Ledger: Advantages of Blockchain Smartcontract - Articles

Autonomy: The benefit of blockchain smartcontract is that they are decentralized in nature. They are direct dealings between parties and do not require the involvement of any third party in the process. This allows smartcontract to be transparent.

Accuracy: Smartcontracts are based on the requirement that all the terms and conditions are recorded explicitly.

Transparency: The Smartcontract build trust and transparency between two parties by using blockchain technology that it minimizes the dispute cases to zero. The possibility of a disagreement is avoided by the certainty and lack of between-the-lines terms in a smartcontract.

Record keeping: The blockchain stores all smartcontract transactions in chronological order and makes them accessible, along with the full audit trail. To provide complete secrecy, the parties involved can be safeguarded cryptographically.

Fraud-less: Identification and decrease of fraudulent activities. The blockchain stores smart contracts. It is extremely difficult to forcefully alter the blockchain since it requires a lot of compute. A smartcontract breach can also be discovered by network nodes, and in that case, the attempt is flagged as invalid and not recorded in the blockchain.

Fault-tolerance: Because no single person or organisation controls the digital assets, one-party dominance and situations in which one part pulls out do not occur. Additionally, because the platform is decentralised, the contract is still in place even if one node disconnects from the network.

Increased trust: Smartcontracts are automatically carried out and upheld. These agreements are also unchangeable, unbreakable, and incontrovertible since they are immutable.

Cost-efficiency: The use of smartcontracts reduces expenses by doing away with the necessity for middlemen (brokers, attorneys, notaries, witnesses, etc.). reduces paperwork as well, saving money and producing less waste.

Ledger: Working of Blockchain Smartcontract - Article

A Blockchain Smartcontract is just a digital contract that has blockchain security code. It contains certain instructions and permissions defined in code that need to happen in a specific order in order to for the smart contract's terms to be accepted. 

In the contract, deadlines may be included due to time restrictions. Every smart contract has a blockchain address. The contract may be interacted with by using its address provided the contract has been broadcasted on the network.

Idea behind smart contracts:

Logic of the Blockchain Smartcontract is pretty simple. They are executed on a basis of simple programming logic, IF-THEN condition.

Example: 

• IF you send object A, THEN the sum (of money, in cryptocurrency) will be transferred to you.

• IF you transfer a certain amount of digital assets (cryptocurrency, for example, ether, bitcoin), THEN the A object will be transferred to you.

• IF I finish the work, THEN the digital assets mentioned in the contract will be transferred to me.

Note: The WHEN constraint can be added to include the time factor in the smart contracts. It can be seen that these smart contracts help set conditions that have to be fulfilled for the terms of the contract agreement to be executed. There is no limit on how much IF or THEN you can include in your intelligent contract. [0]

Operation of a blockchain smartcontract: 

Predefined Contract: Multiple parties identify the cooperative opportunity and desired outcomes and agreements could include business processes, asset swaps, etc.

Events: 

Set conditions: Smart contracts could be initiated by parties themselves or when certain conditions are met like financial market indices, events like GPS locations, etc.

Code business logic: A computer program is written that will be executed automatically when the conditional parameters are met.

Encryption and blockchain technology: Encryption provides secure authentication and transfer of messages between parties relating to smart contracts.

Execution and Settlement: In blockchain iteration, whenever consensus is reached between the parties regarding authentication and verification then the code is executed and the outcomes are memorialized for compliance and verification.

Blockchain updates: After smart contracts are executed, all the nodes on the network update their digital ledger to reflect the new state. Once the record is posted and verified on the blockchain network, it cannot be modified, it is in append mode only.

Cited Source:

 [0] - https://www.geeksforgeeks.org/smart-contracts-in-blockchain/

Ledger: Features of Blockchain Smartcontract - Article

 

Distributed Ledger Smartcontracts:

These are very simple programs with conditions in it, stored on blockchain to run till the condition is met. This digital program used to automate the execution of an agreement between the parties allowing them to perform successful transactions without any involvement of central authority / agency. 

While I was checking through the Internet on the Features of Smartcontract, I have come across below list of points and they are unique in a way based on my understanding when compared with smartcontracts controlled central governing authority / agency.

Below are the few of the Features of Ledger Smartcontracts:

Immutable: Once deployed smart contract cannot be changed, it can only be removed as long as the functionality is implemented previously.

Distributed: Everyone on the network is guaranteed to have a copy of all the conditions of the smart contract and they cannot be changed by one of the parties. A smart contract is replicated and distributed by all the nodes connected to the network.

Transparent: Smart contracts are always stored on a public distributed ledger called blockchain due to which the code is visible to everyone, whether or not they are participants in the smart contract.

Secure: Smart contracts can only perform functions for which they are designed only when the required conditions are met. The final outcome will not vary, no matter who executes the smart contract.

Some of the other Characteristics of ledger smartcontract:

Autonomy: There is no third party involved. The contract is made by you and shared between the parties. No intermediaries are involved which minimizes bullying and grants full authority to the dealing parties. Also, the smart contract is maintained and executed by all the nodes on the network, thus removing all the controlling power from any one party’s hand.

Customizable: Smart contracts have the ability for modification or we can say customization before being launched to do what the user wants it to do. 

Trustless: These are not required by third parties to verify the integrity of the process or to check whether the required conditions are met.

