If ever there was a symbol of the sheer scale of technological advancement in the workplace, it’s the smart contract. Ridding away huge bundles of paper, and lock-and-key filing cabinets to store valuable and sensitive business information, the smart contract serves a much greater purpose than a transition from paper to digital, and has far more diverse a remit. Smart contracts on the Blockchain will automatically execute agreements, and are adaptable across hundreds of industries, making their future potential endless.
Smart Contracts are a set of programs that execute automatically when a set of predetermined conditions are fulfilled. Smart contracts are not controlled by anyone, but embedded into the blockchain or other distributed ledger technology (DLT). This type of technology is utilized for the storage of smart contracts due to its immense security and transparency.
There are many benefits to digital smart contracts that have helped them gain popularity over recent years. Smart Contracts act as the foundational blocks for the main principle behind decentralized finance (DeFi). They also eliminate the need for a third party for an execution of the contract, mainly due to the set of code that describes the structure of transaction which becomes the final authority of the action.
Each transaction made in a smart contract is stored in distributed ledgers/application-based blockchains such as Ethereum, making them accessible to the users to verify the information for further clarification of
the authenticity of a certain information. This builds a form of trust and level of transparency for its users. Smart Contracts also enhance the speed for transactions to take place compared to the traditional methods which consists of paperwork time and noting information manually. It also reduces the cost for transactions that takes places across borders and save resources such as workforce required to maintain different transactions and data. As a result of the benefits that emerges with smart contract, it becomes the main attraction for decentralised app (Dapps).
The main concept of the smart contract was devised in 1996 by Nick Szabo. Initially, he compared the ideology behind smart contracts to that of a vending machine. Just like how a vending machine performs a sale automatically without a human interference, Smart contracts are designed to do the same virtually for any type of exchange. An American cryptographer and legal scholar, Nick was well known for his invention of virtual currency called “Bit Gold”. Since distributed ledgers weren’t available at that point of time, it didn’t gain much popularity. Eventually it gathered momentum in the success after the invention of Bitcoin in addition to the distributed ledgers.
As mentioned before, one of the prominent smart contract platforms is Ethereum. The other blockchains that could run smart contracts are Solana, EOS, Tron, Polkadot etc. Anyone can create and deploy a smart contract to any blockchain where users can verify the code and can validate the code’s functionality. Every node can store the copy of all the existing smart contract code and data of each transaction. This contract code can be written in
programming languages such as Web assembly, Solidity etc. After the smart contract code is already deployed into the blockchain, it cannot be changed.
Smart contracts are used in many different sectors in real life. It is used in healthcare, financial services, government voting systems, trading activities, mortgage systems, financial data recording, insurance etc. It is building both popularity and momentum in many working sectors, and its potential for the future is exponential.
