In recent years, topics related to the blockchain have been reported on virtually non-stop, and with good reason. There are hundreds of new companies now working to develop both products and services which are centered on the decentralized technologies.
With the vast amount of press that blockchain organizations have received, many have neglected to take notice of one of the most useful components of this technology, which would be the smart contract.
Overview of Smart Contracts
The primary objective of creating smart contracts is to make it possible for individuals to trade and conduct business transactions with strangers, typically via the internet, devoid of any need for any centralized authority website to work as an intermediary.
This is significant because the key issue with purchasing products or services online, employing staff using the internet, and conducting any type of business with complete strangers online is the matter of trust. In resolving that issue without any need for an intermediary, smart contracts can cut business expenses, minimize consumer costs, and boost our independence when conducting our own business transactions.
Among the most popular platforms being produced for innovative uses of the blockchain and smart contracts is Ethereum. Ethereum is an open-source venture that offers a decentralized platform for web developers and business owners to generate and distribute applications which use blockchain technologies to facilitate the use of smart contracts in place of traditional business documents.
The Ethereum website draws attention to the fact that the platform may be utilized to trade virtually anything. By merging law, computer technology, and finance in unheard of ways, smart contract technology offers the potential to carry out a host of business functions with elevated transparency.
Smart contracts are important to understand as they have limitless potential and astronomical use cases as they allow traditional sectors to be ported into blockchain. To learn more about them, check out our educational piece: What are Ethereum Smart Contracts.
Applications to Decentralised Trading
Open source decentralized exchange platforms can offer both the liquidity that a centralized exchange would offer, combined with the safety measures and openness of the current decentralized exchanges. Over the years, a considerable number of the centralized exchanges have been jeopardized, leading to the loss of roughly 925K BTC, or just over $2 billion USD. Still, centralized exchanges hold an important part in the cryptocurrency environment as they connect conventional financial services and currencies to the blockchain environment.
Just recently, smart contracts have begun to be utilized as a base, not a feature. Most all of the blockchain-based systems currently make use of them, but as a resource instead of the target of their services. Recent modifications in a number of state legislatures, together with less difficult accessibility, could lead to a significant increase in the overall usage of smart contract-based services.
A number of companies have already begun working on alternatives that supply smart contracts to businesses that do not actually run on the blockchain. Startup company, Jincor, which plans to issue an ICO next month, has developed a platform that provides business-to-business smart contracts which can be executed in bitcoin as well as various other cryptocurrencies. The critical component of their service is that businesses are not forced to conduct business on the chain, but instead use the platform to produce enforceable, automatic smart contracts.
Features of the Jincor platform include numerous conceptual blocks, such as messenger for secure and approved business communications, smart contracts templates for handling e-document circulation, and cryptocurrency dealings. The process of rendering a smart contract on the foundation of the Jincor system requires only completing the registration form.
The system also includes an arbitrage solution, which permits companies to negotiate conflicts on a decentralized level, along with a host of additional financial instruments that significantly streamline the process of business-to-business connections.
Cryptocurrency opens up a broad range of different uses for smart contracts which would not be possible otherwise. One example is the system used by BurstCoin, which has the ability to carry out auctions which automatically determine the top bidder within a set time period and issue a refund all others, instantly transfer inactive funds, or operate a decentralized lottery. Another model would be Bitshares’ fixed assets, which involves collateral being place in a contract which has the capacity to sell off that collateral should the market make an undesirable move against its owner.
Smart Contract Economy
With the support of a clear and fixed agreement, together with clearer negotiation methods and automated dealings, smart contracts provide a powerful new resource to startup companies. Modern entrepreneurs could very well create an improved, more transparent environment across quite a few industries. From business banking, investment, and even B2B transactions, smart contracts are an important innovation that could lead to more general approval of blockchain.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.