The future of crypto is the Smart Contract.
So what is a Smart Contract?
I don’t just want to teach you about what is a smart contract, I also want you to remember the information given. So, to do that, I have highlighted three key points that you should read and try to remember what is a smart contract:
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1. A smart contract is an agreement between two people in the form of computer code. They run on the blockchain, so they are stored on a public database and cannot be changed.
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2. The transactions that happen in a smart contract are processed by the blockchain, which means they can be sent automatically without a third party. This means there is no one to rely on!
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3. The transactions only happen when the conditions in the agreement are met — there is no third party, so there are no issues with trust.
How does it work?
Yes, just how do smart contracts work, then?
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To find the answer, let's start by looking at how a smart contract can be used:
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Let’s imagine that John wants to buy Mike’s house. This agreement is formed on the Ethereum blockchain using a smart contract. This smart contract contains an agreement between John and Mike.
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In the simplest terms, the agreement will look like this: “WHEN John pays Mike 300 Ether, THEN John will receive ownership of the house”.
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Once this smart contract agreement has been put into place, it cannot be changed — meaning John can feel safe to pay Mike 300 Ether for the house.
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Without the use of a smart contract in this scenario, Mike and John would have to pay lots of fees to third-party companies. Including the bank, a lawyer, and a house broker.
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It’s great, right? No more commissions and no more delays to wait for a lawyer and broker to process the agreement! This is just one of many examples of how a smart contract can be used.
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Smart contracts are automatically executed once the conditions of the agreement are met. This means there is no need for a third party, like a bank, a broker, or a government.
How is this possible?
As mentioned before, we have the blockchain to thank. Because of blockchain technology, we are able to decentralize smart contracts so that they are fair and trustless. By decentralizing, I mean that they are not controlled by one central party (like a bank, broker, government, etc.).
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The blockchain is a shared database run by many computers (called 'nodes') belonging to many different people. Because of this, not one single person or company has control of it.
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It means it's near impossible to hack it — the hacker would need to hack more than half of the nodes if they wanted to attack the blockchain or the smart contracts that run on it. Therefore, smart contracts can run safely and automatically without anyone being able to change them! Now you know even more about what a smart contract is!
What are Smart Contracts currently being used for?
As I said earlier, Mike & John’s house sale is not the only scenario in which smart contracts can be used. Smart contacts can be used for any type of transaction — it doesn’t have to be financial.
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The possibilities are endless for smart contracts. They are already being used for financial trades and services, insurance, credit authorization, legal processes, and even for crowdfunding agreements (ICOs).
Let’s look at how smart contracts are already benefiting certain industries and how they will benefit other industries in the future…
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Insurance Companies
Two insurance companies, Atlas Insurance in Malta and Axa in France, tested smart contracts in 2017. They had prototypes that compensated airline customers if their flights were delayed.
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Let’s see an example:
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John is about to fly from NYC to Los Angeles. He sends $5 worth of cryptocurrency to the Axa Insurance smart contract and provides his flight number. Axa sends $95 to the smart contract. So, there is $100 in the smart contract.
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If John’s flight is on-time, Axa is sent $100 from the smart contract. But if the plane is late, $100 is sent to John from the smart contract. Everything is automatic.
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This saves lots of time and money. It also means that John does not have to trust that AXA will pay him the agreed amount if his flight is late — he knows that if it is late, the smart contract will instantly send him his compensation ($100).
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Health Systems
Health systems will use smart contracts to record and safely transfer data.
We can already see examples of smart contracts being used in the medical industry by the likes of EncrypGen. This is an application that uses smart contracts to transfer patient data in a secure way, allowing no access from third parties.
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This way, the patients are in control of their own data. If researchers want to use patient data, they must pay for it. Not only that, but the patient has to choose whether or not they want to sell it to them.
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Governments
For governments, smart contracts running on the blockchain can make voting systems completely trustless and much more secure.
Applications like FollowMyVote use smart contracts and blockchain technology to protect votes from fraud. When the voting transaction is written to the blockchain, it cannot be changed. When the voting is over, the smart contract will send a token to an address that represents the winner of the vote.
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This way, voting is always fair, meaning the winner is always correct.
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Did you know?
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Business Management
Businesses can benefit massively from smart contracts. Instead of paying staff to run payrolls, they can use smart contracts.
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Businesses can just set up a smart contract that says WHEN the date is 28.03.18, the Business sends John 2 ETH. This means John will always be paid on time, and he will never be underpaid. The business benefits because it is all automated, saving them lots of time and money!
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ICOs
If you want to start your own project that uses the blockchain, you can build your project on the Ethereum blockchain, as we saw earlier. However, you’re going to need some money!
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How’re you going to get the money you need? Welcome to ICOs.
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An ICO (Initial Coin Offering) is a crowdfunding system for new applications that use blockchain technology. You create a smart contract and a token for that smart contract. Let’s imagine you call your token ABC.
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You want to raise $10,000,000 to start your project and build your application — let’s imagine that $10,000,000 is equal to 10,000 Ether. You decide you’re going to put 100,000 ABC tokens into the smart contract, and that each ABC token is going to be worth 0.1 Ether.
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That way, if you sell all 100,000 ABC tokens, you will have the 10,000 Ether that you need, because 100,000 x 0.1 = 10,000.
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Now, in the smart contract, you will write something like: IF 0.1 ETH is sent to the smart contract, THEN the smart contract will send 1 ABC to the address that sends the 0.1 ETH. That way, the people contributing to the ICO always get the right amount of ABC token.
Remember! It's crucial to keep your cryptocurrencies in secure wallets. HotDoge recommends either Trust Wallet, or SafePal.
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Why would people want to buy the ABC token?
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The two most common reasons people buy tokens from ICOs are:
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The token can be used on the application once it is built;
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The price of the token may increase when the project becomes more popular.
You can think of ICOs as a blockchain version of Kickstarter. The key difference is that it automates the whole crowd-sale process in a secure way.
So what about HotDoge?
These are only a few use case scenarios. Smart Contracts will disrupt (in a good way, don't worry) almost every single part of how we interact with each other. HotDoge is currently focused on Banking, Corporate Investment, Mobile Development, Gaming, Interactive Merchandise, Augmented Reality, eCommerce for NFTs, and much more!
Our full Alpha Pup Whitepaper and Roadmap are currently in development are going to be released soon which gives a complete breakdown and detailed explanation of the token, business model, current developments, plans for the future, etc.
Make sure to subscribe and see our blog for updates and check back to this site regularly for additional features and information.