Smart smart contract transform many industries by automating processes directly on blockchain. These intelligent contracts make it possible to automatically execute transactions without human intermediary, thus guaranteeing transparency, security and speed. But how did they work and why have they become essential for the evolution of blockchains?
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What is a blockchain and what is its link with smart contractS?
A blockchain is a technology for storing and transmitting information, decentralized and secure. It works as a large public and unchanging register where all transactions and information are registered. Each new transaction is validated by a network of decentralized computers, then added in the form of blocks to the existing chain, creating a "blockchain".
Smart smart contract s are autonomous programs included in the blockchain that automatically perform actions when specific conditions are met. For example, a smart contract can transfer funds or perform a task as soon as certain pre -established conditions are reached, without requiring human intervention.
However, to operate effectively, these smart contract often need external data. This is where the oracles come in, which make it possible to bring information outside the blockchain, such as the prices of assets, the results of an event or meteorological data.
Thanks to oracles, smart contractcan interact with the real world and trigger actions according to this external information. This considerably widens their use cases, whether in finance, insurance, games, or other sectors.
For example, a parametric insurance contract can automatically pay compensation to a farmer if an oracle reports that precipitation has been below a certain threshold over a given period.
The origins and evolution of smart contract
The concept of smart contract was proposed for the first time by Nick Szabo in 1994. However, it was only with the creation of Ethereum in 2015 that this idea really took shape in the blockchain world. Ethereum offered an environment where developers could create and execute smart contract decentralized.
Bitcoin network complex smart contract accommodation However, solutions like stacks have been developed to overcome this lack. smart contract features , and this project is increasingly attracting developers and users seeking to combine Bitcoin safety with more complex functionality.
Why are the smart contractessential in the blockchain?
Transactions automation
smart contractare replacing certain trusted third parties such as notaries in complex legal and administrative processes, in particular by automating and securing transactions.
Take the example of a real estate purchase . Usually, the notary plays an essential role for:
- Check the property titles : He ensures that the seller is the legal owner and that the property is not burdened with mortgages or disputes.
- Guarantee the legality of the transaction : he writes and authenticates the act of sale, making it legally indisputable.
- Secure payment : the notary serves as an intermediary to keep funds in a receipt account until the transaction is finalized.
- Transfer the property : it officially registers the transfer of ownership in the land register and ensures that taxes are properly collected.
How can smart contractand blockchain automate this process?
With smart contractand blockchain, some of these steps can be automated:
- Digital ownership title : If the ownership certificates are tokenized and recorded on a public blockchain, the verification of the property becomes instant and immutable.
- Automation of conditions : A smart contract can be programmed to verify that the conditions of the transaction (payment, lifting of mortgages, etc.) are met. Once these conditions are met, it automatically triggers the transfer of the digital property title to the buyer.
- Secure payment : Funds can be transferred directly from the buyer's account to the seller via the smart contract , eliminating the need for a sequestration account.
- Traceability and transparency : the whole transaction is registered on the blockchain, guaranteeing total transparency and verifiability by all parts.
Current limits of automation :
- Legal recognition : Digital property securities are not yet recognized as legal equivalent in most countries.
- Legal complexity : situations involving litigation or complex clauses still require human interpretation.
- Dependence on oracles : smart contract need oracles to obtain reliable external information (such as mortgage lifting), which can introduce vulnerability points.
Although smart contractand blockchain cannot yet completely replace a notary, they offer an effective solution to simplify and speed up certain parts of the process, such as payment and transfer of property. As legal recognition and digitization of registers are progressing, this technology could transform complex transactions into rapid, transparent and economic process.
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Safety and transparency
Once deployed, a smart contract is immutable and transparent, that is to say that it cannot be modified and that everyone can consult their code. This ensures that the rules of the contract are always respected. In comparison, a traditional contract could be altered or subject to human errors.
Blockchains that house smart contract
Ethereum : the pioneer
Ethereum was the first blockchain to popularize smart contract . In 2023, there were more than 1.5 million smart contract active on the Ethereum . However, with the increase in the number of users, Ethereum faces challenges in terms of scalability and high gas fees, which encourages certain projects to look for alternatives.
Solana : a quick and economical alternative
Solana is distinguished by its scalability and its very low transaction costs. In 2023, more than 200,000 smart contract were deployed on Solana . Its ability to treat thousands of transactions per second makes this blockchain an attractive option for many projects. Projects like Helium and Render migrated from Ethereum to Solana to benefit from these advantages.
Examples of use
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Simplified travel insurance:
Imagine that you take out insurance to be compensated if your flight is delayed. With a smart contract , everything is automated: if a reliable source (such as the airport or the airline) confirms a delay of more than two hours, the smart contract automatically performs the reimbursement and transfers money to your account, without requiring administrative procedures on your part. -
Management of royalties for artists with NFTS:
when an artist sells a work in the form of NFT (non -fungible ), a smart contract can be programmed to automatically pay him a percentage of each future resale of the work. For example, if an NFT is sold at a higher price, the smart contract immediately takes a commission and transfers royalties to the artist, thus guaranteeing its long -term rights without intermediary.
