Smart Contracts

Solve digital transaction challenges with smart contracts

 

With all the hacking in the world today, you may be concerned about the security of your online transactions. A blockchain-based smart contract offers you a solution for that concern, and developing one is not as complex as it sounds in the news. All your smart contract app developer needs to know is what you want to be done, when and how.

 

What is a smart contract?

 

A simple analogy to a smart contract is a vending machine. The seller displays his available wares in the machine and the buyer launches the sale by inserting money into the slot. Pushing the chosen button triggers the transaction. The machine avoids fraud because the buyer can clearly see the item he wants, and the machine won’t dispense the seller’s product without first receiving the exact change. Equally important, the identity of both buyer and seller is irrelevant to the transaction.

 

A smart contract functions in a similar manner. The parties determine the subject of the transaction and its terms – the when, what, etc. of how the deal will go through. The developer programs those conditions into the digital contract, and when they are met, the programming automatically completes the agreement, transferring the seller’s value to the buyer and visa versa. When any of the conditions fail, so will the agreement.

 

Perhaps most significant: once the terms of the contract are set, they cannot be changed, so neither party can alter it if they decide after the fact that they don’t like it. Further, as the assets continue to trade over time, new owners can track all the details of previous transactions, except for the identities of previous owners.

 

Smart contract distributed apps disrupt old industries

 

Smart contracts are already disrupting age-old systems because they eliminate the centralized “middleman,” such as a bank or investment house. Instead, a smart contract facilitates the transfer of asset value for asset value directly between the parties themselves; each party simply programs into the deal the details of the assets they are offering to exchange, in many cases using cryptocurrency. Known as a “decentralized ledger,” the smart contract records and saves transaction data for every transaction in which the specific value is involved, so future owners can track its experience throughout its lifecycle.

 

Perhaps the most impressive use case for a smart contract occurred in 2015 when the Depository Trust and Clearing Corp. (DTCC) cleared 345 million transactions using a blockchain smart contract ledger.

 

Programming the DApp

 

People using smart contracts develop “decentralized applications” – DApps – to manage their transactions, but DApps can be used in thousands of other instances. DApps use open source software, so the tools for their development are available to anyone who understands app development processes. To be a true DApp, its validators – people who access the DApp – receive a reward for maintaining its integrity (often cryptographic tokens). As well, storage of all records of its operations must be public, and the community invested in the DApp must agree on the protocols that demonstrate proof of value.

 

Smart contracts and DApps may resolve your transaction security concerns. At Azumo, we build the intelligent apps and bots that can move your business forward.

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