HOW SMART CONTRACTS SOLVE PROBLEMS: THROWING LIGHT ON USE CASES

BLOCKCHAIN TECHNOLOGIES IN THE MODERN WORLD

Let’s dig deeper into the crypto world. There are new phenomena—Ethereum(ETH) and smart contracts—based on cryptocurrency, thanks to Vitalik Buterin, one of the most famous developers of blockchain technology in the modern world. In this article, you will familiarize yourself with the main functions, possible uses of smart contracts, and benefits, in addition to the spheres where can we use them:

Your task is to come to your own conclusions regarding the business value of smart contracts, either intuitively or based upon true-to-life facts and personal experience.

WHAT ARE SMART CONTRACTS, AND ARE THEY ACTUALLY GOOD?

The first cryptocurrency suitable for the smart contract idea was Bitcoin, but the problem is, its use case is quite narrow. Bitcoin transactions are limited to operations like transferring money from one user to another.So, possible smart contracts are not so popular nowadays.

Ethereum was created to deal with such problems. To put it clearly, the principle of the EVM (Ethereum virtual machine) is the following: all of the methods or functions of the smart contract are executed like transactions, with block confirmations: mining and data input. You also need a program to compile, deploy, and execute the contract’s functions and methods. The suitable integrated web app is Remix and it can also help to compile your smart contract source code.

After smart contract deployment, you can interact with the contract using different wallets (MEW, Ethereum Wallet/MIST, Parity…). You can transfer ownership, mint tokens, set allowance, and more. All you need is your wallet (don’t forget about a private key or keystore file) and a balance larger than zero, as you will have to pay a small gas fee for all transactions. In other words, no third parties, no middlemen, no substantial fees—just integrity and security.

SMART CONTRACTS IMPLEMENTATION

It is necessary to mention the Solidity coding language, thanks to which EVM can execute smart contracts. Solidity is a beneficial programming language because it not only solves computational problems, but also defines data structures in contract code: usually, a set of contracts with .sol file extensions. This makes the language stronger and more powerful. That is why Solidity has gained popularity. It is important to keep track of new versions of Solidity, because it is being constantly updated and renovated.

Below, you can observe a piece of smart contract code. The first line identifies the Solidity version 0.4.0. To demonstrate, at the beginning of 2018, developers are already using the 0.4.19 version. This affirms that the Solidity language is constantly upgrading.

In addition to the information mentioned above, you can investigate how the smart contract blockchain works with Applicature.

WHY DO YOU NEED GAS?

At the same time, there is one reasonable condition when creating a smart contract: the developer has to make the contract as transparent as possible, so it will consume a sufficient amount of gas to implement the code and perform some operations with it. Gas will be charged every time transactional functions are executed.

When you execute any transaction, it will require specifying the gas price and gas limit. Let’s untangle these two terms. So, the vending machine requires paying the gas fee (that includes gas price and gas limit) in Ethereum, which will be used by miners to confirm the blocks in your transaction. The gas limit is the maximum amount a user spends per transaction. It is necessary for the transaction not to fail. When you reduce the gas limit, it will not make a profit for you. You pay the gas price for the unit of gas, so if you want to reduce the gas price, it means that your transaction will be confirmed, and it will take much time. Normally, 40 GWEI guarantees that your transaction is likely to succeed.

TESTNET VS. MAINNET

Another key point of EVM is that it provides the option of deploying a smart contract to the test network. In this way, you have the chance to test and prevent your code from crashing before deploying it to the mainnet and firing away. This will help you make sure your code works as it was intended to; that you reduced the vulnerabilities and your work is pure perfection.

You may also choose one of the test nets available: Ropsten, Rinkeby, Kovan, etc. Rinkeby is as easy as pie. There are many tutorials on how to get free test Ethers to your test wallet so you can give it a go.

However, the most important part is deploying your smart contract to the main network. If you choose to use the Ethereum Wallet/MIST, be ready to wait a decent period of time to download the main network, as there are lots of blocks to wait for. You must be careful with all the data you insert when deploying the contract.

WHICH INDUSTRIES USE SMART CONTRACTS?

Why do smart contracts cost money? Let’s dig a little bit deeper. Smart contracts are meant to solve numerous problems, which will make certain difficult processes simple and available. Smart contracts are the basis for lots of ICOs. They help people engage more investors and develop their businesses at the highest level. In fact, the Applicature team is convinced of the truth of these words.

SMART CONTRACTS FOR THE FINANCIAL INDUSTRY

There is no doubt that smart contracts exert an innovative influence on the financial sphere. Intermediaries are left behind when companies choose to use smart contracts for their projects. Smart contracts can be useful when recording and storing financial data and information, making transactions, and completing payments. Not all agreement types, however, can be elaborated with the help of the blockchain technology.

You can discover below how many services in the financial sphere rely on smart contracts and blockchain:

For investment banking, smart contracts can solve the problem of unjustified high fees for payment operations or different types of loans and credit. In retail banking, mortgage lending will benefit from the implementation of smart contracts, as banks will be able to cut costs for processing banking operations. The automatization of insurance will increase annual savings for insurers and customers, as well.

Smart contracts have one major feature: auto-sufficiency. They are able to perform transactions, collect funds, and store and distribute resources without intermediaries. Smart-contract code can perform any necessary functions automatically. In addition, fraud is impossible.

However, issues can arise when legalizing smart contracts. This depends upon the country’s jurisdiction and formalities when two involved parties request the establishment of legal relations.

There is also a remarkable example that illustrates the benefits of smart contracts in comparison with banking systems. The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is used by many financial institutions to keep track of financial transactions. SWIFT uses a middleman (bank) for the completion of transactions/payments between two banks. However, if the middleman steals money, the banks will not be able to find out who the thief is. The advantage of completing transactions via smart contracts is that they do not use middleman services.

