Applications of smart contract and decentralized applications in the real world
What are the applications of smart contract in our real world and what is the role of decentralized applications in this world? The purpose of designing smart contracts was to replace computer codes with traditional intermediaries that used to form the requirements needed for each agreement. The concept of smart contracts has a long history and its introduction goes back to before the birth of Bitcoin. Nick Szabo first in 1996 in an article titled “Smart Contracts; “The cornerstone of digital markets” proposed this term.
Some time later, in 2015, Gavin Wood and Vitalik Buterin launched the Ethereum network. Ethereum was the initiator of the second generation of blockchain technology; A generation that introduced new concepts and techniques for managing distributed ledgers. One of these techniques was smart contracts, which included automatic guidance (automation) for the entire blockchain network; But to simplify the writing of smart contracts, Ethereum also introduced a scripting language.
Although not much time has passed since the emergence of smart contracts, this important and outstanding feature has been able to open its way to other areas of our lives. In this article, in addition to reviewing the concept of smart contract, we intend to explore smart contract applications in finance, blockchain games, legal sectors, real estate, decentralized self-governing organizations, and emerging technologies. We will also take a look at the applications of smart contracts in industries; So stay with us until the end of this article.
What is a smart contract?
Smart contracts are one of the important components in blockchain-based ecosystems and important elements of application-focused blockchains such as Ethereum. These digital contracts have an independent, decentralized, transparent and intermediary mechanism and are usually irreversible and unchangeable once created and launched.
The benefits of a smart contract include reducing or even eliminating the need for intermediaries and contract enforcement in a single agreement or transaction. For this reason, smart contracts have become the cornerstone of the entire decentralized application (dApp) ecosystem and an important focal point of blockchain development.
Read more: What is a decentralized application (Dapp)?
Each smart contract can be used for only one type of transaction. However, most decentralized applications work with a set of smart contracts to be able to implement a complex set of capabilities.
There are thousands of decentralized applications in areas such as finance, gaming, exchanges, and media on blockchain networks, all of which can use smart contracts in different ways and for different purposes.
Smart contract applications in finance
Decentralized applications in decentralized finance or DeFi (DeFi) are a powerful alternative to traditional financial services. Their popularity is increasing thanks to features such as the lack of intermediaries and the immutability and transparency of blockchain technology and smart contracts.
Decentralized DeFi applications provide users with services such as loans, borrowing, buying and selling, and other financial services along with new business models in parallel with financial and banking services.
Decentralized programs can reduce the barriers to entry of users from all over the world into the field of finance due to increasing the transparency of smart contracts and non-stop and round-the-clock operation and reducing costs.
Read more: What is DeFi or decentralized finance?
The value of DeFi projects has reached billions of dollars so far, and it seems that this trend will continue as more users become familiar with the unique opportunity of this field. Users can participate in the new generation of financial services without the need for centralized protection or paying fees to intermediaries.
Although only a few years have passed in the field of DeFi, the presence of innovative decentralized programs and proving the value and efficiency of these programs to consumers has made the effects of these programs based on smart contracts felt on the financial industry.
Heterogeneous tokens and smart contracts and blockchain games
While the global gaming industry is a $100 billion ecosystem that continues to grow rapidly, the way value is created and distributed across the industry can be unfair. Developers make and release games, and players pay to interact with these games.
This one-way flow where players have to pay to access in-game assets continues. Instead, in-game blockchain technology can allow players to use in-game purchases more effectively.
Non-Featured Tokens (NFTs) are the mainstay of the blockchain gaming industry. These unique digital assets represent in-game content and depend on smart contracts.
Another thing is that these tokens are rare and indivisible. While blockchain networks underpin asynchronous tokens, they can facilitate player ownership, rarity, interaction, and immutability of items.
Read more: What is a non-fungible token or NFT?
Thanks to the implementation of blockchain technology in the gaming industry, you can keep in-game purchases or sell them to other players or transfer them to games that support these items. Meanwhile, the rarity of the in-game token is provable through immutable records on the blockchain network.
Because asynchronous tokens are unique and can be designed to retain their value beyond the game in which they are created, decentralized games and applications created within the blockchain have the potential to expand the gaming economy and create new categories and new games. Develop based on these items. Ethereum, Tron, IAS and Neo are blockchains that have made significant progress in the field of game development.
Smart contracts in legal departments
Perhaps one of the promising applications of smart contracts in the real world is to use the capability of these tools as legally binding contracts. The emergence of electronic signatures to bind legal contracts has led to innovation in the legal field.
