The application of Web 2.0 dominated the global scenario for the last 2 decades; the institutionalization of the same led to both the growth of technology and an increase in cyber crimes. The revolution which was meant to provide individuals with access to unlimited amounts of freedom, became a capitalist house because the information was obtained at the expense of privacy. Morality and ethics became a mirage and were mere words to milk profits. Morality and ethics are lacking because there are numerous scams, piracy, stealing, and invasions of privacy. Since we aren’t arguing about why Web 2.0 failed, we are arguing about the importance of “Smart Contracts” in Web 3.0. So going into greater detail, the failure of Web 2.0 becomes irrelevant. Soon enough, enough people were frustrated and decided to mold the web into something safer, non-institutionalized, and decentralized. With this came Web 3.0; this made use of smart contracts to protect the privacy of individuals and made a system that could not be deprived of the ethics previously forgotten.
The term smart contract was first used by Nick Sabo in 1997, long before Bitcoin was invented. Nick Sabo was a computer scientist, legal scholar, and cryptographer. He wanted to use a distributed ledger to store his contracts. Smart contracts inherit a few thrilling properties. Transactions are traceable and irreversible and programming controls their execution. They are inflexible and distributed. Being immutable/inflexible means that after smart contracts are created, they cannot be changed. As a result, no one can change the contract code behind the scenes. Distribution means that everyone on the network sees the outcome of the contract. Therefore, one cannot force one person to release funds through a contract, as others in the network will notice this attempt and mark it as invalid. The forgery of smart contracts has become almost impossible.
Smart contracts are transparent as there is no involvement of a 3rd party, and, due to this fact, encrypted statistics of transactions are shared by all participants. Smart contracts eliminate the need for central authorities, legal systems, or external enforcement mechanisms to make trusted transactions and agreements between remote anonymous participants.
We know that Kickstart is a big funding platform. Product teams can access Kickstarter to create projects, set funding goals, and start raising money from others who believe in the idea. Kickstarter is a third party that sits between your product team and your backers. This means that both of them need to trust Kickstarter to make money. Once the project is successfully funded, the project team expects to provide funding on Kickstarter. On the other hand, supporters want their money to be used on a project once it is funded and they want a refund when the goal is not met. Both the development team and backers should trust Kickstarter. However, with the help of smart contracts, similar systems like Kickstarter can be built that do not require external help. We can program the smart contract to hold all funds received until a certain goal is reached. Project proponents can now transfer funds to smart contracts. Once the venture is completely funded, the settlement will routinely switch the money to the venture creator. If the venture fails to attain its goal, the money can be returned again to the supporters.
Smart contracts can be applied to many things, not just crowdfunding. For example, banks can use it to grant loans or offer automatic payments. Insurance companies can use it to process specific claims, postal companies can use it to pay for cash on delivery, and so on. Smart contracts are saved on the blockchain, so the whole lot is absolutely distributed. With this technique, no person is on top of things. Smart contracts are efficient, accurate, and quick because contracts are executed as soon as the conditions are met. They are digitally automated, so one doesn't have to do any paperwork and doesn't have to spend time adjusting errors that are often caused by manually entering paperwork. There is no doubt that the data has been modified for private gain.
Using smart contracts for transactions is very safe because transaction records on the blockchain are encrypted and very difficult to hack. In addition, each document is linked to the records before and after the distributed ledger, so hackers need to modify the entire chain to modify one record. Apart from recording transactions, smart contracts are used for securing medicines. SonoCo and IBM are working to mitigate life-saving drug mobility issues by increasing supply chain visibility. Pharma Portal powered by IBM Blockchain Transparent Supply platform that tracks temperature-controlled medicines throughout the supply chain, providing reliable and accurate data to multiple parties. There is increased trust in the relationship between retailers and suppliers who use Smart contracts. Home Depot uses smart contracts on the blockchain to quickly resolve disputes with vendors. Through real-time communication and increased supply chain visibility, they build close relationships with their suppliers, giving them more time for critical work and creation.
Currently, there are several blockchains that support smart contracts, but the largest is Ethereum. Specially designed and developed to support smart contracts. Smart contracts can be programmed using Solidity. This language was created for Ethereum and uses a syntax that resembles Javascript. It also noted that bitcoin has support for smart contracts, although it is much more limited than Ethereum. Web 3 is undoubtedly the most needed revolution, but it too will someday become a tool of oppression, the aim should not only be to make it perfect but rather also have the understanding that one day, even smart contracts will need to be abandoned for the greater good. That time is nowhere near, but precautions should still be taken or we shall find ourselves again at the point where the system is monopolized by the rich.
Deepak Bishnoi
Deepak Bishnoi , is a third year student of economic hons. A crypto and technology enthusiast, Deepak is always ready to discuss NFTs, currency and finance. He is also an aviation aficionado and is a keen plane spotter.