Smart contracts are gaining immense popularity. Here are real-world examples of smart contracts in blockchain.
If you’ve heard of blockchain, there is a higher chance you must have heard the word “smart contract.” What is it? Is it another type of cryptocurrency? An NFT? There are several brimming questions around this; the answers are only here! Today, this article will explore the world of smart contracts, how smart contracts work in Ethereum and real-life examples in the blockchain. So, without any further ado, let’s get started!
Nick Szabo created the term “smart contract” in 1997, long before bitcoin even existed. He is a computer scientist, cryptographer, and law scholar. In simpler terms, smart contracts are just like contracts in the real world. The only difference between the two is that smart contracts are completely digital. A smart contract is actually a tiny computer program stored inside the blockchain. Let’s understand the working of the smart contract with a quick example.
You must be familiar with Kickstarter, one of the largest fundraising platforms. Product teams can go to Kickstarter, build a project, establish a funding goal, and start collecting money from people who believe in the idea. It is essentially a third party between the product teams and the supporters. It also means that both parties need to trust Kickstarter for easy money handling. If the project is successfully funded, the team anticipates receiving payment from Kickstarter.
On the other hand, supporters want their money to go to the project if it is funded, or they want a refund if it does not meet its objectives. As previously stated, trust is the most critical factor here.
In the case of smart contracts, a similar framework can be built without having any third party like Kickstarter. So, you can develop a fully-fledged smart contract for this. The smart contract can be programmed to hold all the received funds until a certain goal is reached. The rejected supporters can now transfer their money into smart contracts. In case the project gets fully funded, the contract automatically passes the money to the project’s creator. In case the project fails to meet the project goal, the money gets transferred to the supporters. And because smart contracts are stored on the blockchain, everything is distributed evenly. With this technique, no one is actually in control of money.
In simple terms, smart contracts eliminate the need for a central authority or intermediaries, thereby reducing cost, and time and streamlining processes. The blockchain is the most appropriate for smart contracts because it’s secure and immutable, which means there’s absolutely no risk of human errors or manipulation.
Do you think anyone is using smart contracts in the real world? Well, that is a pretty good question! The answer is yes! People do make use of smart contracts in the real world. Here are the top 3 real-world examples of smart contracts in blockchain. Let’s have a look.
DE BEERS Group is one of the world’s leading diamond companies. Undoubtedly, diamonds are the most precious stones one can ever invest in. However, their provenance is a massive source of ethical contention, with many coming from war-torn countries or those with mining practices. To fight this, DE BEERS Group uses a blockchain-based project known as Tracr, which improves the logistics and supply of diamond production. It is responsible for verifying the diamond’s lifespan by creating a digital fingerprint for the diamond, a non-fungible token also known as NFT.
It does this by scanning the diamond for easy data collection so that it can be recreated digitally. Trace then registers this information which is later stored in the blockchain ledger. Later, it is shared securely across the chain of networks, so any changes in the data or ownership can be added or verified using smart contracts in the blockchain. This confirms the diamond’s authenticity and ensures productivity.
One of the most efficient and promising use cases of the smart contract is its ability to function as a legally binding contract. The recent advancements in technology drove their way to the legal industry as well, especially with the introduction of e-signature required for binding legal contracts. The wide use of smart contracts for myriad types of transactions leads to low-cost, less time-consuming, and speedy transactions that may be faster than you can ever think. Several states in the US have agreed on the use of smart contracts in the legal industry and other industries. One prominent example is Arizona’s allowed to create enforceable legal agreements through the smart contract. Also, California allowed the issue of marriage licenses through blockchain technology.
Effective clinical trials depend on institutions exchanging data among themselves. Professionals may smoothly share data throughout the sector with the help of smart contracts. Additionally, blockchain technology can aid in the authentication of data to guarantee its accuracy. This changes everything for people looking to start large-scale clinical trials. The healthcare sector has various applications for smart contracts.
Apart from these, there are several other real-world examples of smart contracts in blockchain as this technology is booming at a higher speed.
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