Bitcoin may be the world’s first applied use case of Blockchain Technology, but Ethereum is the second generation Blockchain that is making waves in the tech ecosystem. The Ethereum Blockchain facilitates the coding of Smart Contracts in a way that is not possible with the Bitcoin Blockchain. This article gives you the low down on the 5 popular use cases of Ethereum Smart Contracts.
The Founder of Ethereum, Vitalik Buterin, devised the Ethereum Blockchain, which has advanced scripting abilities such as Turing Completeness and smart contracts, in order to build an advanced Blockchain network that can provide the platform for the development of decentralised applications or dApps.
Today, Ethereum Smart Contracts can be applied in real life and have several use cases.
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5 Use Cases of Smart Contracts
1. Smart Contracts in Financial services
The finance sector can benefit hugely from the deployment of Smart Contracts. The digitally automated protocol is applicable to various areas of the finance and banking domain such as bonds, insurance claims, payment settlements and mortgages.
For instance, take the example of a government bond. When managed with a Smart Contract, the bond will automatically disburse the amount on maturity to the bearer. Yes, the application of Smart Contracts in the financial domain can work wonders by automating and streamlining processes.
2. Smart Contracts in Initial Coin Offerings
Smart Contracts when integrated into the coin offering process can make it more transparent, democratic, and effective. Buterin, the founder of Ethereum has suggested a model for ICOs called the DIACO model. It is considered to be a hybrid of Decentralized Aunomous Organization and Intial Coin Offering.
The DAICO entails the launch of the DAICO Smart Contract on the Ethereum network with a variable ‘tap’. This variable determines the amount of Ether cryptocurrency that the developers can withdraw per second. Interestingly, the limit of ‘taps’ is authorised by the DAICO contributors. Hence, DAICO avoids scams as developers cannot run away with all the money at once. To understand how developers create Smart Contracts with Solidity, do read our article on the same.
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3. Smart Contracts in Management of Digital Identities
Today’s relevant issues of data monopoly and identity theft can be easily resolved through the deployment of smart contracts in digital identity management processes. Projects like uPort give the digital identity of the users back in their hands, allowing them self sovereignty.
4. Smart Contracts in Prediction markets
Decentralized prediction market protocol platforms such as Augur and Gnosis have already implemented Smart Contracts. Such protocol allow the participants to predict outcomes (for example an election outcome), and when their predictions turn out to be true, they are incentivized through trustless Smart Contracts.
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5. Smart Contracts in Escrow Services
Smart Contracts can easily replace middlemen, thus they find one of the most important use cases in escrow services. One thing that needs to be taken care of is that Smart Contracts used escrow services should be equipped with all the pre-conditions.
Smart Contracts seem to be paving the way forward for automatization of various processes. To conclude, Smart Contracts are not just a buzz word, but they actually serve real-world use cases. 2019 may just be the year when these protocols find their niches in different industry verticals.
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