Greetings, my dear friends. In this article I would like to immerse you in future a little bit and just imagine how the world might be changed if accustomed common paper documents with stamps will be replaced by smart-contracts.
But first, let’s clarify what is Smart-contracts.
From Wikipedia:
A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.
First smart-contracts ideas was set out by Nick Sabo in 1994, but it couldn’t be implemented in real life. Only since 2008, after Bitcoin blockchain implementation, some smart-contracts realization had appeared, they didn’t used in practice out of concern for safety, but some principles after all have been laid into Bitcoin protocol.
Five years later, in 2013, smart-contracts was introduce for the first time in Ethereum project. Project founder, Vitalik Buterin, proposed unleash the blockchain potential more widely, than just using it in cryptocurrencies. He suggested the idea of universal decentralized blockchain-platform, where any interested person can set rules for saving information processing in mathematical form by himself.
Smart-contracts volume:
- Smart-contracts parties, accepting or rejecting conditions using electronic signatures. A direct analogue is the signature of the sender of funds in the Bitcoin network, which confirms the transaction is entered into the chain of blocks.
- Subject matter of the contract. Subject matter of the contract may be only an object located within the environment of the most intelligent contract, or unimpeded, direct access of the smart contract to the subject of the contract without the participation of a person.
- Condition. Smart-contracts condition must include completed mathematical description, that can be programmed in smart-contract existing environment. It is in the conditions described the logic of the execution of the items of the subject of the treaty.
- Decentralized platform. For the distributed storage of a smart contract, it is necessary to write it in the Bloc of this platform.
In general, a smart-contract is a digitized classic contract in which conditions can be described so that, for example, if they are not fulfilled, it would not be necessary to resort to the services of a court or lawyers, which would save time, nerves and money for one of the parties.
And now let’s imagine utopian future, where smart-contracts are widely using.
A person who wants to sell his house or car can do it “in 2 clicks”, because all of his data is entered in the register and the smart contract clearly describes all conditions for the transfer of property.
It’s clear regarding advantages — this is the conduct of transactions without intermediaries. More details:
- Saving time and money. A person doesn’t need to run around various instances or lawyers, check a bunch of documents, pay for travel and fees. All fees will be limited to one transaction and cost a minimum amount of money.
- The appearance of sites only with the owners. When using smart contracts for buying and selling areas, for example, real estate, it becomes possible to accurately read the sellers, and so for the buyer there is no problem to find an owner without intermediaries in the role of realtors. The chain is shrinking.
Deficiencies:
Here we have inevitable errors in code, which may not take into account the smart contracts developers, that’s why various gimmicks are possible, but standard contracts aren’t deprived of that. It is also possible to create fraudulent smart contracts, under the conditions of which one of the parties may lose their property, and since operations on the detainee are irreversible, then no legislative base in this case cannot help. In my opinion there are few issues here:
- Carefully study the terms of the smart contract, which looks slightly utopian, because people are not robots and have the property of making mistakes. Leave everything as it is, and hope that people will learn to read the terms more carefully over time. Subsequently, introduce reputation points for each market participant, so that people can easily navigate.
- Create the possibility of considering “digital” cases by a court. Yes, this is slightly contrary to the idea of decentralization and freedom from regulators, but so far this is the only way out. At least all the data will be recorded in the detachment and the court will be easier to review the case.
Another way to use smart-contracts?
- Buy tickets in subway
- Payment for cash and taxi
- Ticket to the cinema or theater in the form of a smart contract, which shows the places for viewing.
- Loans and Leases
Anyway, we can find a lot applications for smart-contracts, which will save time and money for people.
Some of you can ask the question: But what about those people who can lose jobs because of this “saving”?
There is an easy answer. It is enough to think a little and remember what progress we have made in the last couple of centuries. Humanity does not stand still, each of us wants to make money, so car and video card manufacturers delay progress as much as possible to drain more money from their technologies, while young entrepreneurial minds create new technologies that demand and, accordingly, new workers places. There is enough money for everyone, and if there is not enough, people will eliminate this imbalance by their own efforts, because nobody wants to be deprived.
Smart contracts are already actively used in the ICO. For example, the project decided to sell its tokens to investors. To do this, a smart contract is created, which sets the conditions under which the creators receive ETH to their account, and investors immediately — tokens to their accounts. And all this happens quickly and without the participation of people. You can even point out that ETH is accepted only from certain accounts of investors with a certain limit. Thus, the project can evenly distribute its tokens among a multitude of participants and accordingly prevent the exchange rate of the token from falling sharply when it enters the exchange.
LibreBank project, where I putted my investments, also actively uses smart-contracts. For instance, to provide investors participation in DAO management, they need to freeze their tokens in special smart-contract. Also, the smart contract is used in ICO under the scheme I described above. The project uses modern technologies for maximum decentralization and transparency.
Smart-contracts will be continue developing.
In general, we are waiting for a very interesting future with blockchain, smart contracts and cryptocurrencies.
Read about LibreBank tokens (LBRS).
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