Ethereum represents the second generation of blockchains after the technology became known with Bitcoin. In contrast to Bitcoin, the Ethereum blockchain is also able to work with smart contracts . Smart contracts provide if-this-then-that logic.
This enables the automatic execution of actions between companies or within the company. Smart contracts enable the administration of all actions relating to payment transactions, but offer many more functions. The best-known areas of application for smart contracts can be found in supply chains. Of course, this also applies to smart contracts when used in the Ethereum blockchain.
Digital transformation with the blockchain
In the Ethereum blockchain, it is possible to use various programming languages, for example Solidity, to program smart contracts and save them in the blockchain. Bitcoin is unable to do this. In this post we show some of the most popular ways to use smart contracts in the Ethereum blockchains. Smart contracts are generally computer programs that are stored in the blockchain and can also perform actions in the blockchain.
Smart contracts are one of the most important areas of application for blockchain technologies. Within a blockchain, developers can program smart contracts that carry out actions in the blockchain. These are automatically running processes with which companies can also bill certain processes.
Especially in supply chains where goods are produced, stored, transported and processed by partners at different locations, smart contracts can ensure more security, speed and transparency. If a certain value is reached at one node in the supply chain, this triggers a transaction in the blockchain for another node. It is possible to fully automate delivery processes and the associated payment processes. Of course, this has some advantages in an international environment.
Enterprise Ethereum Alliance expands the possibilities
The Enterprise Ethereum Alliance is expanding the specifications that are available for smart contracts in the Ethereum blockchain development
https://www.blockchainx.tech/erc20-token-development, but also all other options in the Ethereum blockchain. The alliance has the task of promoting the use of Ethereum in companies. The Enterprise Ethereum Alliance is one of the world's largest blockchain initiatives. For example, Santander, Accenture, Microsoft and other large companies are involved.
The Enterprise Ethereum Alliance also provides a testnet for developing your own smart contracts . The test network offers an easy way to develop decentralized apps or smart contracts. The advantage of the test network is that developers can also carry out security tests and thus check at any time whether their own smart contract is working optimally. In the test network it is also possible to create your own nodes for the Ethereum network. This makes it very easy to operate smart contracts in a production-related environment.
Contracts for banks and financial services
Since smart contracts are a function of blockchain technology, areas of application around and around the topic of financial services are of course particularly well known. Since Bitcoin, blockchains have been known primarily for cryptocurrencies and financial transactions. For this reason, when using the Ethereum blockchain, in addition to the cryptocurrency ether, smart contracts can also be used, which focus on financial services and the transfer of currencies.
Of course, banks or other financial institutions also benefit from this, where payment transactions and other tokens are also transferred internationally without further intermediaries. All transactions in the blockchain are completely transparent and can therefore be traced at any time. This is of course ideal for payment transactions and errors and fraud are almost impossible. Most companies have different uses when it comes to conducting financial transactions. In banks and financial institutions, the blockchain with smart contracts can of course offer enormous advantages for carrying out transactions. This also saves banks a lot of costs and, above all, can offer additional financial products.
Banks and financial institutions are already partially relying on Ethereum to carry out such transactions with smart contracts. For example, LBBW has started a project with Daimler to process financial transactions via the blockchain. For this purpose, Daimler has positioned a promissory note loan at LBBW and mapped all financial transactions in the blockchain. This includes placement, allocation and the conclusion of contracts. All processes are completely digitized and can therefore be carried out more quickly.
There are werder letters, faxes or other actions that employees have to carry out offline. All actions run completely via the blockchain and the stored smart contracts, which handle all actions according to the "if-then-then-that" logic. The processes are mapped in a legally secure manner and show the possibilities of smart contracts in the blockchain. However, fully legally compliant smart contracts for financial transactions are still difficult to implement because the technology is still quite new. The areas of application in this area can range from mortgages and transfers to paying bills or other transactions.
Startups: Initial Coin Offering and Decentralized Autonomous Initial Coin Offering
Initial Coin Offering (ICO) and Decentralized Autonomous Initial Coin Offering (DAICO) are also processes that can be optimally processed with smart contracts. For cryptocurrencies, an ICO basically corresponds to the process known as the Initial Public Offering (IPO) for securities. In an ICO, the developer of a new cryptocurrency offers part of the currency for sale for a while. Either conventional currencies or other crypto currencies are conceivable as payment.
Most of the time, these processes take place quite quickly after the establishment of a new cryptocurrency. Ethererum, for example, did this. The point behind this is to bind investors to a new cryptocurrency. Digital startups, for example, benefit particularly from the nature of the process. Investors benefit from the technology of smart contracts, as the underlying processes are completely digital, falsifiable and transparently traceable. Ethereum smart contracts development
https://www.blockchainx.tech/erc20-token-development are ideal for ICO and token sales. Through ICOs, money flows from investors in a crypto currency to the developers of the respective currency.
Allow more control for investors with DAICOs
With a Decentralized Autonomous Initial Coin Offering (DAICO), the models Decentralized Autonomous Organization (DAO) and Initial Coin Offering (ICO) can be combined. DAICO are enhanced ICOs that provide more security and control, especially for the investors. A DAICO starts with a smart contract that controls the payment of funds to the developers of a project.
