< BLOG
Smart Contract Development: Challenges and Opportunities for Your Business
30 NOV 2022
Blockchain development services and cryptocurrency have made significant impacts on today’s economy, and will undoubtedly make even greater impacts in the future. Anonymity, decentralization, and high demand have raised the value of cryptocurrency. According to CoinMarketCap, bitcoin’s maximum value was $67549 on November 8, 2021.
However, blockchain technology is not only used in crypto, but it is often identified with it. Blockchain has also found its application in many areas of business. Relationships between businesses are established and regulated through contracts that spell out responsibilities and conditions. Smart contracts were invented to simplify the creation of blockchain contracts, automate their execution, and eliminate the need for a third trusted party.
As we have mentioned before, smart contract development is an industry that is growing and evolving year by year. Let’s briefly answer an important question: what is a smart contract? Basically, it is an agreement that is automatically fulfilled when certain conditions are met. In practice, they are a computer algorithm or, in simple words, code running on top of a blockchain. This code stores the terms of the contract and enforces them between untrusted parties without the involvement of a trusted third party.
Smart contracts have progressed over the past few years and are well established. However, this technology is still not perfect. So, what are smart contract development challenges and opportunities? In this article, we have collected all the information about the open problems of smart contracts and the possibilities of applying this technology to business. Let’s jump right in!
Let’s take a look at smart contract development challenges and opportunities in some of the most popular blockchain development services
Each of these platforms has its own smart contract development challenges and opportunities. But more often than not, smart contract development companies choose Ethereum because it is one of the most established and mature blockchain platforms. And in addition to the convenient development of smart contracts, it offers the maximum availability of a huge and potential crypto market for business.
So, which business areas can use smart contracts, and what solutions exist for them?
✔️ Crowdfunding
In recent years, crowdfunding has become a very popular option for raising money for various projects or startups. Crowdsourcing platforms allow creators to set the necessary amount of money to bring their idea to reality, and users can donate money to them in exchange for a reward, depending on the conditions set by the creators. For example, a certain amount of money entitles them to early access to the finished product or a premium subscription. In the standard approach, the platform, acting as a third party, manages funds between supporters and requesters. If the fundraising is successful and development is completed, it distributes the rewards. If unsuccessful, it returns the money to users. Smart contracts are a promising technology for the field. They provide the ability to prescribe the terms of managing funds without the need to involve a third party. Also, such a system will be more protected from hacking and fraud due to the reliability and transparency of blockchain technology.
An important part of this field is getting up-to-date information about the movement of goods. In logistics, smart contracts help to build business processes without any intermediaries. It provides security and sustainability of supply chains. It also improves the transparency of supply chain operations by making it impossible for unauthorized data adjustments to be made. Smart contracts help automate the flow of goods and documents through the supply chain.
✔️ Elections and polls
The use of smart contracts can have an impact on monopolistic areas as well, such as voting. There are smart contract development companies creating tools and solutions to improve the security and transparency of democratic processes. Such projects create blockchain-based voting ecosystems and smart contracts that enable campaigns for a range of election types and voting parameters.
✔️ Finance
In banking, smart contracts reduce administrative costs for clearing and legal documentation processes. Autonomous execution of agreements on blockchain allows customer transactions to be verified and reconciled. Decentralized systems and the use of smart contracts reduce banks’ operational risk and protect against hacker attacks. It is also possible to automate escrow functions and the payment system.
And what are smart contract development challenges and opportunities? Smart contracts are a promising emerging technology for various areas of business. Their autonomy, decentralization, transparency, and immutability can optimize many business processes. However, the same characteristics of smart contracts impose certain limitations. Therefore, developers’ experience and knowledge are crucial to create profitable business smart contracts that can maximize opportunities and avoid limitations using the latest technology.
However, blockchain technology is not only used in crypto, but it is often identified with it. Blockchain has also found its application in many areas of business. Relationships between businesses are established and regulated through contracts that spell out responsibilities and conditions. Smart contracts were invented to simplify the creation of blockchain contracts, automate their execution, and eliminate the need for a third trusted party.
