Adaption usually never a fast process. Even if we remember something happened “so fast” our individual perspective usually tricks us. The first mobile phone is introduced in 1973, we saw widespread adaption 30 years later, and then the usefulness of the smartphones gave it a big boost after 10 more years. Even today 50 years after the first versions there are still layers of population who can’t or don’t want to adapt it. We can tell similar things of PC adaption too.
If we are shifting perspective from the ordinary peoples to the businesses, we can see the tendency that businesses are usually starts with adapting the outsider technology after some small circles of people but before the mass mainstream adaption. They want to get a competitive edge over their competitors. Also important factor that they have the money to experiment with something and afford the higher costs of pioneer technology. I don’t expect it will be any different with smart contracts and blockchains.
Everything started with the first blockchain of Bitcoin in 2009 and Ethereum introduced the smart contracts in 2015. Many people got interested in these technologies in 2017 and a lot of the today’s bigger blockchain businesses started small around these years. In 2021 the biggest non-blockchain specific companies are came and invested in. Nike, Gucci, Ferrari, Alphabet (Google), Samsung, LG, Paypal, Coca Cola, Microsoft, basically all the big banks, and even Playboy and many more did some blockchain, NFT project or invested in the technology. As we can see companies from very different industries entered the scene. I think it’s time to explore what industries getting from smart contracts!
The first industry which turned to smart contracts was finance. It was so straightforward decision for them because the first blockchain projects had tokens so decentralised finance came to life. Exchanges and swaps, staking platforms, liquidity farms, lending, borrowing and even more new financial products raised. It was innovative because of the trustless, immutable, and transparent characteristics of the smart contracts.
I think this three term worth an in depth review. Trustless and transparency nature is connected. Since the blockchain is public, it’s transparent and with knowledge (what have to consider for each of blockchain related statements) we can verify how much funds a smart contract launched holds. We can see how many customers used the smart contract, and when. We don’t have to trust the company’s report because we can see what is happening onchain. Transparency also extends to the source code of the smart contract. When someone deploying a smart contract can decide to verify the contract on the blockchain explorer and then everybody can see how exactly the contract work. So we don’t need to trust to any statement of the issuer, but we can see what and how the contract exactly doing which one we will going to interact with. The trustless nature also connected to the immutability, because smart contracts on the blockchain can’t be modified after it’s deployed so we don’t have to trust the issuer who could decide to change the code because they can’t.
Of course this three characteristics of the smart contracts not always true, because like everything, smart contract programming can be done with bad intent or just simply a wrong way unintended. Transparency can be reduced by deploying more contracts and even put the transactions trough privacy protocols. Immutability can be hurt by launching a proxy contract. A proxy contract is like a router contract having one property and only knows where to redirect. For example if there is A contract and we is interacting with that A contract is a router and actually our transaction landing at contract B. Everything is good, but one day the developer of the contracts figure out instead of B he will redirect to a new C contract, we can try our contract interaction as always with the contract A, but instead of B this time it will arrive at the contract C and we have no idea what is happening there because it being changed without our knowledge. Even if contract A, B, C still immutable and their logic can’t be changed, the variable of the proxy contract A can lead us for a new unknown contract. So it’s not even trustless anymore because we have to trust the developer to have good intent with this contract update. Also, many contracts are not trustless, because functions can be written which can allow some wallets to pull out every money from the contract for example. Then our trust has to be on the team who deployed this kind of contract that they aren’t going to use a function like this unethically.
Smart contracts are available 0-24, every day of the week. They have one time deploying cost but after that they are very cost effectively because the costs of interaction with them are paid by the users.
The next industry found the smart contracts were the gaming industry. Old and simple lotto like games is easily being made. And later the much more exciting approaches came when they discovered NFTs and the idea was straightforward again to use the in-game items as NFTs. People can trade with the in-game items, can be bought from the developers and many interesting idea surfaced. Right now the biggest gaming platform banned games which are utilizing the NFTs, but they having high fees on the in game items market, so most likely its not a permanent ban, but they will developing their own standards too. That also possible if they not, then the game creators got an extra motive to utilize NFTs as in game items because they can get royalty % after every trade. Players also could feel the items much more theirs in their non-custodial wallet, instead sitting on a centralised server somewhere. And then we didn’t even mention metaverse what can’t be imagined without smart contracts.
Smart contracts are called contracts, but actually they are rather programs which are sitting on the blockchain and waiting for someone calling it’s functions. But as the legal framework will be ready to adapt, it would be very easy to make smart contracts a legal contract. The deployer can be identifying by his wallet, and the signer can be identified the same way. So there is no technical limitation to make a contract like this which would raise to legal status after signed. Smart contracts can contain the text of the legal contract too, however it would be much more cost effective and private if we would be storing the contract files on traditional servers and only the signatures linked to that file would happening on blockchain. Also, it would be possible to launch a private blockchain by the governments which wouldn’t be fully public and would protect the signers more, but still could keep the benefits of the blockchain. It could be decentralized, immutable, fast and easy to use.
We are talking about decentralization. DAO (Decentralized Autonomous Organization) can be created on the blockchain also with smart contracts. The biggest companies trying this kind of leadership and they could find a great platform on blockchains to do the technical implementation. On chain governance and voting systems have pretty nice history already.
The real-estate industry could also utilize smart contracts easily. It would be easy to create a smart contract and tokenize the house for many parts and that way more people could own it. If they are renting out the renter could deposit the monthly fee directly to the smart contract which automatically would distribute between the owners. Also if we would like to sell our house, we could deploy a smart contract and we could ask for 10% down payment to make sure the buyer is serious and only after that he could get a key to the house he could watch around and he would have 1 month to completely pay it or leave the deal. If he is paying it then it would be clearly recorded on the blockchain, but if he isn’t paying for it he should leave and we would get a set amount for that month and he would get back the rest of his money and our house would be available on sell automatically. It would spare a lot of paperwork, middle mans out of the process.
Medical industry also one where accessing patient’s record is crucial for correct health care. Immutability, updated data everywhere the same time, permissions, traceability important factors in this industry where smart contracts could be easily utilized.
Factories working with many sensors and the supply chains became long, but storages became small as the “just in time” manufacturing being the trend. It would be important for factories to make the production synchronized between them and it could be achieved by fast, reliable blockchain with a good smart contract system. The previously mentioned good aspect of these technologies important in this case also. Imagine if one factory knows every data of the other one and it’s updated real time, and when a part getting to run low it would send the truck instantly with new parts or if one material is in lack it would launch a smart contract automatically and suppliers would accept and as soon as they deliver they can claim the payment from the contract.
The energy sector could use smart contracts also. Electricity could be tokenized and easily sold, there are already projects aiming to achieve this. A company could build a solar panel which could log every data on the blockchain and if we are having surplus electricity it could list for sale for the highest bidder and they would pay us and we could claim the money from the solar panel’s smart contract. Or we could communicate with the nearby panels and barter the electricity when we need more and we would give when we aren’t using much but our neighbour in need of it. As the above example shows not only smart contracts but the IoT (Internet of Things) devices could utilize smart contracts too.
The above examples are big industries and some common use cases what could be made with today’s technology. There are many more ideas, and even if we ourselves are sitting down and learning we can understand the technology and we can figure out new use cases too. Only our imagination is the limit, because technology is capable of many things already and if not then there is a chance to improve it or find a workaround.
The future is now and waiting us to take our part of it.