In this model, developers can gradually receive funding from an ICO that is dependent on roadmaps, i.e. the progress of the project. Through actions and conditions, smart contracts enable the automated processing of ICOs and the payment of amounts to the developers, depending on the progress of a project. There is also the possibility that investors get their funds back if they are not satisfied with the project. At DAICOs there are exit opportunities for investors. This in turn can attract more investors, as they do not commit themselves in the long term, but can withdraw from their investments if there are problems with the project.
The biggest difference between DAICO and ICO is that with an ICO, developers can immediately use the money invested by the investors. At a DAICO, a smart contract can check the individual project steps and release capital depending on them. This prevents SCAM ICOs or too much cash flow at once for the developers of the token to rest on. A DAICO protects the investors and offers developers the advantage of finding more investors in a much more serious and reliable manner.
In a DAICO, the tap variable can be used to specify that developers receive a certain amount per second from the tokens sold. The tap variable can increase, the processes are specified in the smart contract. DAICOs give investors significantly more control over the smart contract and developers have incentives to continue working effectively on the project, as they are rewarded for further development.
Smart contracts replace middlemen and supervisory bodies
Trustees and intermediaries are necessary for many projects and campaigns between companies. These are expensive and delay processes, especially in international transactions. With the Ethereum blockchain development
https://www.blockchainx.tech/erc20-token-development and smart contracts, middlemen can be replaced. Basically, a DAICO's smart contract is also a digital broker that controls the disbursement of chapters. Smart contracts can also be useful in other areas in this way and serve as an intermediary.
By doing business with the blockchain, it is also possible to make all processes tamper-proof. By using smart contracts, the individual processes can also be completely automated. In addition, there is the advantage of complete transparency of all processes. The smart contract carries out all actions in a legally secure manner. The areas of application are diverse.
From use in supply chains to real estate, wills and other businesses where intermediaries are required, smart contracts can be an ideal addition. A smart contract can not only carry out the individual processes more securely and transparently, but also much faster. Since the processes start automatically, the smart process can carry out all processes without human intervention. Since the transactions are stored in the blockchain, employees and users can track all actions carried out by a smart contract at any time.
Digital identities - preventing identity theft
With the Ethereum blockchain, it is also possible to prove digital identities beyond doubt via smart contracts. The technology can also be used for access control via RFID chips. With the blockchain, digital identities can also be displayed in a forgery-proof manner, which also prevents identity theft.
Exchange sensitive data - digital patient files
Smart contracts also enable the exchange of sensitive personal data, for example patient files. The smart contract can be used to control which group of people has access to the individual areas of the patient record. This prevents unauthorized persons from gaining access to patient data, but at the same time ensures that the data is still available to the people who are supposed to view it. The authentication of the persons can in turn be handled in a forgery-proof manner via the digital identities, which can also represent a smart contract, possibly even the same one.
Prevent product counterfeiting with smart contracts
As part of the international tracking of supply chains, it is also possible to identify products at any time. The supply chain is processed using smart contracts, and the individual products can also be recorded in the blockchain. As a result, the blockchain recognizes every product and knows its location. Using sensors or chips, it is possible to quickly identify counterfeit products. Similar technologies are used here, as with the use of digital identities in the blockchain and the integration of sensitive information.
Smart contracts ensure the integrity of the supply chain and the products it contains. All routes that a product takes in a supply chain are part of the blockchain and are therefore permanently stored. This transparency also enables comprehensive tracking.
Ensure the cold chain with smart contracts
Not only can counterfeit products be prevented with smart contracts, supply chains can also be traced. The smart contract also enables cold chains to be tracked. In the blockchain, it is fully traceable when, where and for how long a product was stored. Together with RFID chips and sensors, whose data is also stored in the blockchain.
Supply chain law and smart contracts in the blockchain
At the same time, a smart contract can also help to check environmental protection and, above all, compliance with human rights within the scope of the Supply Chain Act (“Act on Corporate Due Diligence in Supply Chains”). The blockchain offers numerous possibilities here, especially in international supply chains. From 2023, all companies with more than 3,000 employees will have to comply with the law, from 2024 all companies with more than 1,000 employees.
Smart contracts in the HR department
Smart contracts can also be used in the HR department. Since sensitive data is also stored here, similar to that in patient files, the blockchain can help to make the data only accessible to people who are authorized to do so. Here, too, smart contracts help ensure that the accessing employees can be identified using digital identities. Of course, it is also possible to process employment contracts using smart contracts. However, these processes still belong to the rare areas of application, but will probably be used more frequently in the future. Payroll accounting is also possible via the blockchain, as is payment via smart contracts. Payment with a crypto currency is also possible here.
Check certificates and qualifications
Smart contracts can also be used for training and further education to ensure that certain certificates are not falsified. When checking qualifications, ambiguities arise time and again, which causes significant effort. Smart contracts between training institutes and companies make such checks easier and faster. In addition, there are the most important advantages of the blockchain: forgery-proof, transparent and unchangeable.
Conclusion
In this post, we discussed the possibilities that smart contracts with the Ethereum blockchain offer. It is worthwhile to examine the possibilities of smart contracts more closely, since most companies have numerous areas of application for smart contracts, which can significantly accelerate processes and make them more secure.
