Dealing with the realm of enterprise
contracts, the first mistake that someone like me did researching on Blockchain
Smart Contracts was to try and decipher it to the way it's currently
constructed.
It took a lot of reading
....white papers, blogs, podcasts and
webinars by the gurus to drive the Smart Contract philosophy of the Blockchain
world, calling out one academic asset was specifically a Ethereum white paper.
Smart contract by definition is simply a
software program modeled to execute contract terms and payoffs automatically
when the conditions of the contract are met hub to spoke.
the more Geeky definition of Smart Contract
is "Programmable contract capable of automatically enforcing itself upon
the occurrence of pre-defined conditions"
Smart Contract Use-case
Let's understand that with an example of a
Use Case
Current contractual Model most times:
Let's say you wrote a song for the biggest
rockband Metallica and the record company and the band manager cut a one time
check for a million dollars to you stating that the album went gold and your
song contributed significantly on the revenue pie, it ended there , even if the
album made significantly high record sales or is continuing to have recurring
digital download revenue, you never get a recurring portion or share of that
revenue. You don't have visibility into that food-chain.
Things can change in the Blockchain world
with a Smart Contract in the same usecase described above to a Economy of
prosperity.
How?
- You Wrote that song
- Metallica played that song in their album
- the Album had 10 songs
- your song is the reason people want to download that album as
the lyrics are intriguing and catchy
- there are several contributors on the Smart Album Contract The
Song writer, band, record company, music director , recording studio, digital
music marketplace, band website management company
INFOGRAPHIC COURTESY: ME AND MY SHARPIES :-)
There could be several but I'll stop here
- Everyone's
contribution and percentage of revenue sharing is modeled to a percentage auto
contract payoff condition on the Smart Contract
- Let's say today the
band made 3 million via record sales, 2 Million on the album launch tour, every
one gets a part of that revenue sharing that's deemed legit on the smart
contract condition.
- let's say 5 years
have passed and there are still digital downloads happening etc you still get a
share small or big until the asset of out there or the smart contract is
terminated due to charity foundations or philanthropy houses taking complete
revenue that point on or some hypothetical situation like that.
- Bitcoin, Ether or
anyother crypto can be the source of artist compensation that will translate to
FIAT currency monetizing for you to trade the crypto asset to use the money or
leave it on an exchange to grow.
Smart contracts can
only transact in their native token on-chain.
Off-chain, other systems can be developed to convert that native
token/cryptocurrency into fiat if required.
There is nothing wrong with that arrangement. Suitability would
need to be based on the use-case in question.
Future state
Hope I was able to
translate a simple Smart Contract use case for the music industry, now that you
have a fair idea , when you go online and search smart contract use-cases, you
will be thrilled to see several use cases that are in the making and some Smart
Contracts that are already LIVE and executing as we speak in the P2P payments
spree, insurance and other easy to apply and no or low touch contract payoff
models.
Due to its smart
nature and autonomy Smart Contracts will be the future of Contracts when the
enterprise realizes that it's easier for the code to make the fine sense of
judgement based on the contractual rule set meeting acceptance criteria
Downside of Smart Contracts
The sanity and vulnerability of Smart Contracts rely on the developer and also
the code reviewer, we have heard about several issues with Ethereum where the
flaw in the Smart Contracts
Block size Decentralized Database approach and Smart Contract trigger
For a known fact that the block size is critical, loading Bitcoin (Payment
System), Ethereum(Smart Contract Platform) with data and attribution isnt clean
design.
developers should look at IPFS and IPFD like protocol to help attribute all
thats required to trigger a smart contract querying from a Decentralized
Database like BigchainDB.
The attribution from the Decentralized DB can help trigger the Smart Contract
in Ethereum
The future is going
to be autonomous technical & exciting !
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