Smart contracts are the new tech talk around town; but what are smart contracts and what does a Smart Contract Developer in Manchester bring to the table?
The term smart contract was first introduced to the industry back In 1997. A computer Scientist going by the name of Nick Szabo had the desire to store smart contracts via a distributor ledger.
As the name suggests, these are contracts as you would find in the real world, but instead of having paper based contracts, the contracts are digital. It’s essentially a piece of programming code that resides on the blockchain.
To help us understand the smart contracts functionality better, let’s use the example of a well known crowdfunding website like Kickstarter. It’s a platform where an individual, or a group of people can go to raise money for their projects from people who are interested in investing in the venture for a return on their investment. The Kickstarter platform acts a “middleman” between investors (or funders) and the people wanting to raise capital for their projects. So both parties are reliant on the platform for handling their money on behalf of both parties. If the project owners become successful in getting funding, then Kickstarter is expected to pay the team. However, the investors expect the platform to only fund projects that have been completely funded; if the project fails to meet its funding goals, the investors are refunded.
In this scenario both of the parties place their trust in the Kickstarter platform. However, with smart contracts, a system is developed where the need for the “middleman” is eliminated.
A smart contract can be coded to hold onto funds until a certain objective is met. Similar to the above scenario, the coded contract will not release the investor money to the project team. Until their project is fully funded. And if the project fails to meet its funding goals, then the money is sent back to the investors. The whole process is automated by the coded contract. It thus eliminated the need for a third party to be involved with the whole process. And the fact that the smart contracts resides on a blockchain, no single party is in control of the money. It’s completely distributed.
The contracts are code on the blockchain. This essentially makes them distributed and immutable. What exactly does that mean? If a contract is immutable, it means that it cannot ever be altered. Once the code is on the blockchain, it is impossible for the code to be changed by anyone. And the fact that it is distri9buted, it means that everyone on the blockchain will validate the contract output. So one single party cannot interfere with the contract to change it as everyone else on the contract will see such an interference and the contract will become invalid. So altering a smart contract on the block chain is almost an impossibility making them extremely secure.
The use of smart contracts is not only confined to the above scenario. For example, a financial intuition can distribute funds, such as loans, or they can use the system to automate their payment systems. In the case of courier and delivery companies, they can utilise the contracts to receive payments on delivery. The insurance industry can handle specific types of claims using this process. There are many other similar real life situations where this new technology can be deployed.
It was reported that in 2020 over a $100 million were lost due to smart contract hackers on the blockchain. Tis figure has already risen in 2021 and 2022. The best way to reduce any potential of such hacks is to make sure that the developers produce error free code. If you have had a smart contract developed by a programmer, then it is always good to get the code audited by a third party developer to ensure that there are no programming errors. It is not uncommon for developers to have bugs in their code. Even the most highly skilled programmers can have errors in their coding. Although traditional programming languages mistakes and bugs can be fixed with specialist tools, the smart contract code is different. That’s because the code is immutable and once it is out there on the block chain, it cannot be altered. So it is imperative to make sure that any bugs and errors are fixed before it hits the blockchain. Otherwise, a buggy code can results in some serious financial losses.
This is where our smart contract auditor services can help identify any potential coding issues before the contract is deployed on the blockchain. We can run a thorough audit of your code to identify any vulnerabilities and errors so that your deployment is successful.
If you would like your contracts checked and audited by trained programmers then give us a call before deploying your contract. We will ensure that we ucover any errors that may potentally be result in problems down the line.