Let’s make a deal, an agreement that we will provide you with valuable information, and in return, we just want your small amount of time. But you won’t agree to just words you read, there is a need for proof, a certification that validates our agreement. One might say there is a need for some sort of “Smart Contract” that does the following.
Smart Contracts are programs, a kind of functional feature that operates on the fundamental basics of the Ethereum Blockchain Development framework. The word was coined by Nick Szabo in 1994 and the concept took a transformative turn in 1996. However today we have the technological capabilities to establish and create a fully-fledged smart contract platform or introduce it as a feature in your DApps conclusively.
What are smart contracts? Why are they important?
The concept can be categorized as an Ethereum blockchain solution because it helps to eliminate the possibility of numerous security issues that are imperiling the safety of digital assets. After the pandemic, most of the services, solutions, practices, and a whole lot of things got a digital boost. People were moving their work to digital platforms and personalizing every key aspect of their day-to-day functionality.
During this new phase, Blockchain Technology became the face of digital transformation as it is in development to operate within the most critical area; The Economy. Smart contracts are not as complex as they seem to understand. You need to know what logic they operate on. But first let’s clarify the words here, if you think contracts mean agreements that act as a set of rules between two organizations so there is no deception. These Ethereum Blockchain solutions act as a reliability factor that affects the business partnership in a severe mannerism but at the same time mutually benefits them in every possible way.
So on a more generalized note, Smart Contracts are nothing but sets of codes programmed and built for blockchain. These program codes act as logical key points which need to be acknowledged to move on with a successful business partnership. The whole concept is to maintain the authenticity of the deal and jeopardize the way one operates.
We know how blockchain technology and cryptocurrency are going to be utilized to their maximum potential in the upcoming years. Sure there are a few limitations that need to be addressed, one such problem is addressed by smart contracts. They allow the user to create a digital parallel of traditional contracts on which dedicated operations are based. We are considering Ethereum app development as our primary platform for these smart contracts as it is the most famous which helps us to explain a few ideas with clear objectives.
Statistically Speaking
- There were approximately 1.45 million smart contracts created effectively in the first quarter of the year 2022.
- Beeple’s First 5000 Days was one of the most expensive NFT sold in Ethereum pricing at 550 ETH stated by Statista.
- Out of all the cryptocurrencies, Ethereum has the highest market share in the DeFi market (Decentralized Financial Market).
Explain like I am Five
To effectively understand we are going to consider an example that may let you understand how smart contracts are put into effect. In the case of a digitalized food ordering system, you can order your food through a computer present at the doors of the restaurant. You order a few burgers and fries and then proceed on paying the amount.
However, there are a few conditions that need to be met here. First, the amount of your order, second your conditions and personalization of the order, and lastly the table number on which you want your order to be delivered.
Here these conditionals act as points of logic that need to be aligned to complete the whole process of delivering your food. Comparing it to smart contracts, the computer acts as a secure platform that will accept your money and provide you with necessary pieces of information related to the menu. Those conditions are crucial stages that determine the circumstances of your food order.
The Benefits of Smart Contracts
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Cost Reduction
The primary aim of blockchain technology is to eliminate the intermediates and create a cost-effective solution. The data processing fees and unnecessary charges that are commonly imposed can be excluded with the technology’s help. Every bit of information in the contract is personalized according to your prerequisite. That alone eradicates the need as well as the fee of having to verify your data through another party.
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Transparency
Blockchain frameworks assure the immutability of the data and smart contracts are developed based on those frameworks. They provide transparency on both ends and manipulating the content of data is not possible as it works on strict secure algorithms. The contracts are monitored and tailored to perfection by a superior set of technology.
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Emancipation, Efficiency, and Scalability
The reason why smart contracts are growing in popularity is that they have the capability of scaling with several industrial niches. They provide the liberty to be utilized according to one’s regulations. Lastly, it does not consume your valuable time to establish a smart contract over a platform and includes the other party making it a rapid as well as less time-consuming process.
Epilogue
There are numerous applications of smart contracts and through Ethereum blockchain solutions one can make it possible. They are mostly being utilized in huge FinTech firms but soon there are a plethora of industries that will recognize the potential of smart contracts. For more in-depth information or instituting the feature in your next project, you might want to look for an Ethereum app development company. They are smart, and agile, and have the necessary tools as well as experience in blockchain development.
About the Author
Chirag Leuva is one of the Co-founders of Yudiz Solutions Ltd, a leading Blockchain Development Company. He is a tech-enthusiast and likes exploring new technology. His motto is “To become the very best one must utilize the best tools and team.
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