The advantages of smart contract
Reliability and automation
Once programmed and deployed, the smart contractare exempt automatically, eliminating human errors and intermediaries. This ensures that all parties respect the terms of the contract without the need for constant surveillance.
Total transparency
All smart contractare visible publicly on blockchains.
For example, on Ethereum , you can consult intelligent contracts via platforms like Etherscan or Solscan for the Solana . This transparency allows anyone interested to verify the integrity of smart contract .
The limits and challenges of smart contract
Code bugs and their consequences
Like any software, a smart contract may contain bugs. These code errors can have significant consequences. A striking example is that of The Dao in 2016, where a flaw in a smart contract allowed a hacker to divert nearly $ 60 million in Ether. These incidents show the importance of rigorously auditing the code before deploying it on a blockchain.
Legal recognition
Although smart contracts are very effective in automating transactions, their legal recognition remains limited in many countries. This raises questions about how smart contract can be used in disputes or legal contexts.
Savings transformations thanks to smart contract
smart contracttransform entire industries by offering automation, transparency and security in complex processes. Here are some concrete examples:
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Health: automated and secure management of medical data
Smart smart contract allow effective and secure management of medical data, but how does it work concretely? Take the example of Medibloc , a blockchain platform dedicated to health. Patient medical records are decentralized on the blockchain. Each patient has total control over their data using a single private key.
- Access management : The patient can authorize access to his file to specific professionals (such as a doctor or a hospital) by granting them permissions via a smart contract . Once the authorization has been given, these professionals can only consult the information necessary for their interventions.
- Monitoring of actions : Any interaction with data - such as a consultation or an update - is inscribed on the blockchain immutably. This guarantees a complete and transparent history of access.
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Logistics: reinforced traceability thanks to the blockchain
Smart smart contract play a key role in the transparency and traceability of supply chains. Concretely, how does it work? Take the example of Everledger , a solution that uses the blockchain to follow the origin of the diamonds.
- Registration of data : at each stage of the chain, specific actors - such as minors, carriers or retailers - register information on the blockchain. These data may include the origin of the product, its quality, its transfer from one entity to another, and its compliance with ethical standards.
- Validation and automation : smart contract automatically verify that each step has been respected before allowing the passage to the next. For example, a carrier can only be paid if the product is marked as "delivered" in the system.
- Usefulness of information : These immutable records guarantee the authenticity of products for consumers and help companies meet regulatory or ethical requirements.
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Energy: Automation of exchanges in decentralized networks
In the energy sector, smart contract allow effective and transparent transactions. Power Ledger platform uses this technology to manage electricity exchanges between individuals.
- Exchange mechanism : a producer of solar energy, for example, can record on the blockchain the amount of electricity that it generates and which it wishes to sell. Neighbors who need this electricity can reserve it via a smart contract .
- Energy transfer and payment : Once electricity is transferred via an intelligent network, the smart contract validates the transaction and transfers payment directly from the consumer to the producer, without intermediary.
- Advantages for the community : This system makes it possible to create decentralized micro-networks where participants optimize their energy consumption, reduce costs, and encourage the use of renewable energies.
These examples illustrate how smart contracttransform key sectors by making the processes faster, transparent and secure, while reducing costs and frictions associated with traditional third parties.
Conclusion
Smart smart contract have become an essential tool in the universe of blockchain, allowing to automate complex transactions and create decentralized applications in many sectors. Their ability to operate without intermediary, to be immutable and transparent, in fact a popular solution for the future of digital transactions. However, challenges remain, especially in terms of code bugs and legal recognition. With blockchains like Ethereum and Solana , the future of smart contract promises to be promising, especially as projects continue to innovate in this space.
Faq
What is a smart contract ? A smart contract is an autonomous program registered on a blockchain that automatically performs shares when specific conditions are met.
On what blockchains can you find smart contract s? The smart contract are present on blockchains like Ethereum , Solana , Near Protocol, and many others.
What is a collateral in the DeFi ? A collateral is a guarantee in the form of cryptocurrency deposited by a borrower to obtain a loan. If the loan is not reimbursed, the collateral is liquidated to cover the losses.
Where can I see the smart contract s deployed? You can consult the smart contract on block explorers like Etherscan for Ethereum or Solscan for Solana .
What are examples of projects using smart contract for royalties? Projects like Emanate allow artists to receive royalties automatically according to the use of their works, via smart contract .
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Yohan Uzzan
Training engineer, I quickly became interested in the field of finance. Convinced that decentralized finance has a bright future ahead of it, I participate in its democratization by developing Crypternon.
