While many people look at digital currencies merely as investment opportunities due to the skyrocketing value of Bitcoin, Ethereum, Litecoin, and other altcoins, some experts believe that the real value of cryptocurrencies is the blockchain technology, which has the potential to change the way we do business, particularly through smart contracts. And, contrary to popular belief, Ethereum is not the only game in town.
The expansion of fracking and shale oil production have been game changers for America. Although there is much debate regarding this technology’s impact on the environment, from its possible effects on groundwater to causing earthquakes, there is no denying its potential to make the U.S. energy-independent by 2020. A direct result may be lower gas prices for everyone in the U.S., higher GDP and more economic freedom for people as a result. Blockchain technology could have an equally large effect on society at large, not just because of its obvious value in dollars, but because of its ability to transform the way we do business overall.
The Blockchain Technology
The blockchain is a decentralized ledger that is designed to execute, validate, and record transactions without any need for a middleman. Blockchain-based transactions are faster, more secure, and require fewer resources than traditional transactions. This is the reason why many industries, particularly banking, are interested in adopting the technology into their existing systems.
The Birth of Smart Contracts
One of the most innovative applications of the blockchain technology today is the smart contract – a concept popularized by Ethereum. These are self-executing contracts that can validate the transaction between two parties and enforce the appropriate terms and conditions automatically, without the need for a central authority.
The idea of a self-executing contract based on the blockchain technology was first proposed by the cryptographer, Nick Szabo in 1996. The idea behind smart contracts was to create a system which enables secure transactions between parties while taking up lesser time and fewer resources than traditional transactions.
The Arrival of Ethereum
Ethereum’s debut as a cryptocurrency popularized the concept of smart contracts to a great extent. Ethereum is a blockchain-based platform, with smart contract functionality at its core. Ethereum enables contracts to be converted into code, which can execute and validate a transaction based on a set of rules. If the terms and conditions are met, the transaction will be executed. Otherwise, the transaction will not occur.
The whole process is automatic – without the need for any supervising authority to verify authenticity, or to enforce the terms and conditions of the agreement. This path-breaking technology has a vast range of applications and could change the very nature of business transactions.
There are many advantages to smart contracts over traditional methods of enforcement, in terms of costs, overhead and eliminating subjectivity. While Ethereum is in the limelight, the use of smart contracts is expanding further into Litecoin, Bitcoin, and several other altcoins. Transaction speed will be a determining factor in which platform becomes the standard, and each has its advantages and disadvantages. Keep reading for more depth on coins and technology to keep your eye on, as well as links to a few valuable resources.
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