Smart Contracts Archives

How Smart Contracts are Transforming the Bitcoin Space

Posted on January 17, 2018 | by [email protected]

Bitcoin’s explosive growth since it first came onto the scene in 2009 is largely attributed to blockchain technology, which is often praised as the biggest tech innovation since the internet. But now, in 2018, there’s another cryptocurrency in the market with a technology that’s even more innovative.

Ethereum.

Unlike Bitcoin’s blockchain, which functions primarily to verify digital transactions, Ethereum’s technology is far more robust, primarily functioning as a platform that supports smart contracts and decentralized applications (dapps).

What does this mean? Let’s discuss what smart contracts and decentralized applications are, why they’re important, and how they will continue to transform technology and business as we know it.

What are Smart Contracts?

Otherwise known as a crypto contract, a smart contract is a computer protocol that directly controls the transfer of digital currencies or assets between parties under certain conditions. Smart contracts capture the entire term of conditions in code, indicating that certain actions should only be executed when milestones are met. This is a necessary level of protection given that contracts, in their current form, are a flawed way of conducting business.

Take Product Manager Abhishek Chakravarty’s experience, for example. In his Medium article “Prototyping a Blockchain Smart Contract,” Chakravarty describes how he sent a legally binding agreement as a PDF to another party to read and approve, and the other party returned a copy of the executed agreement shortly thereafter. Six months later, after a disagreement surrounding a business issue, Chakravarty went to revisit the contract and realized that, prior to sending him the signed agreement, the other party had significantly modified one of the clauses.

Chakravarty realized, in retrospect, that employing a smart contract would have been far more efficient. The other party would not have been able to change a clause at the last minute if the code had already been preconfigured based on the agreed upon terms. Through the process of coding up clauses and deploying on the blockchain, smart contracts eliminate the need for ineffective and forth communication, reducing ambiguity and boosting efficiency.

What’s more, the benefits of smart contracts go beyond streamlining and improving the process surrounding contract agreements. They also act as the building blocks for decentralized applications, which are rapidly transforming the business landscape as we know it. Let’s take a closer look.

Decentralized Applications

Decentralized applications are applications that run on a peer-to-peer network of computers, rather than on a single cluster of servers. Unlike a traditional web application which calls an API to grab the desired data from a centralized database, decentralized applications call a smart contract, which then connects to the decentralized blockchain. This is important for a number of reasons. Because computation is done at the level of each individual computer (or node), it becomes impossible for hackers to implement the same type of damage that they could be able to do with a centralized server.

In addition to safeguarding against system-wide hacks, decentralized applications remove the need for a middleman and third-party verification, reinstating the values that made Bitcoin such an important innovation in the first place.

Furthermore, like mining Bitcoin transactions, decentralized applications encourage the use of individual and group participation, boosting a sense of community and ownership at the individual level and taking back control from larger, systemic entities.

Programmers are now developing decentralized applications that are built on Ethereum for a number of platforms in a variety of industries. Some projects that are employing decentralized applications within Ethereum ecosystem include, but are not limited to:

The Vevue Project, a peer-to-peer incentivized video network. Created as a solution to crowdsource more accurate reviews of restaurants, retail locations, and events, users take video clips and answer questions about their neighborhood so that they can earn Bitcoin or Vevue equity tokens.
WeiFund, a decentralized crowdfunding platform on and for the Ethereum ecosystem, designed to make crowdfunding user-friendly, thoroughly-tested, and interoperable. Users can launch a campaign using one of WeiFund’s smart contract templates. The system also heavily encourages user participation: Through a “bug bounty program,” users are encouraged to find and report bugs and can receive up to $5,000 in ether for their efforts.

Far more than a digital currency, Ethereum, and the smart contract technology and decentralized applications it supports, is improving and transforming the business landscape today.

Diversifying Your Retirement Account with Ethereum

In 2018 and beyond, Ethereum is and will continue to prove itself, not only as the second-largest cryptocurrency but as the basis for a new way of doing business that boosts transparency, security, and individual and group participation. If you’re looking to diversify your retirement portfolio, consider calling Bitcoin IRA to invest in Ethereum. With its multi-use case versatility, and cutting edge technology, Ethereum both already has and will continue to demonstrate its commitment in taking blockchain technology to the next level.

[mk_mini_callout title=”Free Download” button_text=”Get the Ultimate Investor’s Guide to Bitcoin IRAs” button_url=”/resources/investor-guide”][/mk_mini_callout]

Ethereum activities gain traction in China during Bitcoin’s struggle through scrutiny

Posted on April 30, 2017 | by [email protected]

China has been the major reason for sudden spikes in Bitcoin prices during 2016 owing to the hedging activities of Chinese investors during Yuan’s devaluation. These activities brought the cryptocurrency under the scrutiny of the Chinese Central Bank that has been fighting off capital flight for some time now. As PBOC believed that Bitcoin might be one of the easy and efficient ways to send money out of the country, they have decided to place strict KYCs for the Bitcoin exchanges. To set up an able system that monitors and regulates any laundering activity, the exchanges have banned fiat withdrawals that led to a sudden drop in volumes from China. While the process is still in motion, Bitcoin’s conjugate Ethereum has picked up the pace in China with better adoption and group meetings on regular basis. Let’s look into the details of Ethereum and how it has been making progress in China:

Ethereum as Bitcoin’s conjugate:

Ethereum has consolidated its place in investor portfolio owing to its multiple applications and its growing stability. The cryptocurrency jumped by $5 from $42 to $47 when Bitcoin crumbled under the pressure of a possible hard fork. This revealed that investors are transferring funds between Bitcoin and Ethereum as part of their portfolios interchangeably according to the shifting dynamics of the cryptocurrency. Hence Ethereum truly has become Bitcoin’s conjugate and owing to its executable smart contracts on Blockchain is finding good value with the investors.

