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Ethereum Smart Contracts: Best Use Cases of Second Generation Blockchain

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Ethereum Smart Contracts: Best Use Cases of Second Generation Blockchain

Want to learn more about specific use cases for smart contracts? Check out this post to learn more about use cases for second generation blockchain technology.

· Security Zone ·
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Ethereum is known as the second generation of blockchain technology. The first generation is Bitcoin, though it has restrained scripting abilities. And, thus, to develop smart contracts that are deployable on the Ethereum blockchain is not possible on the Bitcoin blockchain. Ethereum blockchain contains advanced scripting abilities. For instance, turning completeness along with smart contracts is one of its unique features.

Due to the advanced scripting abilities of the Ethereum smart contracts (blockchain) solutions, many unforeseen use cases of Ethereum smart contracts are imaginable in today’s world.

Best Use Cases of Ethereum Smart Contracts

Banking and Financial Services Contracts

Ethereum smart contracts have found many smart use cases in the financial and banking industry.

Smart contracts can become applicable to various areas, such as in national bonds, mortgages, insurance claims, payments, and settlements.

For instance, let us suppose that a person is paying EMIs for an asset and fails to pay ‘x’ number of EMIs consecutively without providing any prior notice to the bank. In this case, instead of implying a foreclosure process, a complete length smart contract can be written for enforcing the terms and conditions.

Or, let us imagine a government bond that is about to mature. If written and maintained with smart contracts, it will disburse the maturity funds to the bearer upon maturity.

Doesn’t it sound like an incredible application of smart contracts?

ICOs or DAICOs

Smart contracts can also help make the process of ICOs (Initial Coin Offering) or token sales more transparent, effective, and democratic.

Not long ago, Vitalik Buterin, the founder of Ethereum, presented a DAICO model. It’s a hybrid model of a DAO and ICO.

In a DAICO, the development team that’s planning to launch an ICO campaign executes a DAICO smart contract on the Ethereum blockchain, along with a DAICO variable known as "tap." Although it’s quite different when compared to the old ICO model, it also commences in the "contribution mode" just like the old ICO contracts and enables investors to contribute according to the rules of the ICO.

However, the variable in the DAICO contract, the tap, determines how much a developer can withdraw from the contract per second. The tap limit gets monitored and governed by the DAICO contributors. It, eventually, allows contributors to keep a check on the developers as they aren’t allowed to withdraw the whole contributed sum at once.

Now, you can see how effective and efficient the ICO or token sale model can become using advanced Ethereum smart contracts.

Prediction Markets

The prediction market is another insightful addition to the use cases of smart contracts. There a few platforms developed on the Ethereum blockchain to implement the use case of prediction markets, such as Gnosis and Augur.

The idea of prediction markets can be used in the places where you want to predict the outcome of an ongoing football match, an election or campaign in a single country, price discovery points of auctions, the probability of Elon Musk succeeding in colonizing Mars, etc.

In such scenarios, the participants will be provided with incentives when making predictions. When some of them predict accurately, they’ll be further rewarded using trustless smart contracts deployed on blockchain technology.

Not only are these predictions used in gambling and betting but also for knowing whether a company should go with the launch of a particular product or not, making the entire process both cheap and rewarding.

Replacing Escrow

Smart contracts can be used in places where you have escrow services and middlemen. Because, now, it’s possible to replace them with smart contracts.

However, the smart contracts, in this scenario, need to be extremely agile and proficient. They need to be thoroughly equipped to handle all scenarios and conditions. Indeed, it should be well tested.

For example, you could develop a smart contract-based job portal, like Upwork, where smart contracts will act like the escrow rather than a centralized platform that asks for commissions on each successful work done through them.

Topics:
ethereum ,ethereum blockchain ,blockchain ,security ,bitcoin ,second generation blockchain ,ico ,daico

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