ICO Smart Contracts
A smart contract is created and stored on the blockchain to provide legally binding transactions that can be self-executed by the two parties. It helps in exchanging tokens related to money, shares, property, or any value in a transparent manner while avoiding the need for any middleman or third party. In other words, we can say that smart contracts represent a special algorithm that helps in executing an automatic transfer of digital assets or money, or utility between parties as per the previously specified agreement.
The blockchain smart contracts are utilized as a prime element in cryptocurrency projects. The most important feature of smart contract implementation is that it eliminates the use of any intermediary services such as agents, brokers, etc. and ensures a transparent and secure transaction process. All these transactions are easily trackable and irreversible. The contracts store all terms and conditions of the agreement and execute the envisaged actions automatically.
A smart contact not only records the agreement terms but also ensure that it will be carried out properly, making it different from any other type of agreement. With advanced smart contract features, the verification process can be easily done in real in time. When the contract terms are accomplished, the smart contract will automatically transfer assets between the parties.
Blockchain in smart contracts
Smart contracts store all their data on the blockchain ledger. You can easily write the code on the smart contract with a certain condition so that if it is met then a contract will automatically deliver the certain result. Ethereum is the most popular blockchain utilized for smart contracts.
Nowadays, blockchain and smart contracts are used extensively in cryptocurrencies to make the transaction process safe and secure. This will help in simplifying the process of performing and verifying transactions, thus preventing fraud and saving money.
How do smart contracts work?
It is a very simple and fair process to create and execute a smart contract under the following three steps:
- First, the contract is written in codes for two or more parties and posted on the blockchain.
- Next, the event has to trigger an execution of the contract.
- When the triggering event occurs, the contract will self-execute as per the terms written in the code.
Once the process is complete, both parties will receive the promised assets, crypto money or utility through a contract. If in the case that contract conditions are not fulfilled, then the program will check whether the funds should be returned back to their respective owners. The smart contract blockchain ledger will store all transaction details and provide immutability on the network. It means that it doesn’t matter whether the contract self-executes or not, but all the details will be stored in the blockchain to offer complete transparency.
How will smart contracts be enforced?
To create smart contracts you need:
- Contract subject: The program required access to goods, services, or assets to lock or unlock them automatically.
- Digital signatures: All the contract participants need to sign the contract with their private keys.
- Term of the contracts: It is important to define the terms of the contract to execute an exact sequence of operations. It should be signed by all the participants.
What makes smart contracts different from others?
Smart contracts have great potential to work with complex transactions while maintaining transparency and trustworthiness among all the parties. Due to the advanced features of smart contracts, it is extensively used by the crypto world for launching a successful ICOs like BunnyToken, Lendo, ABYSS.
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Important features of ICO smart contracts:
Transactions will execute as soon as the terms of a contract are met or fulfilled. Generally, the verification process takes a long time in moving the assets after a contract is signed. But, a smart contract will take less time and execute the process quickly. This is one of the reasons that ICOs (like SapphireCoin, Global Spy, RepuX) are using smarts contract to ensure an efficient and quick transaction process.
Smart contracts are saved in an encrypted form on the shared blockchain which is operated by the parties themselves. It means you don’t need to trust any third party or middleman, as money is automatically transferred without any hassle. Furthermore, there is no chance of data loss in the contract because its ledger is replicated across many different machines. Also ICO ratings enables you the trust on the best ICOs in smart contract industry.
When the contract terms are written in encrypted computer code, there is no room for ambiguity. The agreement can be tested with any number of variables so that all involved parties can check what will happen under each situation. This will help in making the whole process transparent and fair as well as reducing the chance of disputes that may occur during any unusual circumstances.
Smart contracts support a variable permission structure that means it allows regulators to see terms of the contract while preventing the identities of the parties themselves. This will enable regulatory authorities to monitor it to eliminate any kind of fraud or suspicious activities without violating anyone’s privacy.
A smart contract is completely based on a computer program and its terms and conditions are coded, which allows complete accuracy.
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Different platforms for writing smart contracts
Ethereum is the most famous platform utilized for writing smart contracts. It is an open source public blockchain used to create the original Bitcoin blockchain. Ethereum offers a reliable platform for various decentralized applications like ICO tokens but it also provides scripting functionality for the development of smart contracts.
2. Automated transactions
This is another smart contract language used in some of the cryptocurrencies such as Qora and Burstcoin. For example, it is used for atomic cross-chain trading (atomic swap). This will allow cross-chain trading between two parties who have different cryptocurrency coins to exchange, without any need of a third party.