Soon, smart contracts will become an option for parties to legal contracts. Another point is that by using these contracts, the cost of using a lawyer and other intermediaries is reduced. It is likely that we will witness the spread of customized smart contracts and reduce costs and increase speed for various types of transactions much sooner than imagined.
Some US states have allowed the use of smart contracts and blockchain in the legal field and in certain fields. For example, the state of Arizona allows some legal contracts to be created through smart contracts. The state of California also allows marriage licenses to be issued through blockchain technology.
Smart contract applications in real estate
Smart contracts develop fractional ownership of assets through tokenization, and the integration of blockchain and real estate transactions can remove barriers to entry for investors.
There have been successful attempts at real estate tokenization. Platforms such as RealT and SolidBlock, which have linked blockchain technology with real estate, are among the successful examples in this field.
At the same time, smart contract technology can revise and modify documents and transaction processes using blockchain in real estate transactions. For example, the Republic of Georgia in the Caucasus region has launched a blockchain-based land registry since 2016. It should be noted that similar projects are also underway in the United Arab Emirates.
Anyone who has bought a home or other property is probably aware of the hidden costs associated with closing and transfer fees and brokerage fees. These are costs that can be reduced or completely eliminated by automatically executing smart contracts. When a piece of property is converted into a token, its required records can be kept through smart contracts and save the time and money of the parties.
Some experts claim that smart contracts can benefit both parties by simplifying lease agreements and complex credit or mortgage agreements, as well as warranties and insurances. In addition, with the use of smart contracts and blockchain in real estate, the need for legal advice or other advisory services becomes less important and, in general, costs are reduced.
Decentralized self-governing organizations and smart contracts
In 2017, the state of Delaware passed Senate Bill 69, which would allow businesses to be integrated using blockchain technology. The bill paved the way for the expansion of decentralized self-governing organizations, or DAOs.
Decentralized Autonomous Organizations (DAOs) can implement complex structures and automatic execution of incentive processes using smart contracts in corporate frameworks. Also, using smart contracts, DAOs can save on management costs such as office spaces, recruitment processes, and salaries.
Emerging technologies and smart contracts
One of the exciting applications of blockchain technology and smart contracts is their ability to facilitate complex computational tasks such as tasks related to machine learning (Machine Learning) and artificial intelligence (AI).
By combining the centralized processing of artificial intelligence data and the decentralized and immutable security of blockchain technology, it is possible to create smart contracts through artificial intelligence. In order for smart contract-based applications to be implemented in various industries, they must become more sophisticated to adapt to their new roles. Since it is possible to design simple smart contracts manually, much more complex smart contracts can be created using artificial intelligence.
Many experts believe that artificial intelligence and blockchain can benefit from each other’s impressive features. Smart contracts take advantage of advanced computing capabilities and adaptive systems of artificial intelligence technology; While for artificial intelligence implementations, smart contract technology is used to independently implement a set of rules and provide a secure environment for sensitive machine learning data.
Zilliqa is one of the blockchain platforms that tries to increase its advanced computing capabilities with its own smart contract programming language, Scilla, and its advanced processing structure using sharding.
Capabilities of smart contracts in other industries
Of course, the mentioned examples of smart contract applications in the real world are not complete, and in the future, this advanced technology will be used in countless industries. Many researchers and developers are eager to apply the benefits of smart contract technology to meet the needs of the Internet of Things (IoT). While blockchain technology is generally used to create security and transparency in IoT devices, the benefits of smart contracts can further this integration.
Healthcare is another industry that has begun to integrate with blockchain technology for secure, trustless and transparent data sharing. The connection between healthcare and blockchain technology can solve the main problems of this field with the integration of smart contracts and decentralized applications.
Conclusion
Smart contracts are one of the important elements of blockchain-based ecosystems. These digital contracts are independent, decentralized, transparent and immutable once launched. The advantages of the smart contract are reducing or eliminating the need for intermediaries and reducing costs and increasing the speed of transactions. For this reason, these contracts have become the cornerstone of the entire ecosystem of decentralized applications.
Smart contracts have appeared in various fields such as finance, blockchain games, legal affairs, real estate, decentralized autonomous organizations, medical services, and emerging technologies such as machine learning and artificial intelligence, and it is expected that many industries will benefit from their capabilities in the future. Benefit.
What is your opinion about smart contracts? In your opinion, how much will this technology affect our future life?