“Now everyone knows that blockchain-based smart contracts have the potential to revolutionize the way we reach agreements, execute deals and grant licenses. They change the way many industries work. So this technology can be used by ordinary citizens and small What does the company do?"
Editor's note: This article is compiled from Medium, original author: Norbert Biedrzycki, Microsoft Services CEE (Microsoft Central Eastern Europe · Central and Eastern Europe) in charge, former head of McKinsey, vice president of digital, former Oracle consulting and business development services sector.
Original title: THE BLOCKCHAIN SMART CONTRACTS REVOLUTION (blockchain smart contract revolution)
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In the past two years, a large number of publications have been published, and there have been countless debates on artificial intelligence trends and technologies. This year, the media and blogs have focused on the blockchain. Although this technology may not be as explosive as robots, smart cities and autonomous vehicles, it is becoming more and more popular every week. In fact, I can hear the new technology and business implications of the blockchain every day.
In my meeting with clients, this topic is often a priority. The frequency with which blockchain smart contracts appear in conversations stems from an understanding of the enormous potential of automated execution processes, automated decision making, and mission performance. I have also observed the acceptance of this new trend by all sectors of society. Blockchain is no longer the only concern for cryptocurrency investors. Although the technology is currently used by large financial institutions and the energy industry, some of its features are likely to become as popular as email and the Internet in a few years.
Smart contracts in peer-to-peer networks
A key feature of the blockchain is that it saves the middleman by bringing the parties to each other directly into contact. In 1994, lawyer and cryptographer Nick Szabo realized that the blockchain could be used to enter into contracts without any intervention or authorization from either party. Once the relevant contract terms are met, they can be automatically concluded. This is the generation of smart contracts.
Blockchain contracts can be converted to computer code, allowing assets or currencies to be transferred to blockchain-based programs. The program runs its code and automatically checks if the conditions specified in the contract are met. On this basis, whether the asset should be transferred to the counterparty or returned in the form of payment.
At the same time, the blockchain stores and copies contracts, keeping the contract secure and immutable. By doing so, the blockchain can automatically update information such as asset and currency transfers, product and service receipts.
Once the goods are delivered to the recipient's warehouse and passed quality verification, the payment for the ordered goods will be triggered automatically. Payments are made without manual intervention after shipment, even if only one unit has been confirmed by the logistics system.
The advantages of smart contracts
control. In a distributed system that confirms (or refuses to approve) contract performance, multiple parties continuously check, re-examine, and update block entries, while other parties reject any non-compliance with the rules.
Safety. Follow the contract logic and then run the program on all blockchain nodes simultaneously. All parties can compare the results. These parties only modify their own block version after the parties agree to the terms of the contract. Then copy the block throughout the network. In theory, no one can fool the blockchain.
Transparency and flexibility. Any blockchain user can evaluate contract logic and underlying mechanisms. Each of them can verify and run the same code. Users cannot access individual contracts, and all details of the contract can only be seen by both parties to the contract. If other users accept the contract terms and contract logic, simply put, any of them can copy, modify, and execute the contract again for their own purposes. As mentioned many times before, the way the blockchain handles privacy is controversial.
The possibility of launching a smart contract will vary depending on the blockchain system. For example, NXT is a public platform that supports selected smart contracts. Unfortunately, at this stage of development, users are prohibited from creating their own contracts on the network. However, they are free to use any existing templates. The most popular and possibly the most advanced public blockchain platform is Ethereum. In theory, an Ethernet contract can be made by any logic. Unfortunately, the technology is still very complex, and the language used to use its contract logic (called "Solidity") is very difficult and demanding.
Waiting for a killer smart contract application
I am paying attention to this new technology and waiting for it to win the support of a continuous community and professionals. In March last year, Moscowers were allowed access to the blockchain-based platform Active Citizen, which was designed to connect members of the micro-community. The platform was initiated by the city government to support community voting and resolutions. The blockchain debate has also spread to Europe. In February 2018, the European Commission decided to establish a blockchain observatory.
All of this suggests that although the technology may not yet show its full potential, it is ready to support its first business application. However, it will take several years to realize the full potential of smart contracts.
Analysts expect that by 2025, the system will have full functionality. The technology we observe today is only new. Perhaps a year or two later, the secrets of smart contracts will have to be explained to a wider audience.
