As blockchain continues to evolve, smart contracts built to expand the concept of a simple decentralized database into a fully usable decentralized application seem to be popping up everywhere.
We’ve talked about the Ethereum “killers” and how nearly every third-generation blockchain now includes the ability to run decentralized software powered by smart contracts, but is there really a difference between the smart contract chains?
There are advantages, certainly, and disadvantages to the various platforms, but will it make a difference for real-world use cases when selecting one chain over another to build a dApp?
The truth is that blockchain dApp technology is still at an infant stage, and there has been very slow progress when it comes to figuring out where this technology can be used to solve real-world problems. Striking out today to build a blockchain dApp is fraught with challenges, and the downfalls are ever-present from financial risks as well as developing with new and untested technology.
On the other hand, the opportunity of long-term reward is there if you manage to solve a problem in a unique way or become the “Google of blockchain” in the process.
Let’s take a look at some examples where smart contract platforms are actually being used right now to support products and services that rely exclusively on this technology.
1. Sub-Tokens & ICOs
The vast majority of blockchain ICOs which happened over the past 24 months were released as sub-tokens using the ERC-20 standard on the Ethereum network. Hands-down, Ethereum is currently the king of sub-tokens and no other chain comes close. Part of that is due to Ethereum’s first-mover advantage since no other smart contract was actually functioning at a production-worthy level in 2017 to support the explosive growth of this new industry.
The ERC-20 standard is simply a standardized smart contract on the Ethereum network which allows an individual user on the network to generate a sub-token and send it to another user. All of the functionality of the sub-token is controlled by Ethereum’s smart contract system, called the Ethereum Virtual Machine.
Most dApps built on Ethereum will create their own tokens to use within their applications, a function which is controlled, managed and secured by smart contracts.
At the present time, there are over 128,000 ERC-20 sub-token contracts in existence on the Ethereum blockchain, account for 80 percent of all dApps. This is a testament to the popularity of the platform and speaks to the innovation found in Ethereum since 2015.
As a side note, Vitalik Buterin, creator of Ethereum, now says he hates the term “smart contract” and wishes he would have adopted something less flashy. However, the name seems to have stuck since it was coined by Nick Szabo in 1994 and nearly every Ethereum competitor has adopted the “smart contract” label as well.
2. Asset Digitization
The concept of “digitizing assets” has become a new buzzword around blockchains. The question is how can you use blockchain to track ownership of a physical asset, such as gold or silver, and record changes of ownership in a decentralized way?
NEO is a fairly new smart contract blockchain with goals that differ somewhat from Ethereum. The NEO objective is the “Smart Economy,” which is made up of digital assets, digital identity, and smart contracts.
Unlike Ethereum, which aims to be the “world computer,” NEO is working toward a platform that allows for entities to trade goods and services, in a digitized form, with the security of a digital identity layer to provide enforceable trading rules.
Each asset, such as physical gold, for example, would have a corresponding entry on the blockchain so ownership can be tracked and recorded. The record of these assets remains decentralized and available to all stakeholders at all times.
Individuals and institutions, private and government alike, could trade securely in this trustless environment across borders and around the globe with a system powered by smart contracts on the NEO blockchain. Asset trades occur within the rules of the defined contract and happen instantly in NEO’s vision of the “Smart Economy.”
3. Personal Finance
The world of finance and blockchain would seem to go hand in hand and, eventually, that day will come.
The Tezos blockchain, which recently launched in September 2018, has some promising dApps which aim to break down the barrier between traditional financial products and blockchain technology.
Part of the attraction to Tezos for high-value financial dApps is the inherent formal verification which, once fully implemented, will greatly reduce or eliminate the possibility of coding bugs or human error within smart contracts.
TezSure, a dApp in the early development stages on Tezos, aims to simplify insurance on the blockchain. According to the TezSure founding statement, traditional insurance lacks transparency, takes far too long to process claims, and costs a fortune in overhead to administer.
TezSure would streamline this process by allowing an entity to create an insurance product, defined by rules in a smart contract, then move coins into the insurance pool, and wait for claims to be filed. The end result is that once the claim is verified, payment is made directly from the pool per the rules of the smart contract which defines the parameters of the insurance.
The amount of overhead needed to facilitate this system would be a small fraction compared to traditional insurance models, according to TezSure.
4. Health Care
Electronic medical records have become the norm for many hospitals and health care providers. The goal is to provide patients and doctors with instant and secure access to a patient’s records from anywhere on the planet.
Most systems in use today do not yet measure up in terms of allowing universal access to a medical record. There are competing standards, and competing ways to store and access the information. This leaves the patient less in control while being forced to use different services depending on which electronic records vendor a provider chooses to use.
In response to the current limitations, a company called Medicalchain has created a product which utilizes blockchain to provide secure access and auditing of medical records and allow the patient to ultimately retain control over their personal data. The benefits for patients include a secure audited trail of how and when their data is being accessed and future control of how long the data can be accessed.
Medicalchain sees the issue of electronic medical records as a danger for patients considering existing systems are stored on centralized databases where the data is non-portable and patients ultimately have no access control.
To achieve the goal of decentralizing and securing medical records, Medicalchain created an ERC-20 token on Ethereum called the MedToken, which launched as an ICO in February of 2018.
According to the project white paper, “Medicalchain is a decentralized platform that enables secure, fast and transparent exchange and usage of medical data. We use blockchain technology to create a user-focused electronic health record and maintain a single true version of the user’s data.”
Physicians who are part of the Medicalchain platform will have the ability to read and write to the patient’s medical record with access secured by the blockchain. Patients participating in Medicalchain will be able to use Medtokens to pay the physicians fees, along with the benefit of retaining full control over their records.
Medicalchain will also serve as a platform for third-party developers to build healthcare applications. This could lead to further benefits for patients since companies and research institutions would be able to license a patient’s medical records, with the patient’s consent, and compensate the patient using the MedToken cryptocurrency. This puts the patient in complete control and allows them to earn money by selling access to their records if they choose to.
5. Supply Chain Management
When goods are sourced from around the globe, companies need to keep track of them until they reach their destination. They need an immutable and secure record of where the goods have been and how long they’ve been there. This kind of need is another perfect use-case for blockchain.
VeChain, a Taiwan-based company, has created a blockchain focused on real-world needs of supply chain management.
Using smart contracts, VeChain allows manufacturers to assign unique identification numbers to products and keep track of their movements through the supply chain from anywhere in the world.
VeChain achieves this with two cryptocurrencies, the VeChain Token (VET) and VeThor (THOR), which function in tandem to operate on the VeChain network.
The concept of using smart contracts to track global supply chains is so attractive that PricewaterhouseCoopers (PwC), which is considered one of the “big four” global accounting firms, recently acquired a small stake in VeChain. As part of the partnership, PwC will help VeChain develop the product further and bring it to a global marketplace.
The ability to “audit” a supply chain with the security and immutability of blockchain would give accounting firms, like PwC, the ability to work across borders and offer more robust services to enterprise clients who may not know how to start using blockchain in their industry.
Scratching the Surface of Smart Contracts
These five examples offer some good insight, but future possibilities will likely move far beyond these use-cases. The real potential of smart contracts has yet to be realized, and won’t fully be understood until blockchains solve the problem of scaling to meet the demand for more transactions per second and more functionality.