Technological advancements have taken the world by storm, leaving businesses and corporates spoilt for choice. Among the technological innovations that the world is adjusting to are smart contracts. They have been a game-changer in handling contracts in various sectors, especially in legal, healthcare, real estate, accounting, warehousing, trading, insurance, travel, tourism, etc. So, what exactly is a smart contract?
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What are Smart Contracts?
The word contract is familiar in the universe of business. Contracts have been part and parcel of most business dealings involving more than one party. For the longest time, traditional contracts have involved paperwork and a middleman, such as a lawyer or a witness, to build trust between the contracting parties.
However, things have changed since smart contracts came into the picture. Intelligent contracts are created through blockchain and are self-executing decentralized programs that facilitate the transfer of digital money, shares, assets, or property between parties. The self-executing feature implies that you do not need an intermediary to oversee a transaction with another party.
Smart contracts are developed using complex programming languages, rendering them impenetrable. They only process agreements within stipulated terms and conditions, building trust between parties. Smart contracts have streamlined transaction processes in several sectors.
For example, the construction industry has been facing issues such as delayed payments to suppliers, contractors, and subcontractors because of the time taken to review contract paperwork, which sometimes can get misplaced. Smart contracts gave construction projects a facelift by enabling automated transactions, thus allowing the tasks to run smoothly and timely completion.
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What are the Benefits of Using Smart Contracts?
You stand to enjoy the following benefits of incorporating smart contracts in your project:
Smart contracts have eliminated mediators such as lawyers and consultants needed when drafting and witnessing arrangements, who are paid a fee for their services. The only charges you can expect while using this kind of contracts are transactional-related. Otherwise, they are self-executing when the pre-determined conditions are met.
You can rely on the accuracy of smart contracts because, unlike paper-based agreements prone to omissions, errors, damage, loss, and other mistakes, they automate details as presented, guaranteeing correct records.
The codes used in smart contracts are encrypted through cryptography, rendering them hard to decipher and therefore hack. Developers understand that a robust algorithm is critical in smart contracts and agreements because it is hard to build user trust in an insecure platform or system.
Smart contracts are, by nature, digital or online. They are environment-conscious, and they do not involve paper which involves deforestation. All the transactions are enabled digitally, and effortless records retrieval is facilitated upon request. This makes them a more efficient way of effecting contractual terms sustainably.
All the terms and conditions are clearly defined, and you can see the transactions taking place in real-time. You can, therefore, interact or trade with other parties without the fear of being a victim of fraud.
Top Smart Contracts Platforms to Use in 2023
Now that you understand the advantages of smart contracts, it is also essential to know some of the best intelligent contract platforms you can use for your projects. They are as follows:
Ethereum is the pioneer of smart contracts and one of the best platforms. It relies on proof-of-stake for consensus. The platform’s smart contracts are run by Ethereum Virtual machine (EVM), a single decentralized entity connected to a computer network.
Anyone to run an Ethereum node must pay the admins in Ether, the digital coin of Ethereum. Despite this smart contract platform being the original, it faces stiff competition from other emerging platforms. For example, an innovative contract platform like Solana has faster transaction speeds than Ethereum.
As mentioned above, Solana is one of the innovative contract platforms giving Ethereum a run for its money. It is among the blockchains that will contribute to a projected multimillion-USD-worth market size in 2028. The speed-oriented intelligent contract platform also operates with lower fees, another feature that has endeared it to developers and users.
Solana is an open-source blockchain that users can utilize without permission, and it works on a proof-of-history and proof-of-stake consensus. Other than enabling fast, automated transactions, it is also compatible with several programming languages that create dApps.
Cardano smart contract blockchain is a fast, cost-effective, and adjustable platform using a proof-of-stake consensus mechanism. The platform has two layers for streamlined transactions.
Cardano uses Marlowe, Plutus, and Haskell programming languages to create, for instance, a blockchain digital document verification system for legal, real estate, and other sectors. Parties using Cardano are guided by its pre-defined terms and conditions that are hard to alter during transactions.
Stellar is one of the simplest smart contract blockchains that developers can use to create contracts like escrows while benefiting from its speed, small charges, and multi-signature features. Stellar still needs to develop its programming language, enabling developers to use any.
Always up-to-speed with the latest innovations, Tezos uses the Michelson programming language for dApps. It facilitates systematic and secure contracts on a proof-of-stake basis. Developers and transacting parties pay fees using Tezos digital tokens referred to as Tez (XTZ).
Tips for Choosing a Reliable Smart Contract Platform
What should you consider when looking for the best innovative contract platform? As a user or developer, you should weigh a few indicators to make an informed choice. If, for example, you are stuck choosing between Polkadot vs Cardano vs Solana, use the following metrics to make a choice:
Number of Active Users and Transaction Volumes
An excellent, intelligent contract platform is a magnet to users. The more transacting users on a blockchain, the more reliable. Consider a blockchain with several active users and large transaction volumes because speed and other features like low transaction fees are met.
A potential dApps developing blockchain should prove scalability, a desirable feature showing that it can meet the growing demands of decentralization. Pay attention to the platform’s Transaction Per Second (TPS) capability to ensure that it can adapt to technology-based changes without affecting transaction speed consistency.
Number of Decentralized Apps
Reliable platforms register impressive numbers of active dApps. It is a powerful indication that several developers trust the platform for the long term. You should note that many dApps in a blockchain do not directly translate to many users. Therefore, focus on establishing if your dApp idea has the desired number of users and assets in a potential platform.
Smart contracts continue to thrive in different sectors, and whether you will join the revolution or watch from the sidelines is the question. You must take advantage of what the innovation offers, so the sooner you adapt, the better. There are plenty of options to choose from, and you can always count on an expert’s guidance to make the right choices.
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