This article was contributed by Elena Alehno who is a technical copywriter at PixelPlex.
How are smart contracts revolutionizing blockchain technology?
The modern world is growing at a fast pace as waves of digitization continue to hit different global sectors and industries. The finance department has also had its fair share of innovations and transformations over the past few years. The advent of blockchain technology and its usage in the world of cryptocurrencies has been a major breakthrough in the global economic structure.
It has led to new trends and norms in the world of finance. The cryptocurrency market itself is a $3 trillion sector now. This shows the potential and popularity of the emerging concept that is competing with the long-running markets. More and more people from all over the world are joining the crypto bandwagon lately.
The increasing popularity of blockchain and cryptocurrencies
The increasing relevance of blockchain and cryptocurrencies is primarily because of their high-profit potential. But the extensive features brought about by this field are also attracting many investors and stakeholders. These features allow more transparency, usability, and convenience for consumers, making it an automatic choice for many consumers.
The world of crypto is also emerging as a potential alternative to the traditional banking and currency system. With more effective features, like smart contracts, the sector has helped people to earn profits. These simple yet effective modern features facilitate users while simplifying several tasks for them.
What are smart contracts?
Smart contracts are quite simple in nature but they solve a few major issues in the blockchain sector. They are based on algorithms to automatically operate and complete a task on predefined terms and conditions between the two involved parties. The examples of smart contracts in bitcoin lead the way for several cryptocurrency projects that wish to inculcate the new feature in their protocols.
Blockchain is also an open-ledger that can be managed, controlled, and regulated by people from all across the world. It uses a system of public and private keys to operate. But there are different versions of a blockchain. The two major different blockchain houses are Bitcoin and Ethereum. However, smart contracts are currently built on Ethereum technology. The money and the financial conditions are predefined in a smart contract and there is no backing out once the contract is agreed upon.
Upgrading to smart contracts
Traditionally, agreements were conducted by handshakes, verbal communication, pen and paper contracts, and so on. However, none of these are an effective way of managing a business as it promotes fraudulent activities. With the development of smart contracts, there is no reliance on human agreement.
The smart contract works on its own without any possible chance of a technical glitch or a flaw. There are many cryptocurrency projects that have developed or are planning to develop smart contracts following the Ethereum blockchain. In addition to that, Ethereum smart contract explained major features, tasks, do's, and don'ts of the field to relatively new projects.
Redefining global money access and transfers
Money transfer is a major issue globally, as people, investors, and even businesses find it difficult to transfer assets into different regions. Traditional banks are really expensive and users have to follow complicated protocols to transfer or access their global assets.
On the other hand, blockchain technology has shown the potential of influencing money transfers by ensuring more accessibility and feasibility of usage. People are gradually realizing the perks of opting for blockchain and crypto for worldwide transactions. Their reliance on the centralized money transferring and banking system is also coming to an end with this.
Security features the complement modern blockchain technology
Many people are worried about the digital world because of the news of scams, frauds, and cyber thefts. However, the world of cryptocurrency and blockchain has ensured decentralization and user anonymity to solve this issue. Moreover, by the use of KYC/KYB verification and two-factor authentication, several blockchain projects have added extra layers of security for users.
The recent addition of smart contracts has further enhanced the security protocols of blockchains. As people cross the international transaction barrier, they can use these smart contracts to ensure full security and transparency of transferring of assets. No one can alter the terms of the contract, making it more convenient and secure.
These smart contracts help in increasing the trust between the blockchain project and its users. However, users must be vigilant before opting for a crypto and blockchain project. As there are many scammers in the market, users can acquire the services of a smart contract audit company to inspect blockchain security. As a result, users will be able to make a more informed choice with minimal risks involved.
About the author
Elena Alehno is a technical copywriter at PixelPlex. Her sphere of interest lies in such disruptive technologies as Blockchain, AI, IoT, AR/VR, and in translating information about them into a comprehensive language, making the concepts easy for not tech-savvy users.