Online transactions gain ground swiftly across various sectors across the world. Evolving technology has made this mode of payment highly secure, quick, and convenient for customers and recipients alike. Blockchain is an example of an emerging and rapidly advancing technology. Smart contract development has made this technology more useful and relevant for core industry sectors including retail, real estate, and BFSI. The crypto sector also leverages the benefits of smart contacts.
In this article, we are going to see the role of smart contract development services in blockchain technology and the benefits of smart contracts. But, before digging deep into this topic, let’s have a brief introduction to this promising concept.
Concept of Smart Contracts in Blockchain: An Overview
A smart contract is a computer program that controls the transfer and exchange of digital assets automatically between two or more parties under particular circumstances. Just like a traditional contract, the smart contract is also bound by enforcement. Smart contracts can also enforce ordinary contracts by code for ensuring precise execution. As a virtual document, a smart contract is written in computer language and is useful for cryptocurrency transactions.
The smart contract is built on the blockchain and therefore, it is decentralized, immutable, and transparent in nature. The blockchain has addresses for every smart contract. Users can share the smart contract on the network using this address. Smart contracts have a straightforward basic logic and a simple concept of IF-THEN. Time constraints in smart contracts can lead to contract deadlines.
Let’s understand the state of smart contract development with a brief on its working pattern.
Brief Overview of the current state of Smart Contract Development
Smart contracts can record an agreement between two or more parties in the form of code. There is no possibility of altering or changing the smart contract once it is deployed on the blockchain. Simply put, smart contract development enables users to replace traditional contracts while ensuring business growth across different industry sectors including logistics and shipping, supply chain management, and manufacturing where contracts play a vital role in various processes.
A research report of Verified Market Research has given this prediction for the size of the smart contracts market. The way core industry sectors including banking, government, insurance, and real estate adopt this concept in their applications, this target looks quite achievable for smart contracts. What’s more, the growing popularity of Blockchain technology has acted as a catalyst in increasing demand for smart contracts.
Though this report on the global smart contract market gives a holistic view, we can certainly assume that going forward the popularity of smart contracts will increase significantly. The CAGR of over 26% shows increasing importance and adoption rate in different business segments across the world.
Read on to know smart contract development, its key components and benefits.
What is Smart Contract development?
Smart contract development is a process to build smart contracts between two or more parties with the help of blockchains like Ethereum or EOS. Every smart contract has a predefined set of rules and preset conditions. Smart contracts execute automatically once these conditions are met. The entire blockchain network acts as a guarantee for smart contracts and no person can alter them unless the whole network permits.
Smart contracts can be considered one of the safest and most robust online agreement tools between different parties or persons. It benefits modern businesses in multiple ways.
How Smart Contracts Work?
The smart contract development process or life cycle of smart contracts has multiple steps. These steps or aspects ensure that all the business needs and predefined conditions are correctly defined.
Here are the major steps of smart contract development.
Define the Logic as per Needs
Here, all the participants or involved parties define the common and specific conditions for the smart contract. They communicate these conditions as requirements to smart contract developers who define the business logic.
Design the Architecture
Once developers determine the business logic, they initiate the design of the contract’s architecture that effectively represents the logic. It acts as a blueprint during the entire smart contract development process.
It is the most crucial stage in which smart contract developers write the code for the prefixed blockchain platform. This step also includes a unit testing procedure to ensure that the contract performs as per the design.
Internal Testing & Audit
An internal audit is done using a local blockchain. It is necessary to find out whether the contract performs as per the requirement while meeting all the security standards effectively.
The smart contract development company deploys the contract on the marketplace where it will operate.
Types of Smart Contracts
As per the complexity and other factors, we can classify smart contracts into two broad categories-- Simple or Smart Legal Contracts
In this type of contract, legal implications for the breach of the agreement are included.- Complex Smart Contracts
Complex smart contracts include DAO (Decentralized Autonomous Organizations) and ALC (Application Logic Contracts). DAOs are a form of a community based on blockchain and governed by a set of rules. ALCs act as an interface between the IoT (Internet of Things) and smart contracts.
The smart contract development company has to consider many factors and components for developing customized smart contracts. Here is a brief information on them.
Key Components of Smart Contract Development: Programming Languages and Platforms
The advent of a new computational tier, blockchain applications have got a trust model. A trustless model includes public blockchains like Bitcoin and Ethereum whereas a trust model is based on cryptography like digital signatures and consensus algorithms. The smart contract has all the characteristics of the platform from which it is developed. It is advisable to consult a reputed smart contract development company to get the most suitable contract based on your business needs.
The top platforms for developing smart contracts are Ethereum, Tezos, Hyperledger Fabric, Algorand, NEM, Corda, etc. These are all blockchain-powered platforms. Out of these platforms, Ethereum is the best and most popular smart contract development platform. Blockchain smart contract development services use Ethereum for developing contracts that users can use with any type of decentralized application. Talking about the programming language, the smart contracts are written in C#, and then developers enclose them into a web-based front end.
