Where large access to data and advancing technologies have proven to be a blessing for mankind there, on the other hand, these have also threatened humans with a high incidence of fraudulence, cybercrimes, and corruption. Keep in view these insecurities: traditional contracts have now been replaced by smart contracts. The eleventh-hour rise of cryptocurrencies like bitcoin is not new to anyone. And so is the blockchain, the tech behind it. Along with these technologies, blockchain has also given us many other applications and network facilities. One of these is the smart contract.
What are Smart Contracts?
A smart contract nullifies the need for a mediator while you sign a contract. It allows you to sign a contract by directly fetching data from the real world without needing anyone to feed the data for you. Therefore, reducing the chances of data mutation or fraud. It is a computer code that runs with the technology of blockchain, making sure a secure value exchange. Here the contract conditions are observed publicly, enabling transparency and an atmosphere of trust between the two parties.
With the advent of the global world, Blockchain and Chainlink came into being in 2017, allowing us to directly get accurate online data with confidence and allowing digital contracts to happen with trust and fewer insecurities. While the traditional contracts were lessened given the large prevalence of trickery and scam.
Traditional contracts are man-made contracts that are written and signed by men after verbally obtaining and confirming their data. However, the execution of this contract and the management of any issue in face of the contract policies is ensured by the law enforcement agencies. In contrast to traditional contracts, smart contracts are computer programs that automate the enforcement of contract terms and conditions.
Role of Oracles in Smart Contract
Nevertheless, smart contracts have their limitations. One of the biggest challenges developers have to face is that smart contracts are unable to fetch data from outside the blockchain. In order for smart contracts to independently access data, they need to be connected to an oracle. A blockchain oracle is a reserve of database that connects smart contracts to the outside world so that they can fetch data.
Chain link is one of the most popular and useful oracle projects used by smart contracts. It solves the problem of data fetching by creating a large pool of oracles, which are distributed on the network. Each oracle produces high-quality information for smart contracts. However, to use this service, you need LINK tokens that are used to pay for services on the network. ChainLinkthe producer of the tokens, has been a popular crypto among retail investors, with attraction from internet forums such as 4Chan. The currency has been hit by recent market turmoil. However, investors continue to buy Chainlink enough to keep the current market cap of the crypto close to $9 billion.
Smart Contracts Vs. Traditional Contracts: What’s the Difference?
While comparing both of these contracts, one cannot deny the uses of a traditional contract as in the end the contract is going to be in between us mortals. One factor to consider here is the vivid difference in language between the two. The traditional contract is written in human language while the smart contract the computerized sets of rules, mathematics, and determinants are used. Here it should be clear that despite all the advancements the contract is in real between the humans, who might have to negotiate or bargain sometimes. Making the smart contract fall short here. Moreover, the computerized terms and codes used might turn out to be a case of ambiguity for the two parties. Who might abstract the agreement rules from two different perspectives. Therefore, showing the fact that traditional contracts cannot be eliminated.
The comparison between man and computer capabilities is undeniable. Where a computer is more accurate with less incidence of errors, its one coding error can also cause repetitive loss and error. On the other hand, where man is more inclined towards mistakes and scams, his logical reasoning and ability to negotiate are beyond question. Therefore, it will be wise here if we consider the potential benefits of combining the two? The synthesis would be a mechanism, where man negotiates and signs the contract manually and then converts it into a smart contract. Research has been done, to enable its users to fetch information from the online structured data with confidence, negotiate the terms and conditions manually, and then undergo a safe transition into a smart contract where computerized execution of terms is ensured.
Which Blockchain Services Provide Smart Contract Feature?
When it comes to smart contracts, Ethereum is the name of the game right now. Second only to Bitcoin in terms of market capitalization, Ethereum is a decentralized platform that enables the use of smart contracts and decentralized applications. It was created in 2015 by Vitalik Buterin, and soon enough, it became the first and only blockchain to provide smart contract functionality.
The next blockchain is undoubtedly in direct competition to Ethereum as it aims to solves all the problems in the Ethereum network. While Ethereum might have the edge over Cardano in terms of market cap as it was launched way before the former cryptocurrency, but Cardano is slowly catching up to it. Cardano is created by Charles Hoskinson, who was the co-founder of Ethereum, but he soon left the company and took his own road. Unlike most cryptocurrencies that are built on the Ethereum network itself or is its fork, Cardano is made from scratch.
Last but not least, Polkadot is another famous and leading smart contracts provider. It was developed by Gavin Wood, who was also a co-founder of Ethereum. Just like Ethereum, Polkadot allows dual functionality as you can create smart contracts on top of running decentralized applications through it. But, Polkadot makes the job of creating applications much easier. As opposed to Ethereum, developers don’t have to create their own security protocols when using Polkadot as they can use security that Polkadot chain already has. This allows Polkadot the interoperability of different networks through the concept of parachains as other blockchains with their own native token can build on the Polkadot network and offer their services through it.