Smart contracts often generate a certain level of confusion. Coming from different perspectives, people define them in different ways, thus causing misunderstandings of the term within the context of what they can do for businesses. Some of the haze ensues from common definitions that don’t draw a clear distinction between legal contracts and smart contracts.
Smart Contracts vs. Legal Contracts
Though smart contract services can replace some aspects of contractual law, they are definitely not a legal concept. They do support business transactions, but more in the sense of a technical solution for the digital realm in which companies search for new ways to make their projects more profitable. Smart contracts work by delegating certain transaction elements to the computer by giving it instructions with cryptographic code.
Smart contracts are a piece of code, which blockchain developers implant in decentralized networks. They work under a set of predefined, self-executable, known-to-all-parties rules.
Smart contract services simplify many of the processes that need to be otherwise completed or verified by humans, by transferring them to a computer. In this sense, a smart contract can be a reliable auditor.
Types of Smart Contracts
Bitcoin can be considered the first smart contract in the sense of current blockchain technology. However, the cryptocurrency is a fairly limited representative of the concept, as it doesn’t depict all ways in which smart contract services work. Bitcoin is a smart contract executed on a fully decentralized network, without the interference of intermediaries or third-party fees.
The Ethereum platform, in contrast, is not simply finance-based. Its Solidity development projects extend to business solutions. On Ethereum, developers create an open-source code to apply decentralized technologies in areas such as digital identity, voting, utilities and computing resources, to name a few.
Smart contracts can be applied to closed organizations. The Hyperledger project, for example, develops blockchain projects where decentralized networks are available only to specific participants who can join the group by invitation. Hyperledger is not fully public; businesses need to gain permission to be accepted in the inner circle. The difference between the Hyperledger projects and a 100 percent decentralized blockchain is in the business logic. It’s more viable and efficient to create a closed platform for organizations that meet the integrity and trust criteria than to give every member of the public the same level of trust.
How Do Smart Contracts Work?
If you are considering smart contract services, a blockchain developer can create a contract that sets a range of criteria to validate multiple transactions. Transactions will not be limited to a simple give-and-take exchange of value. They can also include dates, qualities or quantities, and other specifications that must be met if the transaction is to be considered valid. The event takes place only after all conditions have been met by all transactional parties.
The instructions are embedded within the code and are impossible to change unless all parties agree to update the smart contract. For instance, a second stage of the transaction can’t take place until the first one is completed. A typical example of a smart contract is a group signature, where a business transaction is valid only after a certain number of people have signed.
With smart contracts, businesses can gain a new level of protection against unknown outcomes. Because the records in a decentralized ledger are permanent, immutable and traceable, it’s virtually impossible to get an outcome that wasn’t planned by the parties.
Smart contract services have proven to be an effective solution for supply chain management. Each participant in a supply chain built on a decentralized blockchain has insight and access to the recorded transactions and can keep track of what happened at a certain point in time or location.
Immutability, permanency, and consensus are three important aspects of smart contracts that protect participants from unscrupulous activity. However, smart contracts are still executed on a computer network and are therefore vulnerable to mistakes made during their processing. Despite their imperfections, smart contracts can potentially help you develop new business solutions, such as avoiding multiple transaction fees, letting computers run secure transaction records, verifying recorded data, and even creating your own cryptocurrency.
For the latest cryptocurrency news, join our Telegram!
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.
Image courtesy of Pexels
XNO Token of Xeno NFT Hub listed on Bithumb Korea Exchange
Hong Kong, Hong Kong, 25th January, 2021, // ChainWire //
Xeno Holdings Limited (xno.live ), a blockchain solutions company based in Hong Kong, has announced the listing of its ecosystem utility token XNO on the ‘Bithumb Korea’ cryptocurrency exchange on January 21st 2021.
Xeno NFT Hub (market.xno.live ), developed by Xeno Holdings, enables easy minting of digital items into NFTs while also providing a marketplace where anyone can securely trade NFTs.
The Xeno NFT Hub project team includes former members of the technology project Yosemite X based in San Francisco and professionals such as Gabby Dizon who is a games industry expert and NFT space influencer based in Southeast Asia.
NFT(Non-Fungible Token) technology has recently gained huge focus in the blockchain arena and beyond, making waves in the online gaming sector, the art world, and the digital copyrights industry in recent years. The strongest feature of NFTs is that “NFTs are unique digital assets that cannot be replaced or forged”. Unlike fungible tokens such as Bitcoin or Ether, NFTs are not interchangeable for other tokens of the same type but instead each NFT has a unique value and specific information that cannot be replaced. This fact makes NFTs the perfect solution to record and prove ownership of digital and real-world items like works of art, game items, limited-edition collectibles, and more.
NFTs are already being actively traded in markets globally. For…
Should Crypto Projects Devote Resources to Community Growth and Marketing?
2020 has been an incredible year for crypto as investors have generated windfall profits and crypto projects have seen their businesses gain the spotlight they’ve been looking for. While Bitcoin has received most of the attention after major institutional investors announced they were accumulating the increasingly scarce asset, many altcoins have also seen their fair share of glory. When looking at all the big winners of the past year, the first project that probably comes to mind is Chainlink, having appreciated by more than 550% YTD and now valued at over $4.5 billion. But, the actual biggest winner of the year is HEX with a YTD return of over 5,000%.
I mention both of the above projects as they have each taken slightly different paths to achieve greatness. Chainlink has devoted resources toward building a fundamentally sound business with many strategic partnerships while HEX has spent vast sums of money on marketing and promotion. Both approaches are valid, but one thing is certain, it is absolutely imperative for crypto projects to let the crypto community know what makes them special. Of course, one of the reasons that makes crypto so valuable is the powerful blockchain technology that most projects are utilizing.
Cryptocurrency vs. Blockchain Technology
It’s important to make a distinction between blockchain technology and cryptocurrency. Although they are often used interchangeably, they are different. Blockchain technology and crypto were both created after the 2008 financial crisis, but cryptocurrency…
XENO starts VIP NFT trading service and collaborates with contemporary artist Hiro Yamagata
Hong Kong, Hong Kong, 24th December, 2020, // ChainWire //
The XENO NFT Hub (https://xno.live) will provide a crypto-powered digital items and collectables trading platform allowing users to create, buy, and sell NFTs. Additionally it will support auction based listings, governance and voting mechanisms, trade history tracking, user rating and other advanced features.
As a first step towards its fully comprehensive service, XENO NFT Hub launched a recent VIP service to select users and early adopters in December 2020 with plans for a full Public Beta to open in June 2021.
“NFTs are extremely flexible in their usage, from digital event tickets to artwork, and while NFTs have a very wide spectrum of uses and categories XENO will initially focus its partnership efforts and its own item curation on three primary areas: gaming, sports & entertainment, and collectibles.”, said XENO NFT Hub president Anthony Di Franco.
He also added “This does not mean we will prohibit other types of NFTs from our ecosystem However, it simply means that XENO’s efforts as a company will be targeted into these verticals initially as a cohesive business approach.”
Development and Procurement Lead, Gabby Dizon explained, “Despite our initial focus, we found ourselves with a unique opportunity to host some of the works of Mr. Hiro Yamagata. We are collaborating with Japanese artist Hiro Yamagata to enshrine some of his artwork into NFTs.”
Mr. Yamagata has been…