What’s so great about smart contracts?
Smart contracts are great because they allow you to do many useful things on the blockchain cheaply, transparently, and securely. Some would even argue that smart contracts will cause an economic paradigm shift where the blockchain supplants real world middlemen.
Cutting out the middlemen for Internet services
One example is the replacement of Internet broker companies such as Airbnb, Amazon, and Uber with smart contracts. A service like Airbnb is desirable because it obviates the need for the host and the guest to trust each other, they need only trust Airbnb. With smart contracts, the host and the guest can forego Airbnb and put their trust on the blockchain. In doing so, they avoid paying Airbnb’s high brokering fees.
When there’s a dispute after the contract has concluded (funds transfered and keys exchanged hands), such as if the host kicks the guest out or the guest squats, either party can go to the authorities and use the blockchain as irrefutable proof of the contract’s terms and the opposing parties wrongdoings.
Cutting out the middlemen in real estate
Real estate is another example of an industry that could be improved via smart contracts. The industry is notorious for high middleman fees because of the numerous intermediaries that need to be involved in order to complete a transaction. According to the International Blockchain Real Estate Association (IBREA), using smart contracts means many of these intermediaries such as brokers, government property databases, title companies, escrow companies, inspectors and appraisers, and notary publics, would no longer be needed.
Secure and fair betting and lotteries
Besides cutting out middleman fees, smart contracts are great when transparency and fairness are desired. Good examples include betting and lottery services. It’s not a stretch to assume people would prefer to bet their money with a betting house using the blockchain over a betting house using a black box system. The same goes for lotteries.
Secure and fair voting
Another more important example of an activity where transparency and fairness are desired is voting. In the last US election cycle, there have been numerous claims of voter fraud. These allegations have undermined trust and also highlighted an inherent flaw in the election process: it’s incredibly hard for most individuals in the electorate to independently verify that vote counting has been fair. Conducting an election on the blockchain will allow any citizen to quickly and independently verify fairness. This is huge for maintaining democracies.
Support and interest from Fortune 500 companies
Finally, instead of pondering what smart contracts could potentially be used for, here’s something that’s already happened. Hundreds of companies, including many Fortune 500 companies, are backing smart contract technology through membership in the Enterprise Ethereum Alliance. These companies include JP Morgan, Microsoft, Deloitte, and the National Back of Canada.