How Smart Contracts Might Change The Way We Live

How Smart Contracts Might Change The Way We Live

Here’s a brief introduction to smart contracts and their real-world applications.

Several technological advances, such as the Internet have altered human presence in ways we never could have predicted. What started out as a fad-like concept retained for nonconformists and outliers has single-handedly changed the way we share information across the borders. The revolution of blockchain technology is forecasted to do the same.

The force of blockchain portrays a shift in our reliance on centralized value transfers and third-party services monopolized by banks and governments, to one of secure digital interactions that are trustless, open-source and transparent. They showcase a realization of a technological and reflective vision; a change in the status quo that eliminates inefficiencies and empowers people to rely on their skills and abilities regardless of wherever they are in the world.

What is a Smart Contract?

In 1994, Nick Szabo (a cryptographer), came up with the idea of being able to record contracts in the form of computer code. This contract would be activated automatically when certain conditions are met. This idea could potentially remove the need for trusted third-party companies (such as banks).

Why? Simply because you no longer need a trusted third party when you make a transaction. Instead, the contracts (or transactions) are self-executed on a trusted network that is completely controlled by computers.

What a Cool idea, right? Szabo worked on this idea for many years and even wrote a book called “Smart Contracts: Building Blocks for Digital Free Markets“. The problem was that back in 1994, blockchain technology didn’t exist.

But it does now!

  • In 2009, Bitcoin introduced the first use of blockchain technology. In 2015, Ethereum was founded by an intelligent young man named Vitalik Buterin, and it introduced the first working smart contracts.
  • A smart contract is an agreement between two people in the form of computer code. They run on the blockchain, so they are stored on a public database and cannot be changed.
  • The transactions that happen in a smart contract processed by the blockchain, which means they can be sent automatically without a third party. This means there is no one to rely on!
  • The transactions only happen when the conditions in the agreement are met — there is no third party, so there are no issues with trust.

As smart contracts exist on open systems that anyone can access and use, they could be instrumental in the transformation of a wide range of services and the elimination of intermediaries that would be no longer required. This is the far-reaching promise of smart contracts. However, challenges will arise on the journey ahead.

The trouble with smart contracts

Scalability, or the number of computations that can be performed per second, and ease of usability by non-tech users are the two primary objectives along the way.

Even the small number of decentralized applications that are currently available for use by thousands of people can overload the system and lead to errors and delays. This issue would surely become exponential if millions or billions try to use these platforms.

Cutting out the “middlemen”

Smart contracts are particularly useful in reducing the complexity of sales processes by removing unnecessary parties; the middlemen which previous technological inadequacies required. The effect of this technology on how we live could be enormous, given how much time, energy and money we currently spend on things like identity management, currency transfers, administration, data storage & security, notaries, sale agents, trade through third parties and more.

Smart contracts have a multitude of applications and will be particularly powerful where user-centric identity management is concerned. Not only will blockchain technologies allow for secure and fast identification verification to occur, they could also drastically reduce instances of fraud, smuggling, and money laundering to name a few. Thanks to scalable smart contracts on a public blockchain, users will be able to regain their privacy from technological giants and governments.

Trusting the crowd

One of the biggest advantages of the user-focused approach to smart contracts is the potential for neutrality via the essence of what blockchain is: crowd-sourced trust. This could be particularly powerful in the entertainment industry for example, where musicians and game developers can create products and choose the conditions under which their materials are sold. This would allow them to retain not only rights to the content, but also the bulk of income generated from it, rather than ironically being the last person in the supply chain to get paid.

Public blockchain for public services

The ability of blockchain smart contracts to release us from paperwork and red tape is another exciting aspect of the technology. A world where administration services operate quickly, seamlessly and with complete transparency was previously a dream. There’s no more queuing up in lines to submit a passport application, or spending hours on the phone on hold to change the registration of your address. Imagine having all of your health records in one place, without having to link in between all the medical experts you’ve seen to share the information. Or actually knowing what’s in your own records; from health to finance, services history to property ownership.

Here’s to the future…

Thankfully it is not a question of if this will happen, it is a question of when it will happen. This is our vision for a fearless new world, based on a powerful blockchain platform, scalable smart contracts, and user-friendly applications. The redistribution of power is already happening. Everus is proud to be a catalyst, serving in this exciting digital revolution.

xxx

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