HISTORY
It was Nick Szabo who first announced smart contracts in 1990. Nick Szabo combined protocols with user interfaces when explaining smart contracts in the past. Thus, while formalizing the computer networks, it also secured it. After a while, Nick Szabo studied the potential of smart contracts on topics such as credit systems, payment processing and content rights management and discussed this issue extensively with many people.
"Smart Contracts" can be defined as a computer-generated protocol designed to facilitate, validate or provide the negotiation process of the contract.
Smart contracts are an uninterrupted technique that is applied automatically by computer, without human intervention, without the need for the enforcement processes of the state registration and judicial system, without allowing legal disputes over money, real estate, shares and other assets by eliminating the dependency on intermediary elements such as lawyers and notaries. It can be defined as the agreements that provide the opportunity to take action in line with the sequence.
FEATURES
- Smart contracts work automatically.
- There is no trust problem in smart contracts.
- Smart contracts cannot be changed after they are distributed.
It is quite transparent.
- Smart contracts can be encoded in many different ways before distribution.
- It has a qualifying feature. Only the situations for which they were designed happen.
Application Areas of Smart Contracts
Since smart contracts are developed with cryptocurrencies, they are often used in the financial and banking world. However, this technology can be used in many areas around the world as far as possible. Supply chains, for example, can apply this structure to both track their products and automate all transactions and payments.
Likewise, real estate, healthcare, tax, insurance, and numerous industries can also benefit from the use and benefits of smart contracts. Some examples include the creation of tokenized assets, voting systems, crypto wallets, decentralized exchanges, games, and mobile apps.
Besides, they can be applied in addition to other blockchain solutions related to healthcare, charity, supply chain, management and decentralized finance (DeFi). Also, smart contracts are particularly useful in situations where funds are exchanged or transferred between two or more parties.
- Finance
- Banking
- Supply chains
- Real estate
- Health
- Tax
- Insurance
Although the approach of governments, banks and financial institutions to cryptocurrencies varies around the world, blockchain and smart contracts have been widely accepted and are used at all levels. For example: recently, DTCC (an American post-trade financial services company providing clearing and payment services to financial markets) and four other major banks (Bank of America Merrill Lynch, Citi, Credit Suisse, and JP Morgan) used their credit default swaps, blockchain developed by Axoni. They successfully traded in, using smart contracts.
Image : webrazzi.com
Platforms using Smart Contracts
RSK
It is a second tier solution aimed at developing and running smart contracts using the Bitcoin blockchain. In addition to bringing value and functionality to the Bitcoin ecosystem by bringing smart contracts to the platform, it can also process 100 transactions per second, which is sufficient for most applications.
You can think of it as a platform similar to Ethereum, which will benefit from using the world's first and most reliable blockchain. It combines the best two Bitcoin and Ethereum options based on the needs of users and plans.
LiquidApps
The smart contract experts on the platform's team are engineering study experts who will make blockchain development fast, easy, and accessible. He believes that this platform, which is the main task of connecting the chain together, will play a strong role in the next wave of dApp purchases.
Echo
It is another smart payment solution based on Bitcoin. Projected use cases include providing decentralized funds without using local tokens. The platform has a workspace, browser, desktop and mobile wallets, 64x virtual machine and EVM, and a consensus mechanism reached by PoWR. Estimated uses of dApps developed on this platform and protected by the Bitcoin blockchain include derivatives markets, stablecoins, loans, and decentralized exchanges.
Loom
The vast majority of smart contract platforms focus on overcoming Ethereum's shortcomings. This is a good example of this on the platform. It acts as the second layer together with the DPoS system running its own efficient dApp network. Tired of Ethereum's scalability problems, they achieved great success with the projects they developed. Production-ready smart contracts can work with the perfect UX thanks to its fast and easy setup.
How Smart Contracts Work ?
As Bitcoin was the first cryptocurrency, it was also the first example of simple smart contracts. However, due to its nature, bitcoin is used only for money transfer purposes.
Ethereum smart contracts are leaving bitcoin at this point. By using the Ethereum code structure, developers can develop smart contracts that can serve many different purposes.
One of the most important features that distinguishes Ethereum from bitcoin is smart contracts.
Any user can create a smart contract using ethereum infrastructure and put it into use. (In early 2018, there were reports that the ethereum-like smart contract period will begin in the bitcoin blockchain, but we can say that it is still in the trial process.)
Ethereum developer Vitalik Buterin explains how smart contracts work at a blockchain summit: "Contracts are converted to computer language and recorded in blocks. Contracts copied into distributed ledgers keep parties 100 percent anonymous. ..) stand by. When the time comes, it takes action to fulfill the transaction and if the necessary conditions are met, the transaction is successfully completed or canceled before completion.
What Do Smart Contracts Provide?
Autonomy: Smart contracts eliminate the need for a third-party facilitator mediation and basically give you full control of the deal.
Trust: No one will be able to steal or lose your documents as they are encrypted and securely stored in a shared ledger. Moreover, you don't have to trust the people you deal with or expect them to trust them, as the neutral system of smart contracts replaces trust.
Savings: Notaries, real estate agents, consultants, assistance and many other intermediaries are not needed thanks to smart contracts.
Security: Smart contracts are very difficult to interrupt when implemented correctly. Also, perfect environments for smart contracts are protected with sophisticated encryption to keep your documents safe.
Productivity: You will save a lot of time with smart contracts. While you would normally have to manually process stacks of paper documents and send and transport them to specific locations, with smart contracts you won't need them.
I think we are very lucky to witness one of the technologies of the future. There are enormous opportunities in this area and it seems that those who make use of these opportunities will be the giants of the future. For this reason, it is very important to understand smart contracts and blockchain technology well.
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