The importance and role of the smart contract

The importance and role of the smart contract

Introduction

The importance and role of the smart contract are to transfer digital currencies or different forms of the asset from one party to another. The process is accomplished and monitored by using computer programs as well as controlling the transaction. The functions and processes of the smart contract are controlled and regulated by individual agreements that enhance obligations by enforcing the process (Christidis and Devetsikiotis, 2016). To some extent, smart contracts are responsible for executing transactions in a wider range of fields formed under legal processes. With the development and invention of blockchain technology, it provides a platform for people to exchange digital information. The aim is to improve and modify the processes used in transferring digital currency, Bitcoin, and the respective process of buying bitcoin (Cong and He, 2019). As a result, it forms a series of financial records that are usually managed by computer systems. Therefore, the roles and importance of technology to create a platform to exchange data and financial information from one party to another.

Effects of smart contracts

The implications of blockchain and smart contracts are far-reaching in describing the changes experienced and expected across the world. These changes have a negative and positive impact on people, businesses, and different functions relating to the goals and objectives of the government.

The positive impact of smart contracts

The importance of smart contracts is to create a platform for government, people, and businesses in enforcing contracts. It is used to govern explicit terms and conditions that are laid within the functions and purpose of people, government, and business (Christidis and Devetsikiotis, 2016). As a result, it facilitates the rate of exchange of money, shares, and properties. Therefore, there are different effects of contracts that contribute positively to the current changes in the world. The smart contract creates a primary role in ensuring the accuracy of the agreement as provided by business terms and conditions provided. This is due to an experienced omission in a transaction that results in an error in business.

Smart contracts are used to create a high level of transparency of the contract, as the terms and conditions are visible and accessible. Thus, it provides a mechanism of people, business, and government disputes errors emerging from contracts established. Therefore, it facilitates the level of transparency, especially concerning the parties involved in the transaction. To some extent, smart contracts develop a clear form of communication among businesses, governments, and individuals (Watanabe et al., 2016). The details of contract tend to explicit reducing the chances of miscommunication or misinterpretation that affect proper management of contracts.

Automated contracts are currently using the highest level of data encryption. These are desired to enhance the level of security desired to protect financial information relating to the government, business, and other entities. As a result, the levels of protection are essential for business development and the protection of data and financial information (Christidis and Devetsikiotis, 2016). Nevertheless, there are the highest levels of speed and efficiency in implementing smart contracts. Increased efficiency is responsible for generating value transactions processed in a designated period. As a result, increasingly become an impact on the development of the global business as the world desired to achieve the virtual world.

The negative effect of smart contract

Given the current state of intelligent contracts, business enterprises are considering to use and apply traditional contracts. These are attributed to a lack of standard measures for smart contracts technologies, shifting the burden to functions of an enterprise. As a result, most of the firms and enterprises consider being exposed to potential information risk (Kosba et al., 2016). In most cases, smart contracts are blamed for failing to meet the needs and requirements of the parties. In the long run, smart contracts are affecting the growth and development of the business as initially designed by the signing parties.

To address business concerns some smart contracts tend to concentrate on cessation clauses. However, some of the required and expected clauses are considered to increase vulnerability to the signing parties. These are developed exploitation and rigorous clarity of purpose and impact on the development of required data (Watanabe et al., 2016). The challenge is experienced through a lack of meeting rational outlook of contracts and the expected code of conduct. In addition, the untested platforms of the provided contracts demonstrate a great risk to business development due to rapidly changing technology (Cong and He, 2019). Ultimately, the shortcomings of the contracts contribute to poor application in business development processes.

Smart contract Links to law and lawyers

Enforcement and implementation of a smart contract are effective and efficient as the process is legally binding. The role of the law and lawyers is used to demonstrate that an offer made is accepted and is accompanied by expected considerations of the law (Kosba et al., 2016). To some extent, the process of satisfaction and elements of smart contracts are determined and influenced by the law. Nevertheless, the requirement of the law is for the parties to express a certain level of content from the conditions provided under the law. The law regulates satisfactory elements of the agreement signed by contracting parties.

The changes and requirements of the smart contract have increased the importance of lawyers in businesses. The desire is to enable and enhance the ability of the company to understand concepts and requirements business contracts. These are attributed to changing and adapting different regulations and laws that are on constant shift. Corporations tend to use contract lawyers to keep costs down while protecting themselves (Christidis and Devetsikiotis, 2016). Different aspects and challenges affecting business development need law interpretation for the rational decision-making process. By doing so, the business is capable of understanding the function and importance of smart contracts and blockchains.

Smart contract Links to cryptocurrency (Ethereum)

The importance of Ethereum is to create an open-source of blockchain systems that are distributed among computers across the world. For effective service delivery and operation, Ethereum is designed to use and apply a smart contract platform. The desire is to regulate the transfer and exchanges of ETH among accounts, especially after meeting specific requirements. The changes and requirements to achieve are determined and regulated by development and technological growth. As a result, the identified link is concentration and developing decentralized systems of transferring information from one party to the other.

The use of smart contracts and cryptocurrency (Ethereum) provides an essential tool in running and managing the business. The components are used to create a decentralized approach to business management, which never existed in business previously (Kosba et al., 2016). As a result, the links of the elements are essential in reducing the cost that is incurred by different firms to provide and enhance secured services or products. The aim and purpose of the elements are to achieve decentralized registration, SCM (Supply-Chain-Management), and democratized crowd-funding.

These are determined by rapid changes in the function and application of technology in business functions as compared to traditional methods. By using computerized systems, Ethereum is capable of writing smart contracts by using and applying specific language (Christidis and Devetsikiotis, 2016). However, the programs are individualized to promote the levels of exchange of products. The process is effective as it applies and functions for the value on the computer network.

Conclusion

The smart contract is becoming an essential form of computer code to run and manage the process of blockchain technology. It has increased the ability to store respective public data and increasing the security of information from changes or any form of interference. Therefore the information and data processed by the blockchain can be transferred without involving any third party. These have created efficiency in the process of contracting, the process of enforcement, and reduced compliance costs. These changes have led to the achievement of major business goals and objectives in the desired period. The importance of the process is determined by the economic viability of the procedures.

Reference list

Christidis, K. and Devetsikiotis, M., 2016. Blockchains and smart contracts for the internet of things. Ieee Access, 4, pp.2292-2303. https://ieeexplore.ieee.org/abstract/document/7467408/

Kosba, A., Miller, A., Shi, E., Wen, Z. and Papamanthou, C., 2016, May. Hawk: The blockchain model of cryptography and privacy-preserving smart contracts. In 2016 IEEE symposium on security and privacy (SP) (pp. 839-858). IEEE. https://ieeexplore.ieee.org/abstract/document/7546538/

Cong, L.W. and He, Z., 2019. Blockchain disruption and smart contracts. The Review of Financial Studies, 32(5), pp.1754-1797. https://academic.oup.com/rfs/article-abstract/32/5/1754/5427778

Watanabe, H., Fujimura, S., Nakadaira, A., Miyazaki, Y., Akutsu, A. and Kishigami, J., 2016, January. Blockchain contract: Securing a blockchain applied to smart contracts. In 2016 IEEE international conference on consumer electronics (ICCE) (pp. 467-468). IEEE. https://ieeexplore.ieee.org/abstract/document/7430693/