by Lumai Mubanga
The term “smart” in smart contracts may well excite many readers to think they are the ultimate solutions. Perhaps you may think of smartphones and what they are capable of doing. You use smartphones to surf the net, send emails, watch movies, conduct zoom meetings, transact, take pictures and videos, learn, teach, and many other everyday conveniences. While that is smart indeed, does the same apply to blockchain’s smart contracts in their current form?
This article will endeavor to explore some specific applications that may be suitable for smart contracts and analyze the question of whether they are the ultimate.
Smart contracts are sometimes referred to as a binary solution, meaning they apply well in situations where there is “if this, then this” scenario. For example, if the airline fails to facilitate your departure, then you should get refunded. This basic code may well spell some perceived limitations in the current smart contracts. This is definitely different from the way artificial intelligence and machine learning algorithms are designed. What specific applications then suite this binary-based approach?
Simple and rote type of applications?
Smart contracts have so far been effective in solving the challenges and problems of a repetitive nature. Take for example the two effective areas where smart contracts have been applied with success namely financial transactions and supply chain management. In as far as these processes are complex and tedious, the application of smart contracts have eased the long procedures and reduced the time and costs involved.
Financial transactions using DAI
DAI is one cryptocurrency that is controlled with written code, unlike the fiat US dollar. This gives it enormous flexibility. For those who work abroad and are obliged to meet certain financial obligations back home, DAI comes in handy. You can use it to pay individuals regularly a certain amount on specific days. DAI takes advantage of smart contracts to effectively pay these individuals on a routine basis. These payments can be effected at any time, any day including weekends and holidays at very small fees. We see an effective way of using smart contracts in this routine procedure which can go on and on as long as you want.
Supply Chain Management
The complexity of supply chain management has been eased with the incorporation of smart contracts. In one best-known application of tracing end to end the mining, shipping, and delivery of conflict minerals like diamonds and tantalum from specific war-torn African regions, the smart contract has played a role to manage business procedures seemingly without challenges. Shipping and trading in conflict minerals have been reduced if not eliminated.
In both examples, a smart contract brings with it automation, trust, and transparency, besides security, affordability, and efficiency. Basically, repetitive processes are best handled by smart contracts. But can this be applied in legal matters? What about complex engineering problems that may demand qualitative assessments?
Complex situations with thousands of variables may not be handled by smart contracts in their current form. The infusion of artificial intelligence and machine learning may well have to be combined with smart contracts. In the absence of that, smart contracts as well are relegated to the pages of history.