USES OF SMART CONTRACTS ARE POSSIBLE IN BUSINESS

It is highly important to investigate how blockchain can transform and upgrade your business. Numerous recently-established startups are using the blockchain system along with smart contracts in order to run a successful business. These cutting-edge technologies can lead almost any business to prosperity and great achievements.

Smart contracts promote cost efficiency, and make it easy to manage your business. You can quickly verify agreements that will allow the establishment of direct business relations.

To demonstrate, blockchain can be used with the following business models to upgrade your business to a higher level:

Smart contracts are also profitable for small businesses. The first thing to mention here is the automatization process. All of the payments your company generates can be implemented without banking system services. Paying for the internet, rent, food, etc. the funds can be arranged according to a concrete date and time. And the counterparty receives the payments without waiting a couple of weeks for all those bank formalities.

What’s more, a massive amount of paperwork and documents can be replaced and stored with the help of smart contracts.

SMART CONTRACTS AND BLOCKCHAIN CAN BE SUCCESSFULLY USED FOR ADVERTISING

It might seem far-fetched to use smart contracts in advertising in terms of blockchain technology. With the help of the blockchain system, however, it is possible to create a rewarding advertising project. Mass-media adds can be rewarded immediately with the help of smart contracts.

Another important thing is controlling your advertising budget. If the campaign involves a lot of people and you are to share revenue between them, it gets harder to control all the processes. The process definitely requires automatization for launching and conducting intensive campaigns, and/or organizing payments or tasks. With smart contracts, you can manage your project accurately and transparently.

It is worth mentioning the purchase of ads via smart-contract execution.NYIAX (The New York Interactive Advertising Exchange) is a blockchain-based exchange supported by Nasdaq. The aim is to make an automated contract execution for buying media. Another key point is its deployment in the cloud. The NYIAX exchange platform helps publish or trade advertising. With the help of this platform, companies can increase profits by reducing fees for monetary transactions.

NYIAX CEO Lou Severine expressed his constructive opinion concerning this platform:

All in all, digitizing your business will increase profits and make all its processes simple, transparent, and secure.

SMART CONTRACTS FOR REVENUE SHARING

Basically, revenue sharing is widespread among various industries: advertising, mass media, politics, healthcare, sports, etc. It depends on industry, but the demand for it is increasing. Revenue sharing varies from paying bonuses to engaging new customers. Nevertheless, the main idea is to provide stakeholders with their revenue share in time.

To provide accurate profit-sharing, smart contracts are implemented and compared with agreements that ensure the performance of the conditions accurately and without delay. This way of running a business is really trustworthy.

To demonstrate, a person invests a large sum of money in a business and becomes a stakeholder. He expects to get his revenue correctly, without any mistakes in calculation. A smart contract solves this task: the revenue-sharing performs automatically, as was arranged beforehand during its creation. Take a look at this plan:

USING SMART CONTRACTS FOR GIFT CARDS

Is it possible to create gift cards using Ethereum? Let’s investigate. Using smart contracts for gift cards performs a deeper function than it seems to do at first sight. The main purposes are to increase sales and to be able to make purchases on behalf of someone.

The following logic should be implemented in smart contracts used for gift cards: the token holder should be able to set the beneficiary, calling the function in the smart contract along with the ID of the gift card. In this way, the person will be able to get the tokens have been already prepaid.

Here’s what a piece of code for creating a gift card should look like:

The secondary properties can be distinguished in the latter development stages.

For instance, there exists a trading platform called Gyft Block, created to make using gift cards easier in the blockchain system. It lets users exchange their gift cards and buy a cup of coffee, for example.

Guillaume Lebleu, Gyft’s Head of Special Projects, explained the concept of their project:

An alternative like this will not intrude upon people’s privacy or security, and it is more beneficial and easy to use.

SMART CONTRACT APPLICATIONS FOR HEALTHCARE

Blockchain technology is considered a breakthrough in healthcare. As smart-contract logic presupposes security and traceability, it is useful to encode the health records of an individual with personal access. The individual has his private keys, and is responsible for storing his personal data. This could also be applied to surgery, medicine, or medical supply.

Healthureum is rooting Ethereum smart contracts in the medical system. The vast amount of existing healthcare data is growing bigger, and there is a problem in storing and sharing it. With the help of Healthureum, data can be stored in the blockchain system, as it takes control of data and payments for healthcare services. Smart-contract code guarantees security, and when performing the transaction, the user pays the fees in HTH Tokens.

The benefits are the following:

• your health data is secure and stored in the smart contract
• the automated process can save lives and time when an emergency arises
• full accuracy and privacy is provided

Feel free to investigate smart contracts in healthcare with Applicature.

SMART CONTRACTS FOR THE SECURITY WORLD

Identity and privacy take first place among smart-contract priorities. In our modern world, it is mandatory to make sure that your private data is not accessible or public.

Blockchain supports and maintains people’s security when running a business or launching a startup. In order to avoid negotiating agreements without intermediaries or third-party services, numerous businesses solve their problems with a simple smart-contract code.

There is a vast array of companies that can advise you how to upgrade your business with the help of the Ethereum ecosystem in order to perform in a timely manner and avoid high fees. These services can launch a brand-new project for certain brands, paying attention to every detail and providing full-circle technical support and smart-contract audits. Applicature team will help you develop your customized smart contract!

Source: Applicature by Olga Vasylyk

#blockchain, #smartcontract

Applicature – a boutique Blockchain development agency focused on strategic consulting and implementation of Blockchain, smart contracts, ICO, wallets and payment gateways, consumer applications. We help companies worldwide to optimize their business processes and take maximum advantage of the opportunities opened up by Blockchain technology!

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