Smart contracts are protocols intended to verify or enforce a contract’s negotiation digitally. They ensure that the terms of the contract are met by performing actions or preventing actions from taking place that would change those terms.
- The global smart contract market is expected to be worth $300 million by the end of 2023. This will be accomplished with an average annual growth rate of 32% from 2017 to 2023.
- By 2020, the daily number of Ethereum smart contracts created will be around 50. As of June, the platform had made the most contracts in a single day on April 28, when it designed 123 contracts. In the months leading up to the recession, that figure had reached 300 per day.
- According to Santander Innoventures, blockchain technology will save more than $ 20 billion annually by 2022.
- According to Industry Research, the global smart contracts market is expected to exceed USD 1460.3 million by 2028, growing at a CAGR of 24.2%.
- As per Valuates Reports, With a 24.2% CAGR between 2022 and 2028, the global Smart Contracts market is expected to be worth USD 1460.3 million by 2028, up from USD 315.1 million in 2021.
How Are Smart Contracts Different From Traditional Contracts?
Traditional contracts are binding agreements between two parties that are enforceable by law. Smart contracts are similar to traditional contracts, but they are executed and enforced automatically by computers running on a blockchain network.
- The main distinction between smart contracts and traditional contracts is that smart contracts are self-executing, while traditional contracts require manual execution.
- With a smart contract, both parties can be confident that the contract terms will be fulfilled as long as the conditions specified in the contract code are met. This can reduce counterparty risk and the need for third-party intermediaries.
- Smart contracts also have the potential to be more transparent than traditional contracts, as they can be written in code that is publicly available on a blockchain. This could make tracking compliance with a contract’s terms easier and make it more difficult to commit fraud or other malicious activities.
Smart Contract Development: The Process
Smart contracts have been used in various industries and business applications, including insurance, supply chain management, real estate, and healthcare. Assuming you’re already familiar with the basics of blockchain and cryptocurrency, let’s jump into how to create a smart contract. The process is quite simple and broken down into a few key steps:
- Define the Terms & Conditions
This includes specifying what actions will trigger the execution of the contract, what data will be stored on the blockchain, and what parties are involved.
- Write the Smart Contract Code
This is possible in various programming languages, but most popular platforms like Ethereum use Solidity.
- Deploy Your Smart Contract
The deployment will make it accessible to anyone who wants to interact with it.
- Test Your Smart Contract
This is a crucial step to avoid potential errors resulting in lost funds or other issues.
- Start Using Your Smart Contract!
Now that it’s live on a blockchain, anyone can send transactions and execute the contract terms.
Top Applications of Smart Contract Development
The possibilities are endless, and as the technology develops, we will likely see even more innovative applications for smart contracts besides the ones below.
#1 Document Accessibility & Preservation
Document preservation and accessibility are of utmost importance regarding smart contracts. After all, these contracts are meant to be enforceable and binding, so they must be preserved to make them accessible to all parties involved. There are several ways to go about this, but the most important thing is to ensure that the contract is stored safely and securely.
#2 Administrative Billing & Payments
Administrative payments and billing are essential applications of smart contracts. By automating these processes, smart contracts can save businesses significant time and money.
- Cryptographic Signature
One way that smart contracts can automate administrative payments and billing is by using cryptographic signatures. These signatures can be used to verify an individual’s identity making a payment and verify that the price is valid. This can help prevent fraud and make it easier for businesses to track their finances.
- Automatic Decision-based Transactions
Another way smart contracts can automate administrative payments and billing is by executing transactions when certain conditions are met. For example, a smart contract could be set up to automatically send a payment to a supplier when goods are delivered. This can help streamline business processes and reduce the chances of errors.
Overall, administrative payments and billing are two areas where smart contract can shine. By automating these processes, businesses can save time and money.
#3 Statistics Collation
While a smart contracts can be used for various purposes, one of their most common use cases is in the collation of statistics. Using smart contracts, data can be collected from multiple sources and stored securely and tamper-proof on the blockchain. This data can then be used to generate accurate and up-to-date statistics about whatever topic the contract is tracking.
#4 Health & Agricultural Supply Chains
Smart contract can streamline healthcare supply chains by automating key processes such as ordering, payments, and claims management. This can reduce costs and speed up turnaround times. Smart contract can provide visibility into the entire supply chain, from farm to table, and this traceability can help ensure food safety and quality.
The agricultural sector is ripe for disruption by smart contract . The use of sensors and IoT devices in agriculture is increasing, providing data that can trigger smart contracts. A sensor could detect when a crop is ready for harvesting, and this information could generate a purchase order from the buyer to the farmer.
In both healthcare and agriculture, smart contract can reduce costs and improve efficiency. They can also help to ensure transparency and traceability throughout the supply chain.
#5 Real Estate & Crowdfunding
Real estate and crowdfunding are two industries disrupted by the emergence of blockchain technology and smart contracts.
While smart contracts have a wide range of potential applications, they are particularly well-suited for use in the real estate industry. Smart contracts help streamline buying, selling, and transferring property ownership. They can also create digital tokens representing fractional ownership interests in property, which can then be traded on secondary markets.
Crowdfunding is another industry that is being transformed by smart contracts. Platforms like Kickstarter and Indiegogo have long been popular with entrepreneurs and creators looking to raise money for their projects. However, these platforms are centralized and often take a cut of the funds raised.
Smart contracts are a powerful tool in various ways. Smart contracts could be the answer, whether you’re looking to create a contract for a business transaction or want to use one to automate a process. With their tamper-proof nature and ability to execute transactions quickly and efficiently, smart contracts change the way we do business.
As a reputed smart contract development company, Pyramidion Solutions has delivered many projects to clients across the globe. We deeply understand Blockchain technology and can help you leverage it to achieve your business goals. Connect with our experts today to know more about our smart contract development services and solutions!