Why We Need Smart Contract Applications in Blockchain

In other words, since the smart contract code runs on an open blockchain ledger, the rules can be applied not only within the company that encoded the smart contract, but also to other business partners authorized to be on the blockchain. As mentioned earlier, a smart contract is hosted on the blockchain by calling its constructor function via a transaction transmitted to the blockchain network, then the constructor function is executed and the final code of the smart contract is stored in the blockchain. After deployment, the smart contract creator has received the returned parameters (e.B contract address), and then users can call any available smart contract function by submitting a transaction. Smart contracts do exactly what they are programmed to do and are unable to judge. Order rules, in particular with regard to the calculation of fees and invoicing practices, must be able to be coded from clear and conflict-free contractual conditions. For more than a decade, blockchain has been established as a technology in which a distributed database records all transactions that have taken place on a peer-to-peer network. It is considered a distributed computing paradigm that successfully overcomes the trust problem of a centralized party. Therefore, in a blockchain network, multiple nodes work together to secure and manage a set of transaction records shared in a distributed manner without having to rely on a trusted party. In 2008, Satoshi Nakamoto introduced Bitcoin [69], the first cryptocurrency proposed to introduce blockchain as a distributed infrastructure technology.

It allowed users to securely transfer cryptocurrencies known as “bitcoins” without a central regulator. In addition, Ethereum [16], NXT [71] and Hyperledger Fabric [4] have also been proposed as blockchain-based systems used for cryptocurrency. Unlike Bitcoin, they can use smart contracts (SC). Blockchain technology overlaps with traditional contracts by including the terms of agreements between two or more parties, but surpasses them through smart contracts by automating the execution of agreements in a distributed environment when the conditions are met. Hasan H, AlHadhrami E, AlDhaheri A, Salah K, Jayaraman R (2019) Smart Contract-based Approach for efficient shipment management. Comput Ind Eng 136:149-159 Another limitation of the blockchain itself that affects smart contracts is the irreversible nature of blockchain, so once smart contracts are deployed, they cannot be changed. In addition, all nodes of the blockchain can be hacked or misused to report erroneous data that is connected to the blockchain immutably. In summary, research has emerged in recent years to improve the security and performance of smart contracts. While executing smart contracts in parallel can speed up contract execution, it faces the challenge of executing interdependent contracts at the same time. In addition, optimizing smart contract codes can effectively reduce potential vulnerabilities in contracts and ensure efficient and secure contract execution. However, existing studies are not yet mature and unknown vulnerabilities or errors cannot be detected for replacement.

Therefore, optimizing smart contracts requires additional research. In particular, the problems in Ethereum smart contracts include ambiguities and light but insecure constructs in its Solidity contract language, compiler bugs, Ethereum virtual machine bugs, attacks on the blockchain network, immutability of bugs, and that there is no central source documenting known vulnerabilities, attacks, and problematic constructs. [34] IEEE blockchain experts believe that blockchain and IoT could actually transform vertical industries by combining them. The development of blockchain technology, which allows companies to create decentralized models, opens up new horizons for companies to make transactions and conclude agreements. And one of the technologies that offers an alternative to the traditional model is the smart contract. Accuracy and transparency Since the codified terms are fully visible and accessible to all parties involved, there is no way to challenge them once the smart contract is in place. This provides full transparency of transactions and can eliminate the likelihood of manipulation, distortion or error. This, in turn, leads to a reduction in monitoring costs and the risks of opportunistic behavior.

A variety of industries could benefit from using blockchain-based smart contracts as part of their supply chain. Automating healthcare payment processes using smart contracts can reduce overbilling and prevent fraud. The music industry could register ownership of the music on the blockchain and then use a smart contract to ensure royalties are paid when the music is used for commercial purposes. Smart contracts and blockchain could benefit the automotive industry by storing readily available information about vehicle maintenance as well as accident and property history. The legal issue of smart contracts is another crucial aspect of smart contract challenges. For example, the European General Data Protection Regulation (GDPR) [35] states that citizens have a “right to be forgotten”, which is incompatible with the immutability of blockchain-enabled smart contracts. Other legal issues can be cited, including: (i) each country has its own laws and regulations, so it is complicated to ensure compliance with all regulations, (ii) legal clauses or conditions are not quantifiable, so it is still complicated to model these conditions in smart contracts so that they are adapted and quantifiable for a machine, to execute them, and (iii) governments are interested in a regulated and controlled use of blockchain technology in many applications, but this means that the unreliable network falls back into a trusted third-party network and loses some of its essence [79]. Over the next few years, the massive growth of IoT-connected devices could lead to greater use of smart contracts. Indeed, a significant portion of the estimated 46 billion industrial and enterprise devices connected in 2023 will rely on edge computing, according to a juniper study. Therefore, it will be essential to solve standardization and deployment issues. A proposal to use Bitcoin for the registration of replicated assets and the execution of the contract is called “colored coins”.

[45] Replicated titles for potentially arbitrary forms of ownership are implemented in parallel with the performance of replicated contracts in various projects. .