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Solidity Smart Contracts and Blockchain

Impact of Smart Contracts in Blockchain

As the term suggest Smart Contracts are really Smart enough in Blockchain and it is the power house that enables Blockchain to be so powerful in terms of security and performance.

So, what is Blockchain first? It is nothing but a decentralized digital ledger distributed over numerous nodes on a network.

Distributed Ledger Technology (DLT) is similar to a Database where every transactional data is stored in different nodes at the same time. Whereas the regular Database is stored in a server for all other clients to access it. This gives DLT more advantage as the data is not stored in one centralized location. Since the data is available in multiple location, so in case of any data loss. It can be recovered from other locations.

We can see wide implementation of DLT in public Blockchains like Ethereum and Bitcoin.

So, what is Smart Contract?

Generally, CONTRACT means a mutual agreement in paper where more than one party is involved and the contract has to be approved by all the concerned parties.
For instance, we can consider the Non-Disclosure Agreement (NDA) which is signed between companies to share the details of their business and the requirement.
We probably need a physical file organizer to store the signed printouts and scan the copies and store it in digital form as well. What will happen if the agreement is missed due to some unexpected circumstances? We might need to start from fresh provided the other party agrees to it.

In order to avoid all these hiccups, Smart Contract comes up with varied solutions with salient features and advantages.

Smart Contracts are a block of codes written in Solidity language in Ethereum Blockchain that automates the tasks by executing itself whenever required. The completed task or transaction can be tracked anytime and anywhere but it cannot be reversed forever. So, one has to be very careful before performing any transaction in Blockchain as it is irreversible.

In other words, Smart Contracts in Blockchains are agreements made between anonymous wallet addresses.
Need of Smart Contracts

1.  Permanence: Once a Smart Contract is created and deployed in a Blockchain like Ethereum then it is forever. It is permanently available for any time use. We can re-visit it after number of years. There is no data loss or any kind of discrepancy. Once a transaction is made means it will be there forever. It cannot be modified for any reasons.

2. Accuracy: It is one of major advantage of using Smart Contracts. As we know that each transaction is linked or chained with others. The Blockchain stores them in the permanent order and once accessed. It returns in the same order as it was created.

3. Transparency: The Smart Contracts in Blockchain work with complete transparency. That means anybody can see the code deployed in the public Blockchains like Ethereum. So, it is transparent to all the parties involved. There is no hide and seek. This gives more assurance and security to all the parties involved in the contract.

4. Feasibility: It is very well understood that the Smart Contracts in Blockchains are far better than the legacy paper-based agreement or the digitally signed agreements store in a server. The Smart Contracts only work when the conditions satisfy. So, for any kind of secured and confidential agreements can be done via Smart Contracts in Blockchain.

Benefits of Smart Contracts:

Since Smart Contracts work as the agreement between one or more parties with out any mediators or administrators in between. The transaction happens between the parties directly. So, it is pretty straight forward and cost effective.
We can foresee the implementation of Smart Contracts in various fields such as-

  • Healthcare
  • Real Estate
  • Government offices
  • Logistics
  • Stocks and Trading
Advantages of Smart Contracts:

As we know that the main advantage of the Blockchain technology itself is that it eradicates the middlemen or administrator in the transactions.

  • Speed: Transaction in Blockchain using Smart Contracts happen very fast without any delay.
  • Constant: Transactions made in Blockchain are irreversible. So, it cannot be modified at any cost.
  • Security: Since the transactions are immutable. So, no human intervention or any AI kind of thing can do any changes to the completed transactions.
Disadvantages of Smart Contracts:

If there are advantages means then there will be some disadvantages as well. So, here are few related to Smart Contracts in Blockchain.

  • Reliability: The Smart Contracts are developed by Solidity developers. So, one has to depend on their expertise and the extra ordinary knowledge in developing a Smart Contract in Blockchain like Ethereum.
  • Permanent: It is one of the major advantages as well as disadvantage. The Smart Contract once deployed in Blockchain, it cannot be modified and re-deployed in case of any loopholes or discrepancy found after deployment.

Similarly, the transactions made cannot be reversed back. For instance, if someone transfers funds to a wrong address then he cannot get it back until or unless the receiver voluntarily transfers it back.

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