Regardless of their size, most businesses depend on written contracts when carrying out transactions. But these contracts are tedious and can slow down the rate of doing business. A viable solution to the challenges posed by written agreements is the use of smart contracts blockchain.
- What is a smart contract?
- Key things to consider when developing a smart contract
- Smart contract development steps
- Types of smart contracts
- Conclusion on developing smart contracts for blockchain
What is a smart contract?
A smart contract is a virtual agreement in a computer program that is effected mechanically when pre-programmed requirements are met. The contract terms between the parties involved are crafted into lines of code and exist in a blockchain network.
‘A smart contract is a set of computer code between two or more parties that run on the top of a blockchain and constitutes of a set of rules which are agreed upon by the involved parties.’
- Safety: blockchain technology uses a distributed ledger that is immune to changes.
- Removal of third parties: The use of smart contracts blockchain eliminates the need for intermediaries in a transaction, and this cuts down the cost of doing business.
- Faster execution: With smart contracts, transactions happen faster across participating computers.
- Openness: All the transaction information is visible to participants, meaning that blockchain and smart contracts create an environment of trust.
- Storage of information: Smart contract records are stored safely and can be accessed at any moment.
- Paperless: contracts existing on papers are prone to damage, loss, stealing. Because smart contracts blockchain lives in lines of code, they’re more secure.
When creating smart contracts, a blockchain development company must consider various things. Please stay tuned to learn more.
Key things to consider when developing a smart contract
Smart contracts come with multiple perks, such as removing expensive third parties, prompt transactions, and bringing transparency. If you want to enjoy these benefits, you should consider the following things before your start:
1. The use of cryptocurrencies is a mandatory
Virtual agreements are created on blockchain technology. So, virtual currencies are used to settle transactions. You can only make an informed decision if you understand what crypto smart contracts entail. If your company is related to blockchain technology, it’s easy for you to decide. But, if your business is outside the realm of blockchain, you should learn more about the technology. Arming yourself with knowledge will enable you to decide whether you require blockchain and smart contracts.
2. Regulatory concerns
Blockchain and smart contracts lack a consistent regulatory framework. And this may create multiple questions concerning taxation and the role of the government if something untoward happens. Due to a lack of precise regulatory mechanisms, some businesses are hesitant to use crypto smart contracts.
3. Little chances of alterations
Because smart contract cryptocurrency works on an ‘if/when’ approach, there is little room to make changes. So, what you write as your predetermined rule sticks until the agreement is delivered. Furthermore, smart contracts blockchain runs singularly on actual facts. This means that the virtual deals lack room for subjective judgments.
Once you understand the limitations of smart contracts blockchain, you should consider integrating them into your business operations. Before doing this, you need to evaluate your company to determine the smart contracts blockchain that meets your operational needs. For example, you can develop smart contract cryptocurrency to confirm settlements, send a payment for a service, and others. Suffice to say; it’s critical to assess similar solutions in the market to estimate the number of benefits you’re likely to get.
5. Look for an experienced, smart contracts blockchain developer.
The quality of smart contracts blockchain solution you get depends on the experience of the developer you choose. An excellent ethereum smart contract developer you choose should have profound knowledge about blockchain development. With the help of search engines, you should look for a list of smart contract platforms and pick a developer with experience and expertise in this area.
6. Evaluate its safety
A study by UK and Singapore researchers revealed that over 34,000 virtual contracts are prone to hacker attacks. While creating smart contracts blockchain, you should test them to evaluate their safety from cyber attackers. Remember, smart contracts with bugs can spell doom to business as they can lead to loss of money by clients. Furthermore, vulnerable virtual agreements can damage the reputation of your company.
Smart contract development steps
The creation of smart contracts blockchain goes through a life cycle, which comprises multiple phases.
Step #1: Define the business logic and needs
Here, all parties define particular business conditions of the virtual contract and relay the information to the developer.
Step #2: Design the architecture of smart contracts blockchain
After defining the business logic, the next step is to design the architecture of the agreement to mirror the logic. The architecture serves as a roadmap to guide the development procedure.
Step #3: Create the smart contract
Here, developers write the smart contracts blockchain code for their preferred platform. Some of the networks include Ethereum, TRON, EOS, Bitcoins, Binance Chain, and Solana. At this phase, you should test whether the agreement functions as planned.
Step #4: Internal audit
Once your smart contracts blockchain is ready, you conduct an internal audit through a local blockchain and a test net. This evaluation verifies whether the virtual agreement works as intended and meets your safety requirements.
Step #5: Deployment on blockchain
Here, you install the smart contracts blockchain on the platform it will run.
Types of smart contracts
There are two main types of smart contracts: simple and complex smart contracts. A simple, smart contracts blockchain has legal consequences for parties that fail to fulfill their side of the agreement. On the other hand, complex agreements feature decentralized autonomous organizations (DAO) and Application Logic Contracts (ALC).
Conclusion on developing smart contracts for blockchain
If you intend to combine smart contracts with your business operations, it’s crucial to arm yourself with in-depth knowledge to enable you to make the right decisions. Here, we’ve shared the main things to consider when creating virtual contracts. The article has also explored the main phases of smart contract development and the available types in the market.