BLOCKCHAIN FOR SMART CONTRACTS AND ITS IMPACTS

As early as 1991, the concept behind blockchain technology was pronounced when research scientists Stuart Haber and W. Scott Stornetta presented an applied solution for time-stamping digital documents in order that they might not be backdated or tampered with.

Later, it absolutely was improved to efficiently allow numerous certificates to be poised into one block. And further later, the first blockchain was theorized by Santoshi Nakamoto in his white paper, who introduced a Hash-like method to timestamp blocks without necessitating to be engaged by a trusted party. The design was implemented as a principal constituent of the cryptocurrency “Bitcoin”.
Bitcoin is the third most searched google word as of today. Before we talk about bitcoin, let us understand the concept of money. At its core, money represents “Value”. It is exchanged in terms of value we receive/offer. Earlier, it was the barter system, then came gold and further down came currency notes and digital mode of payments nowadays. The current system of money is trade agreement between trusted parties engaged in the transaction with receipts that are backed by government’s promise. A Bitcoin (₿) is a distributed digital money with no central bank or govt administrator which can be sent from one user to another over a peer-to-peer network without the need for intermediaries. There is a common misconception that Bitcoin and Blockchain are one and the same, however, cryptocurrencies (like Bitcoin) is one of the applications of Blockchain technology. Although Bitcoin and cryptocurrencies are the first popular application of blockchain technology, they are not the only ones. While the basic idea of “Trustworthy” records and giving the power in the hands of user.
Blockchain: A blockchain, originally “block chain” is a distributed data structure/database which records all transactions that have occurred in a network. The key feature is that it permits un-trusted parties to communicate and send transactions between each other in a secure way. Each block in the blockchain stores information with the hash of its previous block. Hash is a inimitable mathematical code that fits to a specific block. Once a block is created and appended to the blockchain, the transactions in that block cannot be changed or reverted. This is to ensure the integrity of the transactions and to avert double-spending problem which makes blockchain the most secure and safe system of transaction. There are two categories of blockchain, viz.- public and private. In a private blockchain, only users with permissions can connect the network, write or send transactions to the blockchain. In a public blockchain, any anonymous user can connect to the network, read the content of the blockchain, send a new transaction or verify the correctness of the blocks. Public blockchain are Bitcoin and Ethereum.
Ethereum and Smart Contract: In 2013, Vitalik Buterin, a programmer and co-founder of the Bitcoin Magazine specified that Bitcoin needed a scripting language for building decentralized applications. Failing to gain agreement in the community, Vitalik started the development of a new blockchain-based distributed computing platform, Ethereum, that featured a scripting functionality, called Smart Contracts. Smart contracts are programs or scripts that are deployed and executed on the Ethereum blockchain, they can be used to make a transaction if certain conditions are met. Ethereum cryptocurrency is Ether, which can be transferred between accounts and is used to pay the fees for the computational power used when executing smart contracts. Smart Contracts can be classified into two categories: Code which is stored, verified and executed on a blockchain” and it depends entirely on the programming language used to express the contract and the features of the blockchain. Contract: Smart legal contract means code to complete or substitute legal contracts which does not depend on the technology, but instead on legal, political and business institutions.

The Impact: Buying and selling of property is currently done offline and may be a lengthy process which involves a number of middlemen. Once property records are digitized, all the property details and owner details are available on a blockchain. Now everyone can trade on this blockchain by creating their own smart contracts. These records are irreversible or immutable and linked to every other so the subsequent buyer could see details of all previous purchases and make sure the dealing is transparent and quick. this is often how it works even now. But all of this involves lots of paperwork, too many middlemen, and lot of time is wasted in back and forth. Also, ownership paper must be verified manually from local land records and a physical signature may well be easily faked. In reality, Smart Contracts may well be tied to different “rules” and a noble governmental scenario may be executed by machine instead of human interference at all levels. Another use would be for insurance industry in processing claims, banking to verify person’s credit rating and disburse loans in keeping with predefined standards and tracking of paybacks and EMIs, pharma industry to trace and verify the authenticity of medicine, private companies would use this for tracking their inventory, production throughput and customers could bid on the merchandise pipeline giving companies the very best possible price for his or her latest batch of products. Peer-to-peer lending is one area that’s already being employed by blockchain community. From online voting to tracking of state spending, the uses of Smart Contracts on a blockchain are virtually unlimited.
The revolutionary technology of Blockchain embraces a high potential of applications in many industries and sectors. While some industries have already started adopting blockchain in their businesses, many are still exploring the most effective possible ways to start out with. Blockchain may be a new name within the world of technology but it’s definitely the one to last longer. Even within the early stages, the technology has gained a large popularity with their first application of cryptocurrencies. More areas of applications are being discovered and tested with each passing day. Once the technology is adopted and accepted on a worldwide level, it’ll transform the way we board.

Author: A.C.

Dr. Chakraborty is a researcher in electronics and has authored numerous articles in the domain. She is also an avid blogger and shares a penchant for domains like technology, business and science.

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