Many people think about bitcoin when they think of the incredible success that some currencies have enjoyed in the cryptocurrency game. However, Ethereum is the second-largest cryptocurrency in the world. While you could buy a single Ethereum token for about $1 in 2015, every token you bought would’ve later become worth more than $4000!
And Ethereum achieved all of that while competing with the biggest cryptocurrency in the world. It also competed with thousands of other competitors trying to become the second biggest coin behind bitcoin. So what made Ethereum the winner of this contest?
Whenever you look at smart contracts examples, you should be thinking of Ethereum. Ethereum was the first and biggest cryptocurrency to provide the possibility of smart contracts.
Smart contracts have a huge list of potential uses. On top of that, they have a long list of realized uses. They have already been implemented in the real world time and time again.
So what exactly have people been using smart contracts for? Read on to learn all about the top applications for smart contracts in the real world!
What Are Smart Contracts?
Many people ask, “What is a smart contract?” There are a few different perspectives you can answer this question from.
From the perspective of building smart contracts, you need to focus on Blockchain. Blockchain technology allows people to come to an accord about important questions without relying on a centralized authority.
Traditionally, if you wanted a contract to be respected, you relied on an authority like the court system to state that the contract should be respected. Then you relied on the police system to make sure that authorized contracts are treated the way they are supposed to be treated.
Blockchain technology allows people to officially recognize something without needing a centralized authority. Blockchain technology can recognize the obligations of a contract that exists between people, for example.
From a performance standpoint, the thing to understand about smart contracts is that they can enforce themselves. They rely on Blockchain technology to check whether or not the conditions of a contract are being met or not. Once that question is established, they output actions automatically as part of their programming.
The end result is that you can reliably expect certain things to happen in response to meeting contract conditions. And you can expect them to happen whether or not any outside authority states that they should happen or not.
In theory, this could someday replace the current system we have for authorizing and enforcing all contracts. In reality, we have not yet figured out how to apply smart contracts to everything.
However, we have figured out how to use smart contracts in many different industries and in many different ways.
Real-World Examples in Finance
One of the top applications of smart contracts has been in the world of finance. This makes a lot of sense when you appreciate the advantages of smart contracts.
In many parts of the world, it makes sense to rely on a court system and police system to enforce contracts. However, in some parts of the world, the court and police systems are not that reliable.
Many people opt to simply not use contracts at all in certain situations because they do not trust that the court and police systems will uphold them.
That is where smart contracts can come in handy. You can use them in any part of the world. After all, they enforce themselves.
That means that it does not matter if the court or police systems are reliable. It also does not matter if you trust the other party in your contract. You can rely on the smart contract to execute itself independently of the trustworthiness of the other party or the court or police systems.
Decentralized finance dApps provide many of the same functions as a traditional bank. You can get all the same services like borrowing and trading money.
Traditionally speaking, people have to generate an incredible reputation before they can start a bank. That is why many banks are associated with the government in some way. Government regulations help people to trust that banks will not scam them out of their money.
However, smart contracts allow people to trust banks even if they do not know much about them. Whether the individuals running the banks are trustworthy or not, the smart contracts will make sure that everything gets executed the way it is supposed to.
This creates an added level of competition for banking services. As competition for people’s money and interest grows, banks of all kinds will have to provide better service and benefits in order to persuade people to use them.
NFT Uses for Smart Contracts Explained
People are combining smart contracts and NFTs in the world of gaming. NFT is an acronym that stands for non-fungible token.
Fungible means that something can easily be replaced. One dollar is worth the same as another dollar. One apple is worth pretty much the same as the next apple.
NFTs are nonfungible. That means that they are unique and cannot be easily substituted for. That makes them useful as collector’s items among other things.
Many games are offering in-game rewards in the form of NFTs. These NFTs might represent accomplishments or special items that game characters can use.
Traditionally, everybody would win the same rewards from games. And there was no point in trading around what you won with anybody else. But NFTs are allowing games to reward people with unique rewards that are potentially valuable to other people.
However, how can you ensure that somebody really sends you an NFT when they say that they will? That is where smart contracts come in. Smart contracts allow random players of the same game who know nothing about each other to trust each other enough to trade NFTs.
Legal Applications of Blockchain Technology and Smart Contracts
People have always imagined smart contracts as a way to revolutionize the legal industry. That has not happened yet. However, smart contracts already have their uses in some parts of the legal world.
In California, you can issue marriage licenses using smart contracts and Blockchain technology. This is just a proof of concept so far. However, it shows the potential of smart contracts to issue official legal documents in other cases as well.
This has the potential to greatly simplify the legal system. Traditionally, lawyers have to carefully word everything in a document. That way, they hope that a judge will interpret it the way that they desire and help their clients get what they want.
However, smart contracts simplify this process. All you have to do is set up the smart contract to execute itself under certain conditions. That may be somewhat complicated, but it does not rely on the subjective interpretation of a judge.
Learn Blockchain Technology Applications for Real Estate
When people buy real estate, they often discover hidden fees. Right when you think you’ve paid for everything, it turns out that there is some kind of closing fee. If you don’t pay that fee, then you do not receive the deed to the property.
Smart contracts can fix this process. They can state under exactly what conditions the deed will be transferred to the buyer. Even if the seller wishes they could hold on to the deed and squeeze out a few extra dollars, they will not have the power to do so. The smart contract will execute itself.
The Republic of Georgia has already been working on a land title registry system using blockchain smart contracts.
Smart Contracts Contribute to Designing Corporations
In the state of Delaware, you can incorporate using smart contracts. Corporations are supposed to issue dividends to their shareholders under certain conditions. However, some people abuse their power in corporations and break the rules.
Smart contracts can give people the assurance that dividends will be paid out as agreed upon. It will happen automatically because the smart contract executes itself.
Using Smart Contracts and Artificial Intelligence
The downside of smart contracts is that you have to specify exactly when they execute themselves. It can be difficult to figure out the exact conditions that justify execution.
However, that is where artificial intelligence can help. Artificial intelligence systems can figure out the complicated conditions that justify a contract’s execution.
Some Blockchain platforms are already creating programming languages oriented toward smart contracts. If you can combine artificial intelligence and smart contracts, you may be able to replace almost every other kind of contract in the world.
Learn From Real Smart Contracts Examples
We hope that some of the ideas in this brief article about real-world smart contracts examples have been helpful for you. Some people criticize smart contracts for not being applicable in the real world. Every example of an actual smart contract is a repudiation of this criticism.
Smart contracts have the potential to revolutionize the way that we make and enforce agreements in the world. To learn more about how smart contracts work and the technology that allows smart contracts to exist, feel free to check out our other content here at any time!