Development of smart contracts

Development of smart contracts: basic details

Smart contacts appeared relatively recently, but already managed to make a revolution in different markets. Despite the popularity and effectiveness of the technology, not everyone knows about it and not everything. In this article we will talk about the development of smart contracts, the principles of implementation, their pros and cons.

Smart contracts: brief history and the main principle of work

The prototype of smart contracts appeared in 1994, but in a more modern form the technology was formed only after 14 years. It was used everywhere in 2013, when Vitalik Buterin presented the Ethereum platform. Since then, the development of smart contracts does not stop. The main charm of smart contracts is accuracy and intransigence of execution. It is an ideal tool for regulating the relations between the two parties, when each of them has to fulfill the prescribed obligations. What does the traditional conclusion of such a contract look like now? A document is drawn up with the participation of an intermediary, in which the parties indicate their working conditions and responsibilities. Then each leaves with a copy of the agreements, which, in fact, guarantees nothing. In the event of fraud or non-compliance with the scope of the transaction, the parties have to go to court and settle disputes. Such processes can be prolonged for years. When using smart contracts, this situation is not possible by default. Here, the fulfillment of all promises is guaranteed by blockchain technology, which eliminates the possibility of changing the terms of the contract or rolling back the report retroactively.

Where smart contracts are used and what are their strengths and weaknesses

In fact they are used in any financial and other sphere. Issues of insurance, property registration, loan issuance and international settlements are solved with the help of smart contracts. The simplest example of the implementation of such a contract is a multi-signature, with the help of which the parties to the agreement fix the amount of cryptocurrencies on the blockchain. All transactions with it are possible only upon receipt of signatures from at least half of the contract participants, who then activate it with personal keys. The possibilities of smart contracts are extensive. They provide instant payment, simplify trading processes, forcing the supplier to pay a fine in case of sale of bad products. Also with the help of technology you can track the chain of events, for example, when delivering cargo through several countries and customs services.

Based on this, it is easy to determine the positive aspects of smart contracts. This includes resource savings (both temporary and monetary), no need for intermediaries, and the security provided by blockchain and decentralized system of work. However, technology has disadvantages. First of all it is the complexity of creating a high-quality smart contract in such a way that it works properly and does not have bugs in its code. Also, it should not be forgotten that in the development of smart contracts, all the options for the development of the situation must be taken into account. Lack of awareness about the essence of smart contracts is another popular problem. Curiously enough the protective properties of the technology can have the opposite effects. Having lost a personal key, a person will not be able to enter the blockchain.