No one else can see or copy any data protected by uPort unless you authenticate it through your uPort app. Even better, it’s always stored in the Ethereum blockchain which serves as a trusted safeguard that prevents any intrusions or thefts of your personal information.
Real Estate & Titles
Real estate deals and property titles are a nightmare to navigate for the average person. All of the legal negotiations, paperwork, and other bureaucratic B.S. forms a nearly impenetrable barrier for anyone attempting to execute deals on their own.
All this hassle and headache could be immediately alleviated with smart contracts. With its centralized registry located in the blockchain, you would be able to almost instantly buy and sell properties without any middlemen and transfer property rights like titles and deeds in mere minutes, all without having to even meet the seller!
People in the entertainment industry are being robbed through widespread piracy of their work online.
Smart contracts, being built on a secure and centralized registry, could provide entertainers and other creatives with a transparent authorship registry to protect their work. Your rights to your work would be securely registered and immutable, so no one would be able to modify them.
Here’s how it could work: whenever someone downloads your music online, for instance, you would automatically get a refund. This would ensure proper payment and attribution to intellectual property and practically eliminate the current piracy problem.
Where Can I Use Smart Contracts Right Now?
There are a handful of blockchain networks operating on this technology right now, and the biggest one by far is Ethereum.
Currently one of the biggest cryptocurrencies on the market, Ethereum goes well beyond just coin. Ethereum was designed and created specifically to support smart contracts, so it serves as the primary platform for the smart-contract based projects that are pioneering the use of the new technology.
Here are a couple of examples of current use-cases of smart contracts.
While using smart contracts for real estate has long been discussed, Propy is the first company to actually make it happen.
The innovative company allows buyers and sellers of real estate to list properties that are secured through the blockchain and participate in the drafting of smart contracts together, with various legal and financial requirements also followed to ensure adherence to current laws.
Slock is using these contracts to simplify and expand the sharing economy. Businesses use Slock to simplify and automate payments, rentals, and sharing.
A great example of how they’re doing this is Share&Charge, which makes the process of paying for electric vehicle charging simple by automating payments.
Slock also uses blockchain-connected, digitally-protected locks to safeguard bikes to prevent theft.
Etherparty is a Vancouver crypto startup with the aim to “Create intuitive smart contract solutions to bring the world to blockchain technology, catalyzing ideas that will reshape how we transact, interact, and connect.”
They offer an easy way for people to create their own smart contracts, with a variety of templates and no programming knowledge required.
A Bitcoin Smart Contract Use Case
Bitcoin, the most famous crypto brand in the world, also supports smart contracts to a limited degree, with a few projects including blockchain-based marketplace particl, which uses Bitcoin-based smart contracts to secure and manage funds in their escrow project, Mutually Assured Destruction (MAD).
Far from being a fleeting fad, this technology represents a quantum leap forward in people's ability to draft and execute any number of agreements of almost any kind.
It will be exciting to see what the future holds for this burgeoning new technology, so keep an eye out for smart contracts as they make their way to the mainstream and start to truly transform our world, one crypto contract at a time.