Advantages of smart contracts
The top advantages of smart contracts include
1. Enhances TransparencySmart contracts enable participants to get the same information at once to reduce the chances of any possible manipulation. Smart contracts are based on blockchain and bring immutability of data while allowing parties to make contracts and agreements even without knowing one another.
Smart contracts bring transparency to improve trust and gain data security throughout the life of the contract.
2. Brings Autonomy
Smart contracts do not require any intervention from trusted third parties or people in the process, which offers autonomy and independence to users or companies. Autonomy is an inherent feature of smart contracts that brings various benefits like high speed of process and reduced various costs.
3. Increases Speed
The absence of intermediaries reduces the time automatically. Companies or third parties can save time on manual processing and get the contract done quickly. It also increases the overall speed of any given project.
4. Reduces Costs
Companies or third parties have to spend some amount when intermediaries are present. Smart contracts aim at eliminating intermediaries at any stage. As a result, a third party remains confident and saves additional associated costs including intermediary fees.
5. Regular Updates
Thanks to its autonomous nature and advancing technology, the smart contract gets updates about the changing terms automatically. It not only eliminates the need for intermediaries for changes but also keeps the smart contract ready to remain relevant for a long time.
Though blockchain smart contract development services offer many benefits to core industry sectors, it is imperative to overcome the implementation challenges of smart contracts. Let’s go through some of these challenges.
Challenges of implementing Smart Contracts
Smart contract development faces many issues and challenges at different levels ranging from development to implementation. Here are some of these key challenges.
Security and Privacy-related Concerns
Security and data privacy remain the top priorities for smart contract development companies. It is imperative for the development company to ensure that there is no vulnerability in the code of a smart contract. The DLT (Distributed Ledger Technology) on blockchain is useful in developing smart contracts, but developers and researchers have to increase the security of contracts.
As smart contracts use the P2P (Peer-to-Peer) network, they are vulnerable to threats like reentrancy bugs and event-ordering bugs. A reputed smart contract development company can address these concerns effectively.
Smart contracts support in accelerating cross-border transactions of finances, goods, and services while removing intermediaries. However, companies that use smart contracts have to abide by the different regulations and laws of different countries, and even then, it can be difficult to make sure that various countries will respect smart contracts.
Another roadblock is the immutability of smart contracts. Once the agreement is made and the code is solidified, it is complicated to undo or modify it. So, change in laws or regulations can be difficult.
Scalability can cause multiple issues in the smart contract. It is simply because most smart contracts are based on Ethereum, the largest and most popular blockchain. But, it can handle only 14 transactions every second. It is, therefore, necessary to increase the speed of information sharing on the blockchain. Along with this, companies need to ensure that the data security is not compromised while increasing speed and scalability.
Dependence on Oracles
“Oracles” are the data sources on which smart contracts rely to meet certain criteria. But then, oracles are the weakest link in manipulating a smart contract. If any node of a contract’s blockchain is hacked, it can log falsified data which becomes immutable in the distributed ledger eventually. It further leads to the automated execution of the smart contract’s outcome.
Smart contracts have very specific applications and therefore, they need special software engineering skills. A smart contract development company has an in-house team of professionals who have business insights and command over non-traditional programming languages like Solidity. What's more, smart contract developers should be capable of understanding the formal methods of networking and cryptography.
Why choose Silver Touch as your Smart Contract development company?
Silver Touch Technologies has experienced Blockchain developers who are experts in developing customized smart contracts. Our professionals can use cutting-edge tools to come up with high-end, secure, and robust smart contracts in line with the business requirements. As a trusted smart contract developer, Silver Touch assists its global clientele to grab the opportunity to capitalize on the growth of the Blockchain with complete maintenance and service support.
As a renowned blockchain development company, Silver Touch offers a range of services including
- Exchange Software Development
- Smart Contract Development
- Mining Pool Development
- Node Hosting
- ICO Development
Smart contract development remains highly beneficial for thriving enterprises. But, the development company needs to meet the challenges related to smart contract installation effectively. As blockchain technology will evolve, we will have more advanced smart contracts with higher security and user-friendliness. Simply put, you can leverage all the benefits of smart contracts by hiring blockchain developers from a reputed company.
FAQs on Smart Contract Development
What is Smart Contract development?
It is a process to develop an agreement between two or more parties that is stored on a blockchain platforms like Ethereum or EOS.
How Smart Contracts Work?
Smart contracts are based and executed on blockchain, which means that the terms and record of transactions are stored on a distributed database. This data cannot be altered.
What are the benefits of smart contract development?
The biggest advantage of smart contracts is it eliminates the requirement of intermediaries or brokers. So, there is no chance of any manipulation by third parties along with reducing costs.
What are the common challenges in smart contract development?
Some of the most common challenges in smart contract development include privacy and usability-challenges, overdependence on oracles, and scalability issues.
What are the popular platforms for smart contract development?
Ethereum, Polkadot, Solana, and Tezos are some of the highly popular platforms for smart contract development.
What programming languages can be used to develop smart contracts?