As we have mentioned before, smart contract development is an industry that is growing and evolving year by year. Let’s briefly answer an important question: what is a smart contract? Basically, it is an agreement that is automatically fulfilled when certain conditions are met. In practice, they are a computer algorithm or, in simple words, code running on top of a blockchain. This code stores the terms of the contract and enforces them between untrusted parties without the involvement of a trusted third party.
Smart contracts have progressed over the past few years and are well established. However, this technology is still not perfect. So, what are smart contract development challenges and opportunities? In this article, we have collected all the information about the open problems of smart contracts and the possibilities of applying this technology to business. Let’s jump right in!
Smart contract development challenges and opportunities are important to understand if you are thinking about creating decentralized applications.
Platforms that support smart contract development
In 2008, bitcoin came into being. Bitcoin’s blockchain does not allow the setting of conditions for a transaction in a new block, as it contains only information about the transaction itself. Nevertheless, the emergence of technology provided the push for developing smart contracts. Currently, several platforms offer programming languages, code execution, and security layers for smart contract development companies.Let’s take a look at smart contract development challenges and opportunities in some of the most popular blockchain development services
1. Bitcoin
It is the world’s first and best-known cryptocurrency and digital payment system. However, bitcoin was not originally created as a platform supporting smart contracts. Bitcoin uses a stack-based byte-code scripting language. Unfortunately, it is not sufficient to develop smart contracts with rich logic. The reason for this is that it does not support logic loops. Yet, it protects the Bitcoin network from hacking attacks that many other cryptocurrency networks are prone to. To create modern smart contracts on the Bitcoin blockchain, global changes must be made to its architecture.
Smart contract development challenges and opportunities are a highly debated topic in the field of cryptocurrencies.
2. Ethereum
It is the first platform to support the development of smart contracts. Ethereum has a high-level programming language called Solidity and a runtime environment called Ethereum virtual machine. It allows advanced and customized smart contracts to be placed and executed. Ethereum also offers blockchain development services to create decentralized applications.3. Hyperledger Fabric
Unlike the previous ones, it is a closed platform for smart contract development. Only business-related smart contract development companies can join it. The Hyperledger Fabric architecture is based on chain-code technology. Chain code is software code written in Go, Java, or Node.js. It handles business logic agreed upon by network participants, so it can be considered a smart contract.Each of these platforms has its own smart contract development challenges and opportunities. But more often than not, smart contract development companies choose Ethereum because it is one of the most established and mature blockchain platforms. And in addition to the convenient development of smart contracts, it offers the maximum availability of a huge and potential crypto market for business.
So, which business areas can use smart contracts, and what solutions exist for them?
Smart contracts opportunities
The scope of applications of smart contracts is extremely broad. It is possible to use them in many spheres. Let’s take a closer look at them.✔️ Crowdfunding
In recent years, crowdfunding has become a very popular option for raising money for various projects or startups. Crowdsourcing platforms allow creators to set the necessary amount of money to bring their idea to reality, and users can donate money to them in exchange for a reward, depending on the conditions set by the creators. For example, a certain amount of money entitles them to early access to the finished product or a premium subscription. In the standard approach, the platform, acting as a third party, manages funds between supporters and requesters. If the fundraising is successful and development is completed, it distributes the rewards. If unsuccessful, it returns the money to users. Smart contracts are a promising technology for the field. They provide the ability to prescribe the terms of managing funds without the need to involve a third party. Also, such a system will be more protected from hacking and fraud due to the reliability and transparency of blockchain technology.
Crowdfunding projects should explore smart contract development challenges and opportunities.
✔️ LogisticsAn important part of this field is getting up-to-date information about the movement of goods. In logistics, smart contracts help to build business processes without any intermediaries. It provides security and sustainability of supply chains. It also improves the transparency of supply chain operations by making it impossible for unauthorized data adjustments to be made. Smart contracts help automate the flow of goods and documents through the supply chain.
✔️ Elections and polls
The use of smart contracts can have an impact on monopolistic areas as well, such as voting. There are smart contract development companies creating tools and solutions to improve the security and transparency of democratic processes. Such projects create blockchain-based voting ecosystems and smart contracts that enable campaigns for a range of election types and voting parameters.
