With blockchains first application being to disrupt the financial industry and lower fees, it’ll make sense to target another industry to disrupt. The second application of blockchains is called smart contracts which can be run on many decentralised platforms. The platform to be used as an example in this article is that of Ethereum, the first to bring us smart contracts.
A smart contract, also known as a cryptocontract is a set protocol written as a computer program. This contract is responsible in all aspect for facilitating transfers of digital currencies and assets, between the parties participating in the contract.
Similar to cryptocurrencies being stored on a blockchain, cryptocontracts are also stored on the blockchain. Cryptocurrencies support cryptocontracts and vice versa. It is important to note that at the time of this article, a cryptocontract written on one platform uses the cryptocurrency native to that blockchain, or cryptocurrencies compatible to that blockchain.
Example – A cryptocontract written on Ethereum platform using coding language Solidity. The cryptocurrency native to the Ethereum platform is Ether. Certain conditions are agreed upon by the parties involved and when they are satisfied, Ether is paid to the party that was specified on the contract. This is a simple example of how it works.
I won’t go into much detail in this article, but the Ethereum platform gives users the option to create their own cryptocurrency to be used in a smart contract. These tokens are called ERC20 (Ethereum Request for Comments) and are used in ICOs to raise funding for startup projects.
Smart contract blockchains that were created after Ethereum are NEO, Cardano, STRAT, EOS etc. These will be discussed at a later date.
Today, Bitcoin is regarded as the largest bank with no actual cash as its main application is to be used as a currency. Ethereum’s main application purpose is smart contracts for anything digital and can even be extended to physical products. I’m no expert yet, but I can safely state that I believe Ethereum will be the largest law firm with no lawyers.