Smart Contracts Implementation, Applications, Benefits, and Limitations

Silas Nzuva

doi:10.7176/jiea/9-5-07

Abstract

The world today has realized the vast technological evolution that has greatly shaped the production and management functions of business enterprises. Traditional contracts can take weeks or even months to initiate, and there have been numerous instances of breaches and lack of trust for contracts in both the private and public sector. A smart contract can be defined as a self-executing contract that utilizes blockchain technology to digitally enforce, verify, or facilitate the performance or negotiation of a contract. Owing to the security and decentralized system exhibited by blockchain technology, smart contracts can foster transaction credibility between contracting parties without the necessity of third parties as exhibited in traditional contracts. Any business organization that aims at achieving greater heights in management and production dimensions must consider utilizing robust technologies that are aimed at bolstering its competitive edge. Owing to the newness of smart contracts, characterized by very few studies on the same, this research reviews how smart contracts through blockchain technology can be implemented in an organization to enhance performance and outlines the applications, benefits, and limitations associated with such contracts. Keywords: Blockchain technology; smart contracts; smart contract applications; smart contract benefits; smart contract implementation; cryptography; cryptocurrency DOI : 10.7176/JIEA/9-5-07 Publication date :September 30 th 2019

Highlights

The emergence of advanced technologies has led to increased competition between business as each tries to utilize the latter to bolster the employees' productivity and the general performance of the firm [7]
According to Iansiti et al, business enterprises have shifted from the traditional ways of business and have adopted modern, more reliable and cost-efficient mechanism; smart contracts are some of these mechanisms [20]
Whenever a client performs a transaction since the transactions are replicated across all the machines in the blockchain network, every client checks whether the transaction conforms to the preprogrammed rules, before being relayed further across the network [18]. To better understand this concept of the validity of reactions and which forms the core of smart contracts and associated security measures, it is prudent first to understand how the shared database works in blockchain technology

Summary

Introduction

The emergence of advanced technologies has led to increased competition between business as each tries to utilize the latter to bolster the employees' productivity and the general performance of the firm [7]. Whenever a client performs a transaction since the transactions are replicated across all the machines in the blockchain network, every client checks whether the transaction conforms to the preprogrammed rules, before being relayed further across the network [18] To better understand this concept of the validity of reactions and which forms the core of smart contracts and associated security measures, it is prudent first to understand how the shared database works in blockchain technology. Digital transfer of assets between the organization and its partners can be simplified just as in the example of Sam and Tim bank transfers and be expressed through blockchain technology, that warrants cryptographic verifiability, validity, and security through the use of the decentralized transactional model. The asset balance of both the Company B and the Customer Y can be calculated through the aggregation of the database record that corresponds to their respective public keys and whose asset type matches the digital asset that as transferred

Updating the Network

Conclusions