Smart Contract Evolution:
The world of static and dynamic web pages is now history. Web 1.0 and Web 2.0 are now the past of the world wide web. It has evolved further to give us Web 3.0 with the advent of blockchain technology and the circulation of cryptocurrencies in the real world. Imagine a connection where the technology actually interprets the input and also understands every single thing conveyed, texted, or voice commanded.
This technology is tailored more intricately than ever before. These applications and websites are in process and are applying machine learning, decentralized ledger technology, and big data analysis to develop a semantic web. This technology that is more autonomous and intelligent was called semantic web by the World Wide Web inventor Tim Berners Lee.
The term “Web 3.0” was coined by the Ethereum founder Gavin Wood as a reference to a decentralized online ecosystem that is centered around blockchain. Such organizations are called Decentralised Autonomous organizations or decentralized autonomous corporations. This new technology has allowed the creators to use the internet without involving any centralized authoritarian position. To operate such organizations, the commands are given via smart contracts.
What are Smart Contracts?
A smart contract in the simplest of its terms is a computer program that intends to automatically control, execute, or legally document relevant events and actions when the programmed conditions are met. These programs are stored in blockchains and are executed automatically, hence do not involve any intermediary involvement or time loss.
These contracts can also be used to automate the workflow and trigger the next action when the conditions of the previous actions are met. They are self-executing and hence can be applied in the finance and banking sector where the buyer and the sellers are directly written into the lines of the codes and the orders are matched when the code is triggered due to the matching of certain input conditions. These contracts are traceable, transparent, and irreversible.
The basic features of the contracts hence include:
- Self-executing and automated
- No paperwork and intermediary involvement
- Traceable, Transparent, and Irreversible
Smart Contracts are complex programs with normal contract-like terms and conditions that are input into the blockchain program using simple programming commands like if/else/when/then/etc. The actions that trigger these programs could be releasing funds to the right parties, issuing a ticket, or even sending notifications.
Why are Smart Contracts so Important and what are the Benefits?
These contracts have so many advantages over traditional trading. These benefits shall increase over time, as more and more people get involved to adapt and develop this system.
1. Accuracy
For developing a smart contract, the technology requires the recording of all the conditions in explicit detail and as a result, the automated contracts avoid the paperwork that has room for a lot of manual errors. The contracts record the relevant activities that can trigger the conditions of the contract, and hence the omission of relevant articles can be possible due to manual error but not possible in the case of smart contracts.
2. Speed and Efficiency
Once a condition is triggered in the contract, the terms or follow-up action as mentioned in the agreement is executed immediately without any time loss and involvement of paperwork. This digital and automated process makes the entire process quick and efficient.
3. Transparency
The entire party does not involve a centralized authority to overlook the system and all the activity details are recorded and open for every user of the contract. Because of these encrypted records of all transactions, there is utmost transparency in the entire system.
4. Security and Trust
The entire system is transparent for all its users which makes it impossible to be altered for personal benefit. Over that the blockchain technology records are encrypted which makes the tracking extremely difficult. Due to the interconnectedness of all the past transactions with its subsequent transaction, the hackers have to alter the entire chain to get a single record.
5. Storage and Backup
Every record is essential and has details of all transactions. So, if your details are used in a smart contract, it is stored forever for all future contracts, and hence even if your data is lost, it can be retrieved back easily.
Where can you apply Smart Contracts in Real Life?
Smart contracts and their basic features make the technology more suitable for certain industries more over the other industries. For example, traders and stock market brokers can very aptly use it for market orders. Business areas that can be really helped by this technology are:
1. Medicine and Healthcare Industry
The IT giants IBM and Sonoco are working to reduce issues in the transportation of medicines by increasing the transparency of the supply chain as these areas can be automated by a blockchain to provide trusted, temperature-controlled, and reliable transportation service.
2. Retailers and Supplier
In an ongoing business, you can have a lot of disputes with vendors and suppliers. Companies like Home Depot use Smart Contracts for the resolution of such disputes which results in more time for critical work and innovation.
3. Trading and Banking
Blockchain-based contracts help the users to reduce friction and risk by standardizing the rules and simplifying trade without the involvement of any third part central authority. This eases the trading process and expands the trading opportunities for the trading companies and banks.
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