Take a look at the examples below to see how smart contracts based on blockchain can change our lives in the near future:
Taxi and logistics
Vitalik Buterin, the creator of the Ethereum ecosystem, succinctly sums up the benefits of blockchains for urban transport. The blockchain did not make the taxi driver unemployed, but made Uber unemployed and let the taxi driver deal directly with the customer.
Arcade City is a startup based on operational principles similar to Uber and Lyft. The difference between Arcade City is that drivers using blockchain capabilities can already determine the rates they charge and build their own customer base. They can also use smart contracts to complete transactions on specific routes.
However, the industry's transportation department may notice this technology before the independent operator approves the blockchain. Distributed transaction logs can come in handy wherever real-time tracking of shipments is required. This is especially useful in multi-level information architectures that require multiple validations and authorizations, where trust is paramount.
This is why the Port Authority of Antwerp in the Netherlands chose to use the blockchain. This technology makes life, and communications, easier for shippers, drivers, support providers, and any other company involved in the distribution of goods. It supports the tracking of shipments from the manufacturer to the end customer through a simple mobile application that directly accesses the blockchain record. This simple service does not require a large and complex ERP or SCM system, which also enables it to reduce costs. More importantly, smart contracts stored on Ethereum can automate direct payments, allowing shipment and receipt confirmation to be processed without user or customer confirmation. Everything is safe and instant.
Paper documents will be replaced
Tens of millions of passports are forged every year in the world, and these passports are usually paper. Some countries are already engaged in advanced projects that digitize these data. Dubai is working hard to develop digital passports. This is another possible application of the blockchain.
The public administration should accept the digitization of their records sooner or later. All information used to identify citizens and any other citizen-related data can be stored in a peer-to-peer global decentralized blockchain database. Forging documents requires cracking and modifying the blockchain, which is virtually impossible. More importantly, any changes or inputs to such documents, such as visas or transit notes, will be permanently stored. We can only imagine how this will improve security and data transparency.
Change bank account
Will the blockchain make the bank account a past tense? This is not entirely impossible.
The cryptocurrency community believes that traditional currencies are outdated. They believe that all financial operations can be performed with a string of unforgeable characters that can be shared directly between members of a given network.
The banking community has recognized that blockchain is critical to the upcoming changes. Last year, IBM conducted a survey of 200 banks. As many as 65% of respondents revealed that they plan to launch blockchain projects in the next three years. I think that almost 100% of the blockchain will definitely become an important part of this field. This is likely to mean that ordinary cash customers will no longer need a bank as an intermediary.
Blockchain can be a key tool for public control of politicians. Future blockchain-based tools may prove to be irreplaceable in the process of supervising elections, and the blockchain's real-time operational capabilities will come in handy. Voting tracking and counting will no longer require a large electoral commission to perform multiple activities. Voters can be provided with a useful audit tool to ensure that no ballots are removed or added.
Make the cloud safer
Blockchain technology may be valued by midsize companies. Applications that group datasets and support federated transaction authorization are set to popular. Even as a small business owner, you may save business data in a cloud of more than one address.
Due to its distributed architecture, the blockchain is well suited for this decentralized environment. It divides the file into smaller pieces and saves them to multiple locations. Each new fragment it generates becomes part of the blockchain. File upload or download information is shared with all network users, and users can authorize the entire process. Distribution and joint authorization give users an additional sense of security. The value these solutions bring to smaller or larger companies and their potential for further growth is unquestionable.
Fans and skeptics
Although the technology industry is warmly welcoming the blockchain capabilities, marketers and trend researchers are much more calm. For now, smart contracts can be difficult to accept psychologically. Be aware that once the algorithm believes that the appropriate conditions are met, the contract is automatically executed. Fans of the blockchain believe that this is a sign of technological intelligence. They emphasized that automation contracts eliminated red tape, redundant middlemen, “third parties”, ambiguous terms and conditions, and even reduced the court's workload.
But skeptics point out that humans are reluctant to entrust such things to algorithms. Not everyone can stand the drafting and conclusion of no one involved in the contract. Skeptics are similar to those who swear to never enter a self-driving car or allow IT code to determine road safety. Personally, I don't think that some differences in the operation of the blockchain will prevent it from changing the world.
Original link: https://firstname.lastname@example.org/the-blockchain-smart-contracts-revolution-d438e853b331
Compile: Sharing Finance Neo
Source: Sharing Finance