✔️ Finance
In banking, smart contracts reduce administrative costs for clearing and legal documentation processes. Autonomous execution of agreements on blockchain allows customer transactions to be verified and reconciled. Decentralized systems and the use of smart contracts reduce banks’ operational risk and protect against hacker attacks. It is also possible to automate escrow functions and the payment system.
If you think that it is time for your business to start working with cryptocurrency and smart contracts, then the most sensible and profitable decision is to turn to a smart contract development company with good expertise. Luckily, Brivian fits just that description. If you have any questions regarding smart contracts development challenges and opportunities, please contact us. To do this, leave a request either at the end of the article or here.
Smart-contracts challenges
As we have already mentioned, smart contract technology is not perfect. Along with quite significant advantages and opportunities of using this technology in business, it is important to understand the drawbacks and issues of smart contracts.❗️ Legal status issues
Cryptocurrency, blockchain, and smart contracts are fairly new, though extremely sensational technology, positioning themselves as a decentralized and independent system. Many states are still undecided about their attitude toward this technology. Often they unsuccessfully try to limit or regulate its use legally. The intervention of state authorities contradicts the concept of smart contracts, designed to transact and manage data without a trusted third party. Thus, the differences and uncertainties in the legal status of these technologies in different states may negatively affect business operations.❗️ Scalability problem
Transaction throughput is an important characteristic of any system. A system that acts as a platform for decentralized applications that use cryptocurrency as a means of payment must be scalable. Unfortunately, due to the inherent characteristics of blockchain, the number of transactions per second for mainstream platforms is very low compared to popular payment systems. It is about 15 transactions per second in Ethereum vs about 20,000 for a Visa. Sadly, this is the limit for blockchain networks due to the limitations of consensus mechanisms. Scaling options are being developed, but they are unlikely to increase the number of transactions processed much.❗️ Immutability
Like a coin, the impossibility of making changes in running smart contracts has two sides. Protection against changing the contract code after it has been launched prevents fraudsters from stealing money. Traditional contracts, on the other hand, tend to change their terms when agreed upon between the parties. However, smart contracts do not provide for such a possibility. The same is the case with smart contracts, which have been inadvertently developed with mistakes. Therefore, when designing smart contracts, all possible conditions have to be defined carefully and great attention has to be paid to quality assurance.❗️ Reliance on off-chain resources
Smart contracts, working on top of the blockchain, lack the ability to collect and process information directly from outside their network. As a result, contracts relying on dynamic data are at a significant disadvantage. Luckily, so-called oracles exist to solve this problem, providing a link between the outside world and smart contracts. However, this solution cannot guarantee the reliability of the system.❗️ Blockchain network node consensus
As mentioned earlier, the scalability and throughput of blockchain networks rely heavily on consensus mechanisms. These algorithms synchronize copies of information blocks between nodes in the network, as well as provide distributed, reliable, and secure transactions. However, the architecture of such solutions requires a lot of processing power to operate. Many platforms are considering options for migrating to more productive consensus algorithms, but unfortunately, this is a complex and time-consuming process.Conclusion
To sum it up, let’s go over the key points of the article. What is a smart contract? Basically, it is a computer algorithm that automatically executes the terms of the agreement between the parties. This type of agreement does not require a third trusted party, which reduces costs and increases security.And what are smart contract development challenges and opportunities? Smart contracts are a promising emerging technology for various areas of business. Their autonomy, decentralization, transparency, and immutability can optimize many business processes. However, the same characteristics of smart contracts impose certain limitations. Therefore, developers’ experience and knowledge are crucial to create profitable business smart contracts that can maximize opportunities and avoid limitations using the latest technology.
Brivian will help your business keep up with global trends. We’ll bring your idea to life using a modern technology stack and deep experience in creating smart contracts for platforms providing crypto loans and accepting crypto payments. Contact us, and we’ll discuss any questions you may have. We’ll discuss the possibilities of applying smart contract technology to your business and other important details. Rest assured, together, we’ll create a solution that can make your business thrive.
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