2 k
views

Smart Contracts: Behind the Scenes!

One of the “killer applications” of blockchain technology is smart contracts. Smart contracts are essentially normal contracts that enforce themselves according to the agreed terms and conditions are written in the code. What makes this a “killer app” is that it removes the middleman for services, just as Bitcoin removes the middleman for asset transfers. With smart contracts, intermediary services such as brokers and agents are made redundant, instead of becoming a more expensive opportunity cost to using smart contracts. On the customer-facing side, there will be little change to how transactions are conducted. However, behind the scenes, the intricacies are more complex.

What is a Contract?

Let us first take a step back and understand what a contract is and how it is actually formed. Contracts need to have certain key elements that allow it to be enforceable in the courts. There must be an offer and an acceptance in the simplest contracts, including an agreement from both parties that the contract will have legal force. The agreement in question is of legal nature (among other considerations). This is the traditional view of contracts.

However, it is important to note that the advent of the internet really pushed this definition to its limits with clickwrap contracts (in which a user must agree to the contract). The EU’s General Data Protection Regulation (GDPR) itself is an ode to this fact – that contract law needed to be updated for the internet age because large companies were taking advantage of the loop-holes and fine print. In the case of clickwrap, the internet allows people to sign up for hundreds of services a day, and people are expected to read all the terms and conditions for each service. But this is infeasible, as Time magazine calculated that it would take 76 days every year to read all of one’s privacy policies. Users face a zero-sum choice: to accept the clickwrap contract or not use the service.

Enter: Smart Contracts

Enter smart contracts, paving the middle way. As defined by Nick Szabo, their creator, smart contracts are a set of promises, specified in digital form, including protocols within which the parties perform on these promises. In the above example, this allows the user to negotiate with the company and decide what a fair agreement would be for both parties (e.g., the user only allows the company to monetize certain data and activity and MUST share a percentage of this revenue). As long as the preconditions are coded into the smart contract, then it is possible to have a contract that negotiates with the user at the point of sale.

Smart contract processing can be broken down into 6 key steps:

  1. Identify the agreement between the parties;
  2. Set the conditions of the agreement;
  3. Code the business logic into software;
  4. Encrypt the agreement for immutability;
  5. Run the smart contract for compliance and verification;
  6. Update other nodes of the new contract.

It is currently a lengthy process, but its aspects will be automated as the cryptocurrency space develops. In fact, this is one of the current challenges of smart contracts: complexity. Smart contract development is currently only reserved for programmers and not for the layman entrepreneur. Furthermore, security is a key challenge to overcome, especially on a large scale with millions of dollars running through the code, not to mention questions about privacy, data ownership, and jurisdictional governance brought into question by smart contracts.

Bitcoin live price
Btc
Bitcoin
$16.520,21
price
0.1978%
price change
BUY NOW

Smart contracts are set to transform the operations landscape across industries, lowering the cost of transactions while improving speed and security. But there are still many discussions to have and details to consider regarding the regulatory side of smart-contract implementation.

Stay up to date with our latest articles

More posts

Smart Contract Security – Pitfalls and Solutions

Smart contracts are becoming increasingly prevalent as the world moves towards a more digital and automated future. Still, they are far from being the panacea of all technological ills. Smart contracts are self-executing contracts with a predetermined set of rules. They are stored on the blockchain and run by computers, which makes them tamper-proof and reliable. However, as with any new technology, smart contracts have associated risks. This article will explore some of the most common pitfalls and how to…

Looking for Crypto Marketing? Here are The Best Crypto Advertising Agencies in 2023

It is vital to have a strong marketing strategy if you wish to succeed in cryptocurrency. This is where crypto marketing agencies come in. You may successfully promote your project and reach your target audience through a crypto marketing agency.  This article will explore the top crypto marketing agencies in 2023. Moreover, we will look at their services and how to choose the right one for your project.  We will also discuss the benefits of using a crypto marketing agency.…

The Risks of Investing in Crypto Projects without Smart Contract Audit

Smart contracts are self-executing contracts that run on blockchain technology. They are stored and verified on the blockchain, which means they are transparent and cannot be tampered with. This makes them a secure way to conduct transactions without needing a third party.  Despite their many advantages, some risks exist with using smart contracts. One such risk is investing in crypto projects that have yet to have their smart contracts audited by a qualified auditor.  Without an audit, it cannot be…

SuperBots Trading in DEX – The Future of DeFi Trading is Here

Trading in decentralized finance is evolving rapidly and empowering people worldwide to access new forms of income. Spearheading this revolution are platforms like SuperBots, a BSC-based protocol enabling users to deposit their capital in vaults for secure and efficient trades on decentralized markets. SuperBots accelerates the mainstream adoption of DeFi trading through high-performance bots that automatically trade for their owners. This way, users can achieve profitable trades, regardless of their experience or skill. Furthermore, the platform does not charge any…

Top Smart Contract Audit and KYC Companies in 2023

It's no secret that business is undergoing fast change. Companies must adapt when new technologies, like smart contracts, emerge to remain competitive. A crucial part of this adaptation process is ensuring compliance with regulations and safety. This is where a company's KYC (Know Your Customer) process or smart contract audit come into play.  To ensure that your company is compliant, working with a reputable smart contract auditor or KYC provider is essential. This blog article discusses the benefits of using…

Automated Trading with No Subscription Fees – How UpBots is Revolutionizing the Trading Industry

Cryptocurrency trading has enhanced the universe of assets available to traders worldwide. However, this practice is challenging for inexperienced or unskilled traders. Furthermore, the ongoing bear market makes trading costly and inconvenient when most platforms charge upfront or subscription fees. As a result, many people avoid entering the market. UpBots aims to change that and take the trading industry to a new level through innovative and affordable solutions. For one, its automated trading service allows users to trade in CEX…

Top 5 KYC Solutions for Crypto or NFT Projects

As the importance of blockchain technology grows, many people look for ways to get involved in the crypto world. One of the most important aspects of any cryptocurrency or blockchain project is KYC/AML.  Without proper KYC/AML procedures, your project could be at risk for fraud and illegal activities. This article will discuss the types of KYC solutions available and how to choose the right one for your project.  We will also provide tips on how to implement these solutions properly.…

DeFi Scams – Most Common Scams in the DeFi Space

In the world of Defi, scams are unfortunately all too common. This article looks at popular Defi scams, how they operate, and how to protect yourself. We'll also provide tips on what to do if somebody scammed you and how to report a scammer. Finally, we'll discuss the implications of DeFi scamming and present examples of successful prosecutions. What Are DeFi Scams, and How Do They Work? Decentralized Finance (DeFi) is a term that has gained enormous popularity over the…

5 Trading Bots Platforms to Automate Your Crypto Trading in 2023

Crypto trading bots enable investors to automate buying and selling based on advanced technical indicators. These innovative tools compete to provide the highest percentage of profitable trades even during bear markets when trading winnings are at a minimum. Therefore, it’s no surprise they have become the favorite cryptocurrency trading solutions for beginner and expert traders alike. As a new trader, you can use trading bots to emulate the successful strategies of more experienced traders. Alternatively, if you possess the know-how…

NFT Scams – Most Common Scams in the NFT Space

As the popularity of NFTs (non-fungible tokens) continues to grow, so does the potential for scams.  This article examines popular NFT scams and offers suggestions for avoiding them. We'll also discuss the future of NFT scam prevention and how to report one. A Closer Look Into NFTs and Their Popularity The past year has seen a surge in the popularity of non-fungible tokens. These digital assets are unique, and nobody can replicate them, making them ideal for collectors and investors.…