You might not be interested at all in crypto technologies but actually need them. Here is a good example. Let’s assume you have an underage daughter invited by her girlfriend to a nightclub. You can’t control your child 24/7 and don’t want to ruin your relationship. But you need to be sure she won’t be allowed in a suspicious enterprise and she won’t be served with drinks until she comes of age. Is there any guarantee in such a case? Yes, there is, if you could imagine it.
The smart contract can guarantee that face control can prove whether the girl has reached the full age or not. It’s enough to swipe her chip card to a reading device. At the same time club visitors and administration will not have any access to any other information like her name or address. The life is getting safer this way. And it’s an absolutely reality with identification system build on blockchain.
Now as we know we do need smart contracts technology, let’s define how it works.
What is a smart contract?
Let me introduce you: Nick Szabo, a cryptographer, a computer scientist, a lawyer. From time to time there are some rumors, that he is hiding himself under the name of Satoshi Nakamoto, who is a founder of blockchain and bitcoin. Nick Szabo is a legendary person anyway even if you don’t believe rumors. In 90s before blockchain was created he became an author of the term “smart contract” and of the idea of an application executing the contract.
Szabo likes to explain his idea with an example of a soda vending machine. You make an action – you toss a coin. And the vending machine gives you soda and your change.
It is a simple and iterative pattern, so the machine can take a place of the cashier. A machine can’t make a mistake, can’t let itself talk into any deals and cannot get tired. Nick Szabo says we should also engage devices like vending machines for the matters we usually contact bookkeepers and lawyers.
How does it work?
The principle of using the smart contract can be compared with operations of a standard computer. A big public blockchain like the ones of bitcoin can serve as an operational system which stores data and keep them safe from any manipulations. And a smart contract is a computer application fine tuned to your needs. You can set up actions to allow, actions to block, notifications etc
There are the same principles for running a smart contract and operating a standard computer.
A big public blockchain like the one of bitcoin can serve as an operational system which stores data and keep them safe from any manipulation. And a smart contract is a computer application fine tuned to your needs. You can set up actions to allow, actions to block, notifications etc
A blockchain service (BaaS) offers public Cloud platforms and configuration tools. With these solutions businessmen and top managers can develop smart contracts according to their requirements for running a certain contract.
There are no privilege, no personal influence, no unnecessary actions. You can simply change one product to another, but blockchain with safeguard the interests of counterparts. That means that smart contracts will turn us back to equal exchange without middlemen in trade area.
What does it change?
Sounds good that smart contracts function, help us save time, operate without middlemen, conduct any contracts and be sure in data authenticity and its proper storage. But you have a right to ask: “What do I get from that?” Let’s review what will change for anybody with universal usage of smart contracts.
Do you remember how a smart contract did not allow an underage child to enter a nightclub? The rest of private data stay undisclosed and this is not surprising. You have to remember that blockchain plays the role of an operational system and smart contract is an application. That means it disclose only the data it has access to. And blockchain stores all data and secures it authenticity.
That means for everyone that all data about a human can be stored in blockchain, one smart contract will disclose to doctors his health info, and another smart contract will only show his real estate register by apartment sale.
You can and on the top data security and you will understand that there will be no need to contact any institutions for any certificates. And while buying an apartment or a car you will have all necessary data about the seller and nothing more.
Get in to the any notary office and try to imagine you need to find a power of attorney released 4 years ago and check if it is still valid. Let’s assume you found it but what if another notary has a power of attorney overriding the first one. It’s hard to imagine how long will it take to sort out and digitize all paper document of one office. And how many unintended mistakes will be done.
But actually there is no need to do it. A smart contract is able to digitize paper documents, automatically update all the data and delete them by expiration of the validity.
People get used to make all payments in golden coins had no trust in assignations and banknotes. Today it’s also awkward for many people to save money not in euro or dollars but in crypto currencies. Although almost everybody understands that banknotes will become soon as unusual as golden coins.
But it’s already not that new to use coins instead of dollars. The smart contract technology allows to issue crypto securities. We can store any stocks of any companies on blockchain, we can buy for instance ¼ of a stock and secure automatic dividend payments.
We are not dreaming about the future. The American company Symbiont is already offering for instance crypto signatures of stocks. The Delaware State Administration is actively supporting this initiative that makes crypto stocks legal.
Loans and mortgages
If you already obtained a bank loan or mortgage you must remember that these procedures are complicated and time-consuming. Application, approval, signature – all these are done manually and take a lot of time. And during this time you are not sure whether you will be granted with loan or not.
Smart contracts can automate every single detail of the transaction, including payment procedures and property lien. That will make the signing of a loan or mortgage agreement much quicker and efficient. And more important it will speed up the transfer of property rights for land or real estate and protect the parties from fraud. But the users need to be on Blockchain for that.
Can you imagine the world, where you feel safe in any road accident, because you can file an insurance claim and receive an answer and a payoff almost instantly.
With assistance of sensors installed the car will decide by itself about the gravity of injuries and this data cannot be disputed. Because a smart contract is directly reporting to blockchain.
Maybe it is going to be one of the most awaited changes and long-suffered drivers will be the first who will vote for smart contracts implementation.
Implementation of smart contracts in another several areas will make our world a better and safer place. We are talking about clinical trials, logistics, economy regulations.
As a result there will be created new medicines and treatment protocols, new technologies and better conditions for small and middle business development. These all will significantly improve the quality of lives of many people. But first it is enough that smart contracts can help handle our everyday tasks, and make it possible to spend minutes and not weeks on it.