One of the most crucial features of Blockchain Technology is its decentralized nature. This means that the information is shared by all the parties of the networks. Hence, it eliminates the need for middlemen or intermediaries to facilitate the operations. This feature is particularly useful because it saves one from the possibilities of hacks and fraudulent activities. Blockchain Technology offers a feature-rich, faster, cheaper and more efficient mode of transactions. Thus, most of the government & banking sectors have started adopting this top-notch technology.
This blog deals with the importance and the need for Smart Contracts to create Blockchain Applications in the market.
What is an ICO Smart Contract?
A Smart Contract is computer software that directly controls the transfer of digital currencies between buying and selling parties with a set of rules which are agreed upon by both parties. It works similar to the traditional contract but executes automatically as coded by the developers. These digital contracts can be converted to codes and allowed to be run on a Blockchain Network. These Smart Contracts acts as the backbone of Initial Coin Offerings.
While executing, if the set of protocols are met, the smart contracts execute automatically. This set of codes allows a decentralized version by examining, verifying, and fulfilling the conditions of the agreement. With Smart Contracts, one can exchange money, shares, digital assets, property, etc in a decentralized manner and offering worry-free transactions.
Here are the properties of a Smart Contract:
History of Smart Contracts:
Smart Contracts are one of the most successful applications of Blockchain Technology. This concept was introduced earlier by Nick Szabo, a legal scholar, and cryptographer in the year 1994. Finally, he concluded that a decentralized ledger is a future. This was later termed to be “Smart Contracts”.
Though the concept of Smart Contracts came way before, the present world works as a peer to peer contracts. We are well aware that the involvement of third-party of an intermediary would lead to security issues.
With the existence of Blockchain Technology, such issues can be managed & tackled efficiently. A Blockchain-based system allows all the peers to interact with each other in a distributed manner. Other than cryptocurrency, Blockchain has its real-time use cases in most of the sectors such as Banking, Healthcare, Agriculture, etc.
Using digital smart contracts by replacing traditional smart contracts can reduce the costs relatively. Ethereum is one of the most popular Blockchain platforms to create smart contracts.
How do Smart Contracts work?
Smart Contracts work in a very simple and fair process to facilitate the buy and sell orders. It primarily follows three steps:
- In the first step, the contract is written in codes for a few parties and posted on the Blockchain platform.
- Secondly, the event will get triggered by the execution of the contract.
- When triggering happens, the contract is executed as per the set of codes.
Once the process is completed, both parties will receive their funds or tokens or assets as promised. If in case the conditional protocols aren’t satisfied, Smart Contracts will return back the product to their respective owners. Moreover, the Smart Contract ledger will store the complete details and imposes an immutable feature on it. This means that, once the data is stored, no one can alter/change them.
To create an ICO Smart contracts, one needs:
- ICO Contract Subject
The software programs required access to goods, services, etc to lock or unlock them automatically.
- Digital Signature
All the participants in the contract should sign the Digital Signature with their private keys.
- Terms of Contracts
This means the set of sequence operations required to execute the Smart Contracts. This should also be signed by all the participants.
Importance of ICO Smart Contracts in building Blockchain Applications:
It is crucial that Smart Contracts play a greater role in ICO development. If you want to create an ICO with ICO Script or Software, these smart contracts would well-embedded into them. This, in turn, boosts the transaction speed and credibility of the ICO Script and ICO Software.
An ICO Smart Contracts support a variable permission structure which means that it allows regulators to view the terms of contracts. This leads to the identification of the parties by themselves. This will, in turn, help the regulators to eliminate any kind of fraud or suspicious activities without violating anyone’s policy.
Transactions start executed as soon as the conditions are met or fulfilled. Probably, the verification process takes a longer time in moving the assets, once the contract is signed. Moreover, it takes less time and performs the process instantly. This is the major reason why most of the ICOs make use of Smart Contracts for their transaction process.
When the terms of the contracts are encrypted, there are no chances for confusion. The agreement can be tested with any number of variables so that all involved parties can check with what can happen under each situation. Thus, the complete process becomes transparent and fair as well as decreasing the chances of disputes.
Smart Contracts are saved in an encrypted form on the shared blockchain where parties execute themselves. This means that there is no third-party or middleman involved to facilitate the transactions. Hence, it remains trustworthy.
These Bitcoin Smart Contracts work efficiently and precisely based on the program & its terms and conditions coded in it.
Various Blockchain platforms for writing ICO Smart Contracts:
ICO Smart contracts can be written on various sets of Blockchain platforms:
Ethereum Smart Contracts
Ethereum is one of the most popular Blockchain platforms which can be utilized for writing smart contracts. It is an open-source public blockchain that is used to create the original Blockchain platform. Added, this offers a reliable platform for various decentralized applications such as ICO Tokens.
This is the most preferred ICO Smart Contract which is in existence from 2015. Ethereum platform remains to be a pioneer by rendering its standardizing support to its customers. On the support side, apart from assisting, is the dedicated way of smart contracts creation and operation.
Hyperledger Smart Contracts
Hyperledger is yet another Blockchain platform to write Smart contracts code. It was launched in the year 2015 and was set up by the Linux foundation. Presently, this platform has a large number of different frameworks developed under the Hyperledger banner.
Similar to Ethereum, Hyperledger also has a set of tools such as the Hyperledger composer which allows the developers to create smart contracts effectively. Moreover, it is open-source and supported by the IBM platform.
Stellar Smart Contracts
The stellar platform was founded in the year 2014 which remains to be one of the oldest Blockchain platforms. This is maintained by the Stellar Development Foundation and remains to be the most exciting startups out there.
Automated Transactions Smart Contracts
This is yet another smart contract language used in some of the popular cryptocurrencies such as Qora and Burstcoins. Let me explain to you some examples. For instance, it is used for cross-chain trading between the two parties who have different cryptocurrencies such as Bitcoin, Etheruem, Litecoins, etc to exchange without the need for a third-party.
While some other options are Kirby Smart Contracts, chain link smart contracts, etherdelta smart contracts, etc.
As the Blockchain industry is footprinting into a diverse set of industries every day, we can expect the ICO Smart Contracts to pave the way for the future. By making use of this credible feature, most of the industrial sectors would start managing things effectively!
I hope the article has helped you!