This is a public blockchain platform which is comprised of limited numbers of templates for smart contracts. In this platform, you have to use what is available and you are not allowed to write your own code.
With this, you will get enterprise-grade blockchain infrastructure with SDKs in Ruby, Nodejs, and Java.
How to test smart contracts in Ethereum?
Once you have written the contact, it is mandatory to test it by actually deploying it. This is a time when you need testnets.
Testnets work for the Ethereum network and EVM. With this, developers can upload and interact with smart contracts without paying the gas cost. Generally, it is mandatory to pay gas for computations of smart contracts on the Ethereum network. But, testnets enables the developers to test their contracts without paying any charges. You can find testnets gas free of charge from many public websites.
Advantages of smart contracts
1 – Blockchain application with smart contract
Smart contracts are one of the highly anticipated applications of the blockchain. They are written in codes that provide the benefits of verifying and enforcing the negotiation or execution of agreements automatically. It is capable of managing an agreement between two or more parties according to the terms agreed by both users.
2 – Various benefits of smart contracts
First, blockchain technology is responsible for the security feature that makes smart contracts more secure and safe than other traditional contracts. It also helps in deciding to know what the best ICOs to invest are. It is beneficial for reducing the cost of a number of transactions by eliminating the need for any middlemen or third party. However, the quality of smart contract output completely depends on the quality of input. If there is any oversight in the text then it might reflect negatively on the results. Remember, the rules of smart contracts are recorded in codes that cannot be interpreted according to “the intent of the contract” but only for correcting the meaning. The contract will store the information and data as per the network conditions.
3 – Advanced security
As smart contracts are written in encrypted codes, it makes sure that information or data will not be lost or changed without your permission.
It is mandatory to mention that smart contracts have eliminated the role of middlemen and third parties from start to finish of any transaction process. This will be beneficial for people in saving time and money and will offer complete comfort as they don’t need to rely on middlemen for the work to be completed.
Limitation of smart contracts
Smart contracts are still in their developing phase and unable to replace all forms of the contracts. They can effectively work for those terms which can be objectively defined and comes in the digital form. Some the key limitations of smart contracts are:
- Smart contract on the blockchain cannot be changed. If a developer makes mistakes while writing code then it cannot be changed or deleted. This may result in costly losses for the users.
- There is no government that regulates smart contracts. This is a reason why there is an issue if government authority make any legislative framework for it in the future.
- Smart contracts cannot be utilized without programming, it is therefore important to hire an experienced developer who can make a fail-proof smart contract and utilize the internal structure of the company for blockchain.
- It cannot be used for making calls to external APIs, web services, or external databases. This can make multiple independent executions on the same smart contract and leads to different results. This can break the agreement of the blockchain and create various problems.
- Smart contracts are capable of resolving those issues which can be objectively decided on the bases of facts. This will decrease the smart contract’s value in legal contracts where disputes arise when there are no objective facts and judgments are based on the subjective facts of two parties.
Different tools for deploying and writing smart contracts
1 – Infura
It offers scalable blockchain infrastructure that allows developers to focus on the code and off-loading the prime requirements needed for running a full Ethereum node.
2 – Mist browser
The tool is utilized for browsing and using dApps. This unique browser is capable of browsing dApps and interacting with them.
3 – Truffle framework
This is a famous development framework used for Ethereum. It has built-in smart contract compilation, binary management, linking and deployment that help in simplifying the work for Ethereum developers.
4 – Remix
This web browser is supported by IDE which enables users to write Solidity smart contracts and then allows them to be deployed and run.
5 – Meta mask
It acts as a bridge that enables anyone to visit the distributed web of tomorrow in their browser today. With this, users can run the Ethereum dApp in their browser without running the full node of Ethereum. This browser plugin helps users to perform Ethereum transactions by utilizing their regular websites.
Different languages used to write Ethereum smart contracts
- Serpent: This is also a high-level language utilized for writing Ethereum contracts. This language is similar to Python but due to its security vulnerabilities it is considered as an unattractive platform for development purposes.
Solidity is considered as the most appropriate language for writing smart contract but there are some new smart contract languages that will soon be launched in the future. The new languages designed for smart contract include:
- Viper: This language will target security and complier simplicity. It will contain a python-like indentation scheme.
- Chain: This will offer enterprise-grade blockchain infrastructure with SDKs supported by famous languages like Java, Ruby, etc.
This is our brief to complex smart contract world and how those are utilized in ICO’s. It is necessary to develop and deploy a proper ICO marketing strategy before launching the project.
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