Main Benefits Of Smart Contracts Usage In 21st Century
Ages before bitcoin was a glimmer in Satoshiʼs eye, Carthaginian merchants sailed to the “Pillars of Hercules” at the western edge of the Mediterranean. There they stopped in the broad desert expanse of Libya, where they would begin silent trade with the locals by unloading their goods on the beach.
After doing so, the Carthaginians retreated to their boat and raised smoke, signaling to the Libyans the beginning of trade. The Libyans came to the shore and observed the goods, placed a quantity of gold on the ground, and then withdrew themselves. The merchants returned to the beach to decide if the amount of gold was sufficient. If it was, they collected the gold and left on their ships.
Such trade predated the development of contracts which, in essence, are simple binding agreements that facilitate business, exchange, and are typically enforceable by a higher authority. Had the Carthaginians and Libyans drawn up contracts, they could have skipped a whole lot of smoke and silent negotiations.
But, what happens when contracts filter through self-interested third parties? What about when a contractʼs arbiter loses power or has no real authority over one of the parties involved in the contract dispute?
Because of these severe limitations, the difference between arduous silent trade ala ancient Carthage and todayʼs negotiations based on flimsy contracts is minimal.
However, the glimmer in Satoshiʼs eye did eventually bring bitcoin into the world and subsequently ethereum, which pioneered a revolutionary type of contracts: smart contracts.
Smart Contracts Enforce a New Paradigm
Smart contracts are a programmable type of contracts that allow users to create and execute trades, payments, applications, agreement management, and much more – all without third party involvement.
To get an idea of how it works, letʼs imagine a small business that wants to set-up easy, automated pay to its workers without involving costly third parties. The business enters the necessary data into its team payment smart contract by letting it know the account to pull funds from, the accounts to deposit to, and payment intervals.
With minimal programming done, the binding smart contract delivers payments automatically according to the parameters without human intervention.
There are many advantages of smart contracts – weʼll cover the eight most important ones:
- Indisputable: The parties involved in the creation of a smart contract must input every bit of data necessary for the smooth functioning of the contract. Once all parties have agreed that the data is correct, the smart contract will indisputably execute the agreed upon terms.
- Transparent: Smart contracts are publicly auditable, making them wholly transparent and adding to their indisputable quality. All parties involved can view the terms of the smart contract and observe that it is executing them accurately.
- Consistency: Since the human element disappears from the operation of a smart contract, it will deliver consistent results every time it is executed.
- Scalable: Smart contracts are triggered as transactions on blockchain networks. Their scalability is only limited by that of the network they exist on, but with scalability solutions like sharding for ethereum on the way, smart contracts will be instantaneous.
- Immutable: Smart contracts share the same properties as blockchain with the most important of those characteristics being immutability. Once set, a smart contract cannot be hacked or otherwise maliciously edited in any way.
- Trustless: Trustlessness is a bit of a misnomer in blockchain since what is meant by it is ultimate trustfulness. Because smart contracts are immutable and donʼt require third parties to run, counterparties in a contract can rest assured that the trust of the exchange is intact.
- Efficient: Smart contracts make the world a more efficient place. Imagine that you place a bet on the presidential elections of that year. When the election comes to pass, a news feed-reading smart contract will deliver the verdict on the event to the betting smart contract which will release the funds to you if your bet was accurate. All of this happens in mere moments and without a system of fallible people in the middle.
- Reduced Costs: The efficiency of smart contracts reduces operating costs for most verticals dramatically. This means more money kept in the bank rather than doled out to third-party's services.
MultiToken Uses Smart Contracts to Protect Your Portfolio
MultiToken Protocol relies on smart contracts to maintain, securitize, and bolster your portfolio.
Every MultiToken represents your investment in a diverse array of crypto assets. To generate profit in a volatile market, your MultiToken automatically rebalances the digital assets contained within it by using smart contracts that accurately respond to evolving market conditions.
Use MultiToken to gain safe and secure exposure to the cryptocurrency market while reaping the benefits of a trustful, decentralized investment fund that is free of third-parties.
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