Increasing activity in China:

Ethereum activities are increasing in China, due to increasing interests in the Enterprise Ethereum Alliance and the Ethereum network’s applicability to a wide range of infrastructures across a multitude of industries.Chinese bitcoin exchanges have recognized a surge in interest and demand for Ethereum. As a result, major bitcoin exchanges including OKCoin have announced the integration of support for Ethereum or Ether trading.

CnLedger announced:
“Our source tells us OKCoin is now planning on listing Ethereum. “May list it at the appropriate time.” Confirmed by OKC customer service.”

What Ether’s future looks like:

At the time of writing this article, Ethereum passed $80 reaching an all-time high. Consequently, the market cap for Ethereum has moved from $6 Billion to over $7 Billion. With a significant presence now in the Chinese sphere, Ether trading is bound to pick up. Regular meet ups over ETC and ETH are being conducted in China with the cryptocurrency proponents taking keen interest in the structure of the digital asset and its applications.

Can Blockchain Power Insurance Domain – Part 3?

Posted on February 28, 2017 | by [email protected]

In my previous post in the series – “Can Blockchain Power Insurance Domain”, I have elaborated two other potential markers that would require blokchain’s aid to make the insurance sector gain good traction on the data front. The markers described are purely related to the kind of data that would disrupt insurance sector and its capture and maintenance methods through blockchain and other technological advancements. However it doesn’t talk about how Blockchain can empower the operations and procedures involved directly in insurance proceedings. This last post would be completely dedicated to the same cause. Let’s look into how blockchain can transform the operating procedures of insurance domain:

Updated Distribution and Payment models:

Many global insurance providers are collaborating and developing alliances to identify new payment business models (like bitcoin and other cryptocurrencies),to efficiently handle data through a single global ledger. More efforts have been dedicated to increase automation to proactively capture risk data in contracts also offers new opportunities to build market knowledge. This in turn helps in streamlining payment methodologies suitable to the needs of the users. On top of that, at the least, Global insurers can cut down on the asset management costs, by reducing the hedging fees that they generally pay to protect themselves from the currency fluctuations that exposes them to risk in the international transactions.

Reinsurance:

Reinsurance has always been a hot topic in the insurance sector where, expiration of insurance period might require parties to renew their policy by manual process. For industries and for the insurance of automobiles, smart contracts can be designed that would diligently cut down the work that is put in by middle men in re-enabling the policy. Also when a particular insurer is seeking to offload an equal amount of risk to two separate insurers. A blockchain ledger can provide insight and notification if one of those reinsurers then tried to offload some of its portion to a subsidiary of the other reinsurer.

Hence we see that from detection of fraud claims to stream lining the data for exploratory analysis, Blockchain also weighs good on the process optimization front of insurance sector and has true potential to power it in the time to come.

Microsoft Launches Smart Contracts

Posted on September 5, 2016 | by [email protected]

The First week of September was positive for Bitcoin enthusiasts as the currency is healthily trading over $600 levels. With steady volumes being traded, analysts are expecting a big swing that might take the price upwards of $720. While Microsoft launching Smart Contracts might be one factor, let’s look into other positive highlights of the week:

Microsoft and Smart Contracts

Microsoft has announced that it is forming a dedicated group for improving smart contracts security. The group named as ‘Kinakuta’, aims to make it easier to share information and tips about smart contracts. Smart Contracts refer to self-executing blockchain-based code that could automate complex transactions. Concerns about the contracts have grown after vulnerability led to the collapse of the technology’s first large-scale implementation. There has been a growing realization that smart contracts are new and can sometimes be dangerous if used improperly.

However, Microsoft’s director of business development and strategy Marley Gray believes new tools might help developers avoid future mistakes.

Gray told:

“We feel there’s a huge opportunity here to involve the community. Kinakuta is the community building around Microsoft best practices and elsewhere, to collect best practices and tools and involve developers in creating these best practices.”

Australia to end Bitcoin Double Tax

The Australian Treasurer and the FinTech Advisory Group met on Friday to further discuss the development of innovation. Among topics focused on were blockchain technology and ending the double tax for digital currencies, including bitcoin. The meeting discussed various FinTech topics, including a review of opportunities for blockchain technology. Also, the government reiterated that its intention is to stop the ‘double taxation’ of digital currencies under the GST regime. Currently, consumers in the land down under are ‘double taxed’ when using digital currency to buy anything already subject to Goods and Services Tax (GST). The Australian Tax Office (ATO) does not consider bitcoin and other cryptocurrencies money or foreign currency.

On the same lines popular peer to peer bitcoin exchange LocalBitcons has announced reduction of trading fee for bitcoin trades in UK. After Brexit, there was a fall in Sterling Pound Valuation. This move is aimed at increasing bitcoin trades among UK customers. Starting from September 5^th, the transaction fee has been halved for all the customers in UK.

Japanese organizations launch Blockchain Collaborative

The University of Tokyo, The University of Aizu, Center for Global Communications (GLOCOM), and Soramitsu Co. have partnered to study “smart currency” effects on regional development. The working groups will experiment with distributed ledger technology. The Universities and Global communications have taken up theoretical research on the applications in most of local regions. Fintech startup Soramitsu, a company using blockchain technology to create a digital identity platform, is handling the industry application part. Soramitsu is a member of the Linux Foundation’s Hyperledger Project, which aims to create international industry-wide distributed ledger standards.

How ripples of these events would further effect the price, has to be seen in the coming week.