We are living in a world that, until recently, people only read about or watched in sci-fi movies. It’s now possible to have your business connected to the Internet Of Things and automatically take care of a whole layer of tasks. Automation has the potential to make our lives easier, cut down on overhead costs, remove transaction fees and increase efficiency. This is all possible through blockchain contract management solutions.
Blockchain and Smart Contracts
When Satoshi Nakamura released the Bitcoin whitepaper a world of possibilities opened up. Blockchains are electronic databases of information, records and data structured in such a way that records are easily accessed by authorised parties securely. Blockchains are also immutable, meaning that the ledger is incorruptible; once a record is created it can’t be tampered with or changed.
Ethereum is one of the altcoins that was created after Bitcoin made its big debut. Ethereum and Bitcoin do have their similarities but the former has a lot more going for it than being just a currency. Ethereum is a peer to peer network made up of computer nodes spread across the world. Each of these nodes contains all the information from the blockchain and is an exact copy of the other. That means that if a node fails, any functionality that depends on access to the blockchain will not be affected. Part of the information stored in these nodes is smart contracts.
Smart contracts are legally binding lines of code that work within blockchains that replace or complement regular contracts. These small programmes are created with predefined rules and conditions agreed upon by the contract stakeholders. The contracts are self-enforcing and self-executing so once the conditions are met the desired outcome occurs.
Why Businesses Use Smart Contract Management
Many businesses depend on contracts and agreements for their functionality. However, regular contracts and legal documents often require large investments of time and money. Here are some of the ways blockchain contract management can save businesses money.
One of the fundamental aspects of blockchain is that it utilises advanced cryptography to secure the content of smart contracts. When blockchain developers such as Laracle programme smart contracts, we add multiple layers of encryption with rule-based access rights to the data. Certified blockchain security ensures that the right people have uninterrupted access to the contents of the contracts and other key information that needs to be kept secure.
Smart contracts are automated, guaranteeing instant results and cutting down on the cost and time associated with regular contract management. Once the conditions are met, there's no need for a flurry of phone calls or emails to the counterparties of the contract.
What are dApps?
Decentralised applications, abbreviated as dApps, are programmes that run on a blockchain’s peer-to-peer network, not on a single computer. Decentralisation means that you would no longer need to go through a third party to make a transaction or access your information. These applications can look like regular websites or programmes, however their backend code is made up of single or multiple smart contracts. So you could look at a dApp as your interface with the blockchain, that allows you to manage your smart contract/s.
Web 2.0 is made up of apps and websites that focus on interoperability, user-generated content and ease of use. When you log into a Web 2.0 service such as Netflix, the webpage or app will call an API to process your login information to give you access to the information stored on their centralised servers. This is hardly secure as your personalised data is stored on the server of the service provider.
Web 3.0 is the next generation of the internet and is envisioned as a user-friendly, fully functional network where we control our data. Decentralised applications running on blockchain are what make up Web 3.0. dApps build on the functionality of Web 2.0 websites and applications but none of the information is stored in a centralised space. Their entire backend exists solely on the blockchain and is made up of smart contract code.
Blockchains That Allow Blockchain Contract Management
Polkadot is the fifth largest crypto project by market cap at the time of writing and was founded by the Web3 Foundation. Polkadot’s blockchain can host parachains on its network.
What this means is that their platform is capable of sharding, which is hosting other blockchains within their blockchains. Sharding scales blockchains allowing them to process more transactions than a single blockchain.
The world’s largest cryptocurrency exchange, Binance, has two blockchains; Binance Chain and Binance Smart Chain. Binance Chain was developed and optimised to facilitate the fast trading of crypto coins. However, the focus on trading reduced the scalability of the blockchain and reduced programmability on its network.
Binance Smart Chain, or BSC, is a wholly different blockchain that has smart contract functionality and compatibility with the Ethereum Virtual Machine. Both BSC and Binance Chain have dual chain architecture allowing assets to be transferred easily across the two chains.
Solana bills itself as the fastest-growing blockchain application ecosystem that can support a record high 65,000 transactions per second. Solana’s blockchain can scale the transactions it can complete per second proportionally to the network bandwidth and available hardware. Solana also has an impressively low transaction cost of $0.00001.
Ethereum was the first blockchain created with smart contract functionality and is where most Blockchain application developers build their dApps and deploy them. Roughly half of the dApps currently in the market run on Ethereum’s blockchain with more than 600,000 users interacting with dApps regularly. Our team of blockchain developers build apps for the Ethereum blockchain but we also use Chainlink for increased functionality.
What is Chainlink?
dApps are the front end of smart contracts that live on blockchains. However, smart contracts often need access to real-world data to execute the conditions in the code. That’s where Chainlink comes in. Considering that smart contracts are automated, it would be disastrous if the data fed into them was wrong and resulted in contracts self-terminating, executing too early or not at all.
Chainlink is a decentralised network of oracles that create an off-chain, on-chain link. Oracles are nodes on the peer-to-peer network that collect information from the outside world that is then fed to blockchains. Chainlink’s network collects, verifies and transmits data such as commodities’ prices at a given time from various sources ensuring that smart contracts function as they were designed to.
Smart Contracts In 2021
The global smart contract market is projected to reach a value of USD $300,000,000
by the year 2023. Smart contracts are merging technology, however, as more organisations, governments and legal bodies adopt the technology the industries will remain exponential.
Eventually, dApps will become as common as mainstream Web2.0 applications are and will be a part of every facet of our lives. Currently, there are a total of 3551 decentralised apps in the market across various smart contract enabled blockchains, and there’s ongoing development on many more.
Smart Contract Use Cases
The donor and charity sector has always been plagued by a lack of transparency. Donors are unable to verify that their charity is being used for good rather than embezzled or pocketed by corrupt officials. The blockchain proves the identity of the donation recipient and allows the donor to track how funds in the digital online wallet are spent. Donors can also be specific about what they would like the money used for and can see that their instructions have been adhered to. Tracedonate worked with the Irish Redcross to deliver aid to Syrian refugees in Lebanon. This was the first time blockchain had been used to deliver international aid.
Circulor is a dApp that offers supply chain traceability for the electric vehicle and electronics industries. They help with proof of provenance giving consumers and manufacturers information confirming that the raw materials used to create products were sourced sustainably. Their system also underpins effective recycling, ethical production and reverse logistics.
KYC Chain’s core business is customer verification for their clients and streamlining the onboarding process in a way that follows know-your-customer regulations. It can be used to verify individuals or organisations for criminal or illegal activities in real-time through a watchlist database covering more than 240 countries. The dApp also allows businesses to check their clients crypto wallets against a list of known risk indicators for compliance with anti-money laundering rules.
Blockchain contract management has the potential to revolutionise finance, gaming, healthcare, insurance, shipping, music and various other industries. If you are keen on joining other businesses taking advantage of the benefits that blockchain contract management comes with, feel free to get in touch with us. Our customer service team will start you on your journey to joining the future. Laracle’s developers have been working in blockchain contract management since the technology was first developed, so you can rest assured you will be in safe hands.