by Merlin Rothfeld, Online Trading Academy
Blockchain is already revolutionizing the way data is stored and transactions are made, but that’s just scratching the surface of this breakthrough technology. One of the most exciting potentials of blockchain is smart contracts. Professions such as law, real estate, engineering and trading, which rely heavily on paper contracts, now have the potential to eliminate most of the cost and intermediaries needed to draw up and verify documents. Not only that, smart contracts can be executed in seconds!
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How Does a Smart Contract Work?
To understand how a smart contract works, think of it as an if/then statement: if this happens, then this is the result; if that happens, then that is the result. If something is true, then this is the action; if something is false, then that is the action. Now think of making a wager with a friend about the weather. You bet your friend $100 that the weather in a particular place will be greater than 72 degrees the following day. There would be several things to must consider such as; how the wager would be paid and agreed upon method to measure the temperature.
A smart contract eliminates all the discrepancies and prevents any conflict. In your weather wager, both you and your friend would have already anted up $100 to the network. Using a third-party entity called an oracle, the data the wager requires (temperature) is pulled from an agreed-upon source. If the temperature at any time of the day hit higher than 72 degrees, $200 would immediately be transferred to the winner’s public address. Smart contracts facilitate, verify and enforce any factors that could slow up the transaction. They are not only accurate but save time and prevent conflicts. There are some ifs and ands in a blockchain transaction, but absolutely no buts.
Smart contracts are set to revolutionize time-consuming and costly transactions such as purchasing a home. Instead of waiting for a title company to prepare policies, transfer titles and verify deposits, a smart contract can eliminate the middleman and reduce the entire process to mere seconds instead of weeks or months. Blockchain and smart contracts have the potential to upend many of the ways business is currently conducted, and the technology is likely to displace jobs in certain professions and businesses such as title companies. Some will shrink or disappear, some will be created and expanded, but the writing is already on the wall.
How Else Will Blockchain Technology Impact Our Personal and Professional Lives?
Here are some of the many other revolutionary ways blockchain technology will impact our personal and professional lives:
Voting – By verifying identity through a private key, blockchain technology could make online voting possible and eliminate any chance of voter fraud. No more hanging chads!
IPOs (Initial Public Offerings) – Selling single or small-batch shares would be a breeze with blockchain, allowing individuals to get in on the ground floor of lucrative IPOs. Plus, it would allow all shares to be accurately tracked and – a huge plus – allow actual ownership of stock shares.
Digital Content – Blockchain would allow for musicians and artists to securely license and sell their works directly, without need for a middleman or distributing service. That means more money for the artists and less piracy of their work.
Smart Contracts – Several companies are already jumping on the technology to provide secure digital contracts built on the Ethereum blockchain.
Digital Identity – Blockchain could provide secure digital identities, possibly eliminating the need for official ID cards and even passports.
Gold and Silver – These precious metals can already be backed by sites such as Bitshares and BitReserve.
Currency Exchanges – Exchanges such as Poloniex and Kraken already allow you to purchase and trade cryptocurrencies on platforms similar to the ones stock traders use.
Ride Sharing – Yes, blockchain can even impact ride sharing via apps such as La’Zooz. Both riders and drivers can use their own network, bypassing the extra expense of working for companies like Uber and Lyft.
Data Storage – Services such as Storj.jo and Perrnova already offer blockchain data storage.
Real Estate – Blockchain has the potential to dramatically reduce the time it takes for real estate transactions.
Healthcare Records – Imagine hospitals connected through a blockchain, allowing medical providers to pull up your records anytime, anywhere. It’s already happening through services such as BitHealth.
Should You Invest in Blockchain Through Publicly Traded Companies?
Many publicly traded companies are already realizing the value and potential of blockchain and offer opportunities to investors with the same forward thinking. Microsoft, for example, is a member of Enterprise Ethereum Alliance EEA. Overstock, a popular online shopping site, not only accepts Bitcoin for purchases, but is also purchasing and investing in companies in the blockchain space through a subsidiary company, Medici Ventures. IBM is already well-invested in blockchain initiatives.
Smaller companies that see the same potential for blockchain also provide investment opportunities. First Bitcoin Capital is buying and investing in blockchain startups, HashingSpace is developing the technology and MGT Capital, headed by John McAfee, is building massive Bitcoin mining farms. Other companies like Global Arena Holdings are buying companies and patents using blockchain technology. Some of these are penny stocks and investors should proceed cautiously. There is tremendous potential, but also tremendous risk.
Smart Contracts Are Just the Beginning
Blockchain technology and smart contracts are rapidly changing the way we conduct transactions and seal deals. From ride-sharing to real estate, blockchain has the potential to move a wide range of costly and time-consuming personal and business transactions securely and inexpensively online. It’s a revolution fueled by investments from major corporations and smaller companies, backed up by a massive technical support community.
Blockchain is a link to the future, and it’s pulling us towards it fast.
Previous articles in this series:
Cryptocurrencies 101 – Simple Answers To The Questions You’re Too Embarrassed To Ask
Cryptocurrencies 102 – How To Build A Fort Knox For Your Assets
Cryptocurrency 103 – Blockchain Technology And The Future Of Your Data
