Blockchain development has become more than just a buzzword. It’s gradually transforming into what many call “the new Internet.” What is so incremental to the success of blockchain is what it promises. It promises decentralization, transparency, and immutability to open new realms of possibilities in the way we share and exchange value.
While the Internet revolutionized sharing and exchanging information. Blockchain is said to be the instrument that can revolutionize the way we share and exchange value . Pioneered by the use of Bitcoin cryptocurrency and other Altcoins, Blockchain development is still in its nascent stages and there’s a long way to go for it to become commonplace. Blockchain developers, today, have witnessed an intense growth spurt, mainly due to the desperation of business to adapt to this new revolution in software development.
What Are Smart Contracts?
One important feature of blockchain technology is the use of smart contracts. In the most basic terms, a smart contract can be considered as a replacement of a third-party involved in the execution of traditional contracts, such as an escrow.
It is a program that can be coded to perform certain actions in a way that automates the exchange of value between two parties. This not only eliminates the need for a middleman, but it also negates to need for human involvement in verification of terms and conditions in an agreement, and most importantly, it removes ambiguity in the whole process.
Smart contracts, as a concept, aren’t anything new and it’s not something that was conceived through blockchain development. The idea and concept of a smart contract were first introduced by Nick Szabo, a computer scientist and engineer in 1996. However, it wasn’t put into practice until 2009, with the introduction of blockchain and cryptocurrencies.
A blockchain network is considered an apt place for smart contracts to exist, as they provide a decentralized and immutable platform for it to work, which consequently makes the amalgamation much more credible.
How Does it Change Traditional Contracts?
In traditional contracts and agreements implemented in sectors such as real estate, two parties depend on agents to go through and fulfill all the paperwork and other legal formalities. At times, these agents are also trusted for holding payment of one of the parties involved in the transaction.
So, what happens if we remove the real estate agent in this agreement, put a smart contract in its place, and also add the two parties in agreement to a blockchain network? In this scenario, a smart contract can be simply programmed to make the transactions flow between the two parties as per the details on the blockchain network and the specific conditions coded into the program.
Now, think of the situation without a context such as real estate. The flow of transactions and the transfer of ownership between two parties is rapidly sped up through the smart contract. The automated program provides certain advantages here, which include:
The need for trust is eliminated as the information stored and the transactions performed are secured within a blockchain network. Then, the Smart Contract program makes it immutable, decentralized, and transparent.
The cost and speed in the flow of value is an incredible advantage in comparison to the slow and steady paced flow in transactions involving the exchange of value.
When such exchanges occur within a blockchain network, the new chains of data created will remain permanent and non-removable.
A Future Where Smart Contracts Cover Everything
The capitalist world keeps moving through the consistent flow of monetary value, which fuels the progress of civilization. With new advancements each day, the complexity in dealing with data is increasing more than ever. Smart contracts, through its implementation of blockchain development, offer new possibilities for easing out such complex processes.
A blockchain development company is what most corporations look for, and these blockchain development companies have even come up with new methods for the implementation of smart contracts.
With its applications covering sectors, such as healthcare, Fintech, management, real estate, and even government purposes, smart contracts can be created for implementations to serve various purposes that may include: identity verification, supply chain management, availing insurance services, bank credits/loans, and many others.
A deeper problem is realized with the knowledge that over one-third of the world’s population still doesn’t have an identity, which is necessary in order to obtain access to financial and government services.
Blockchain is considered as a panacea to this problem because of its immutable nature. There are hopes towards a time in the future when progress in blockchain development would enable people to store their identity profiles and use a blockchain network for availing all transactions across all sectors. Though this entails certain threats to individual privacy, there’s no better way to connect a large population to the diverse realm of services offered by private and government organizations across a region.
With progress in blockchain development, the identity of individuals in the future may be verified through a public blockchain network handled by governments, corporations, or even by a specialized blockchain development company. The profile of a person on a blockchain network may be used to obtain authentication for using various types of services. Think of a future where all you’d have to do for accessing a service is to authenticate your credentials with your blockchain profile and get on with it!
When smart contracts are put into this equation, the prospects seem to be much brighter. Every individual on a blockchain network can have their own smart contracts to automate several regular activities and functions associated with the products and services they use.
Today, the growth of the Internet has created an environment where every person using it has their own profiles to gain and exchange information. There’s a possible scenario in a few years from now, where these same people would have smart contracts to help themselves with matters pertaining to the exchange of value.
A smart contract isn’t something like AI. In its essence, it’s just a set of codes created through the solidity programming language, which works on an IF/THEN principle. But what it carries within is the ability to automate a set of actions involving the flow of value (value, in this case, is ambiguous, but can mostly be identified as monetary) from one party/individual to another.
Major Hurdles in the Progress of Smart Contracts
Smart contracts require you to trust on a set of codes instead of a human or an organization. The huge problem this creates is for those who have no idea how the technology inside of it works. Today, almost everyone knows how to handle their profiles on Internet-powered platforms.
That is obviously not the case with software development, as it requires an understanding of a totally different set of languages and perspectives. Only a team of developers in a blockchain development team would understand and explain its complex inherent problems.
Learning the complexities of a blockchain network is difficult and would require the population to adapt to the progress made in blockchain development, the use of smart contracts, IoT, and other aspects. So if blockchain is supposed to be the “next level of the Internet,” its complexities must be exposed to the masses.
Another problem with smart contracts is that, at the end of the day, it’s just a software; and like everything in a software development powered environment, there will be bugs. These bugs could create potential loopholes left open for miscreants to capitalize and use it for criminal purposes.
As of now, the Ethereum platform, based on blockchain, utilizes smart contracts for functionality, and its success is but a minor sign of everything that is to come ahead. So, in a nutshell, Yes, the dream for smart contracts to be applied on a mass scale seems to be impossible. Yes, even blockchain development might not create the perfect platform for the use of smart contracts. It’s just a program like many others that exist and, thus, can be corrupted or misused by expert criminals.
But, there’s no doubt that it’s the perfect panacea to the problems and lack of efficiency placed in transactions involving the exchange of value today. If blockchain development and technology have to be defined and understood as something superior and a step further from an Internet-powered globe, an error-free smart contract is what would settle the debate.