Self-verifying: These are self-verifying due to automated possibilities.

Self-enforcing: These are self-enforcing when the conditions and rules are met at all stages.

These features alone are not making Smartcontracts unique in the blockchain technology, Features along with Capabilities are main backbone for the distributed smartcontracts. I have posted an article on Capabilities for more information - "Ledger: Capabilities of Blockchain Smartcontract - Article " 

Source: 

[0] https://www.geeksforgeeks.org/smart-contracts-in-blockchain/

Ledger: What is Blockchain Smartcontract - Article

Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary's involvement or time loss.

How the information in the Distributed Ledger smartcontracts are stored?

Distributed Ledger Technology stores the information in a secure and accurate using advanced cryptography technology. All the information stored in this can be accessed using "keys" and cryptographic signatures. Once the information is stored, it becomes an immutable database and is governed by the rules of the network.

What exactly we store on the blockchain...!

Ledger technology in blockchain is used to store information about the transactions, share the transaction data across network, Synchronize the data across distributed network allowing multiple participants involved in blockchain and keeping the up to-date. For more information on the features of smartcontract, I have posted an article " Ledger: Features of Blockchain Smartcontract - Article " 

Source: 

[0] https://www.ibm.com/in-en/topics/smart-contracts

Ledger: Articles On Blockchain Smartcontract

Source: https://cdn.wallstreetmojo.com

The code and agreements contained within it live on distributed, decentralized blockchain networks. The terms of the contracts derive from blockchain users agreements to execute a program concurrently through a blockchain deployment system.

Once the contract is approved, it is deployed to the existing blockchain or another distributed ledger infrastructure. The prototype uses the Blockchain and smart contract technologies, and is designed to record the financial transactions within the terms of a building contract. There are different outcomes of this study resulting from developing the prototype of the contract management within financial activities using a cryptocurrency paradigm with the blockchain on various scenarios for the delivery of works at construction sites.

 

Smart contracts may also benefit from blockchain and other distributed ledger technologies for maintaining verifiable records of all activities related to executing complex processes, and which cannot be altered after the fact. The programs underlying smart contracts can be stored within the blockchain or other distributed ledger technologies, and integrated with a variety of payment mechanisms and digital exchanges, which may include Bitcoin and other cryptocurrencies. With blockchains, we can envision a world where contracts are embedded into digital code and stored on transparent, shared databases, where they are protected against removal, tampering, and modification by contracts themselves.

 

When embedded on blockchain, smart contracts allow for automatic enforcement of contractual terms in a deal, without an involving trusted third party. Just like a vending machine can automatically execute a contract for selling only physical goods contained in it, so too a smart contract built on blockchains can ensure the automatic execution of a contract that is related solely to transactions on blockchain-based assets (De Filippi & Mauro, 2017). Buterin (2013) proposed a decentralised platform for smart contracts on the basis of the blockchain in order to resolve any issues related to the execution context, and enable a global secure state.

 

In other jurisdictions worldwide, contracts are of varying legal status, and therefore, whether or not contracts written in code are legally binding depends on the countrys legal system. In other jurisdictions around the world, contracts have different status so whether a contract written in code is legally binding depends on the countrys legal system. Other legal challenges that could be mentioned are: (i) every country has their own laws and regulations, therefore, it is difficult to guarantee that it is compliant with all regulations, (ii) the terms of a law or conditions are not quantifiable, therefore, modeling those conditions into a smart contract is still difficult to make it relevant and quantifiable to the machines executing it, and (iii) governments are interested in the regulation and monitoring the usage of Blockchain technologies for a number of applications, which means the untrustworthy networks would fall back into a trust less third-party networks, which would therefore, therefore, losing some of their essence .

 

Other legal issues can be cited including:

(i) each country has its own laws and regulations, hence, it is complicated to ensure compliance will all regulations.

(ii) law clauses or conditions are not quantifiable, thus it is still complicated to model these conditions in smart contracts so that they are appropriate and quantifiable for a machine to execute them.

(iii) governments are interested in a regulated and controlled use of the blockchain technology in many applications, however, this means that the untrustworthy network will regress to a third-party trusted network, losing part of its essence [79 ].

Then, operationalisation is introduced to a cooperative web framework, showing steps for executing a smart contract, how actors interact with smart contracts, how operations are performed on a Blockchain network. The provision of smart contracts allows the greater blockchain value capture by setting up fixed transactions according to unique conditions (Angelis and Ribeiro da Silva 2019), a value feature for a network with multiple relationships and roles.

 

Cited Sources:

• https://www.tandfonline.com/doi/full/10.1080/00207543.2022.2039413 0
• https://research.stlouisfed.org/publications/review/2021/02/05/decentralized-finance-on-blockchain-and-smart-contract-based-financial-markets 1
• https://www.frontiersin.org/articles/10.3389/fbloc.2020.553671/full 2
• https://www.techtarget.com/searchcio/definition/smart-contract 3
• https://link.springer.com/article/10.1007/s12083-021-01127-0 4
• https://www.investopedia.com/terms/s/smart-contracts.asp 5
• https://www.sciencedirect.com/science/article/pii/S0167739X19316280 6
• https://policyreview.info/glossary/smart-contracts 7
• https://www.mdpi.com/2075-5309/12/8/1072 8
• https://hbr.org/2017/01/the-truth-about-blockchain 9