6 Practical Instances and Applications of Smart Contracts

Over the years, the increasing significance of smart contracts cannot be overstated enough. They have worked to become the preferred solution for guaranteeing security and transparency in binding agreements. 

In this round-up, we take a look at smart contracts and examine their diverse applications across various sectors.

What are Smart Contracts?

Smart contracts are digital programs that follow specific rules and agreements. They operate on decentralized networks, where once a transaction is recorded, the information is secured in the ledger of every computer within the network. 

What’s interesting is that even the Solana Foundation can’t tweak the details of the transaction after it’s registered.

These contracts offer dependable transactions that demand trust, transparency, and anonymity among the parties involved.

Since Ethereum’s inception, the pioneer in smart contract platforms under blockchain technology, there has been a surge of similar platforms based on blockchain, directed acyclic graph structures, and other distributed ledger technologies (DLTs). 

Popular blockchain platforms include:

1. Ethereum:
   • Ethereum is a decentralized platform that pioneered smart contracts. It allows developers to create decentralized applications (DApps) and deploy smart contracts using its native programming language, Solidity.
2. Binance Smart Chain (BSC):
   • BSC is a blockchain network that runs parallel to Binance Chain. It supports the creation and execution of smart contracts and is compatible with the Ethereum Virtual Machine (EVM).
3. Cardano:
   • Cardano is a blockchain platform that aims to provide a more secure and sustainable ecosystem. It supports smart contracts through its Alonzo upgrade, enabling developers to build decentralized applications. Cardano Roadmap
4. Polkadot:
   • Polkadot is a multi-chain network that allows different blockchains to interoperate. It supports smart contracts through its parachain structure, and developers can use the Substrate framework to build customized blockchains with smart contract capabilities.
5. Tezos:
   • Tezos is a self-amending blockchain that allows for on-chain governance. It supports smart contracts through its native language, Michelson, and also has a high-level language called SmartPy for easier development.
6. Solana:
   • Solana is a high-performance blockchain known for its fast transaction speeds and low fees. It supports smart contracts and decentralized applications, making it suitable for various use cases.
7. Avalanche:
   • Avalanche is a platform designed for custom blockchain networks and interoperability. It supports the creation and execution of smart contracts through the Avalanche C-Chain.
8. NEO:
   • NEO, often referred to as “Chinese Ethereum,” supports the development and execution of smart contracts. It aims to digitize assets and automate the management of digital assets using smart contracts.

Popular Directed acyclic graphs (DAG) platforms include:

• IOTA
• Nano (formerly RaiBlocks)
• Hedera hashtag
• Fantom

Smart contracts and the rise of tokens have brought to light how transactions and ownership are handled across various sectors of the global economy. Their versatility has expanded possibilities in unexplainable ways.

Now, let’s jump in and explore some unique applications of smart contracts in different industries.

Identity Management

Technologies in use today designed to combat crimes like identity theft often don’t provide the data owner with bespoke control, thereby limiting their ability to effectively manage and share their information.

Digital Identifier (DIDs) smart contracts, operating on decentralized ledger technologies, empower individuals with complete control over their data. This capability enables them to share their data content as they see fit, sealing data breaches and mismanagement loopholes.

Smart contracts play a crucial role in identity management by ensuring:

• Identity safety.
• User-controlled data sharing.
• Hassle-free KYC verification.

Real estate and Crowdfunding

The token economy expands opportunities for real-world assets, creating easily accessible markets with a range of products. It transforms how commodities are bought and sold and facilitates fundraising for large projects.

Usually, project funding is time-consuming and involves a ton of paperwork. However, smart contracts simplify this process, making it as easy as a click and wallet signature.

Tokenization allows different individuals to own portions of an asset, enabling trading on designated markets, similar to the surge in non-fungible tokens (NFTs) trading. This flexibility extends to properties like real estate, which can be sold online without the usual lengthy process, thanks to smart contracts.

Smart contract perks to real estate and crowdfunding include:

• Easy usability.
• Tokenization of tangible goods.
• Open, timeless markets.
• Enhanced flexibility in the global economy.

Statistical Analysis

The beauty of distributed ledger technologies lies in their decentralized and transparent nature, particularly beneficial in polling, especially during voting processes and other statistical compilations.

When it comes to voting, population censuses, and statistical collation, smart contracts play a vital role in instilling confidence in the outcome, as no single person or organization has control over data collation and result interpretation.

Smart contracts can be curated to provide real-time updates during the process, making it easier for users to embrace and trust the entire procedure.

The advantages of employing smart contracts for statistical collation include:

• Enhanced accuracy in results.
• Reduced election costs.
• Trustworthy outcomes thanks to process transparency.
• Minimized resource requirements for data compilation.

Health and Agric Supply Chains

The health sector witnesses significant waste of medicine and materials due to the lack of an efficient tracking system.

That is where Smart contracts come in by offering bespoke solutions to reduce, if not eliminate, the wastage of food and medical supplies. Through IoT smart contracts, packages can be assigned public keys, and their data, including location and ownership, can be recorded on a distributed ledger, hence matching markets with commodities.

By leveraging smart contracts, supply chains in health and agriculture benefit from:

• Easily accessible proof of existence.
• Seamless tracking and updating of commodity locations.
• Enhanced accessibility for global-scale matchmaking.

Document Preservation and Accessibility

Certificates forgery and documents have long been causing problems for institutions, with both physical and digital documents susceptible to loss. Authenticating certificates typically involves a lengthy process of contacting the issuer.

Smart contracts offer a solution by simplifying and expediting the authentication process.  

By employing smart contracts for document preservation and accessibility, we achieve:

• Verifiable and foolproof patents and copyrights due to the unalterable timestamps of smart contracts.
• Easy accessibility to files.
• A wide distribution of documents across networked computers.
• Simple verification of document validity.

Administrative Payments and Billing

In sectors involving substantial financial transactions, such as insurance, transparency is everything. Traditional processes, such as escrows, may face rare human interference issues.

Global supply chain organizations encounter challenges with current payroll systems due to the complexity of the banking system. It becomes more pronounced in an increasingly remote-first world, where location is less influential in employment and business.

Altogether, smart contracts emerge as a solution by offering transparency, security, and cost-effectiveness in payment processes. They are durable, easily automated, and mitigate the risk of fund mismanagement.

Smart contracts find utility in various administrative payments and billing areas, including:

• Payrolls.
• Taxation.
• Pensions.
• Insurance.
• Bill payments.

What You Need to Know

Adopting distributed ledger technologies not only brings about enhanced flexibility and improved resource management but also fosters accountability and builds trust in our everyday financial engagements.

As smart contracts continue to gain traction across diverse industries, it’s safe to say they’re becoming a noticeable trend that we’ll likely see more of in the future.

Image Source: Adobe Stock

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.