What are the benefits of smart contracts?

What are the benefits of smart contracts?

A “smart contract” is a concept on a blockchain system, and is a program that is executed by a transaction (transaction) on the blockchain or information taken from outside the blockchain as a trigger according to preset rules. Point to.

Here, “smart” is used to mean “automatically executed” rather than “smart”. The idea of a program that runs automatically according to certain rules is nothing new. Computer scientist Nick Szabo has already introduced the idea of smart contracts to the world in the 1990s.

So what are the benefits of smart contracts in blockchain?

First, “reliability” can be mentioned. Traditionally, contracts and transactions are executed through a trust-providing intermediary, but smart contracts do not need to go through a third party. This is because the rules are set in advance, so the program will be executed automatically whenever certain conditions met.In addition,Bridge Smart Contract Development Services blockchain is resistant to data tampering in the first place, ensuring a high level of security.

Next is “transparency”. The contents of the programmed smart contract and the records of the transactions executed by it will be published on the blockchain. Therefore, there is a high possibility that fraud will be detected.

“Cost reduction” is also expected. There is no need to pay a fee to an intermediary or a third party that guarantees reliability. At the same time, the time required for a series of procedures will be shortened, and information will not be omitted by the intermediary.

Many of these merits are rooted in the technical characteristics of blockchain, and smart contracts are the way to increase the availability of blockchain technology.

“DAO” is an example of the use of smart contracts. This is an abbreviation for “Decentralized Autonomous Organization” and refers to an autonomous decentralized organization. Many are built on the public blockchain (anyone can participate without a specific administrator), and the organization is operated by smart contracts, not by human will.

Writing this way gives the impression of a “libertarian” that emphasizes economic and personal freedom, Cross chain bridge development but it is not unrelated to the origin of blockchain technology such as Bitcoin. This is because Bitcoin was created based on the idea of “I want to create an unnecessary decentralized currency for the central bank” and “I want to send my assets at any time without being disturbed by anyone.”

Of course, smart contracts can also be used on private blockchains that maintain a certain degree of centralization (a specific administrator exists and only authorized persons can participate). In real-world contracts and transactions, it is not uncommon for contracts to be invalidated or for transactions to be unwound due to the effects of mistakes and laws and regulations. In a private blockchain, it can be invalidated or rewound by the agreement of the administrator, and in reality, this is considered to be the main battlefield, at least in the short to medium term.

However, you should not expect too much from smart contracts. In the “Hype Cycle for Legal and Compliance Technologies, 2020” announced in July 2020, Gartner, Build a cross chain bridge a research company in the United States, conducted hype cycle analysis in the field of legal compliance (the dawn of the maturity / application of new technologies, etc. → A method of plotting during the peak period of excessive expectations → disillusionment period → enlightenment activity period → stable productivity period). As a result of this analysis, smart contracts are said to be just before slipping off the peak of “excessive expectations.”

With so many expectations and so touted smart contracts, we will need to reaffirm whether what they are expected to bring will really come true. It should also be noted that unexpected risks may be obscured.