Smart contracts have the power to transform the contemporary world, and their use cases are evolving. What are these challenges and their possible solutions?
In the contemporary world, where most social and administrative processes have centralized infrastructures, Ethereum smart contracts represent the possibility of more fair systems free of centralization.
Smart contracts foster trust and eliminate the need for intermediaries in all types of processes. However, to delve into the impact that this technology has had and will possibly have, it is necessary to review exactly what smart contracts are and how they have evolved to the current point.
A smart contract consists of an application made up of code that runs automatically and under previously established conditions. This is how with the launch of Ethereum in 2015, smart contracts gave birth to the decentralized finance sector. Today they have evolved into a large number of use cases that will be briefly explained below.
Evolution of Use Cases in Smart Contracts
The use cases for this technology continue to expand and evolve and in this segment we will talk about that evolution.
Innovation in smart contracts is joined by the evolution of other applications that are transforming the DeFi sector. One of them is oracles, which can communicate real-world data and integrate it into blockchains. In this way, smart contracts can interact more and better with real-world data every day.
Although Ethereum is the pioneer network in this technology, there has emerged the need to create smart contracts that interact between different networks beyond Ethereum.
Artificial Intelligence also drives the evolution of this sector. Developers are starting to experiment with AI algorithms with smart contracts, resulting in huge potential. In supply chain management, Artificial Intelligence plays an important role in predictive analysis, while smart contracts provide decentralization of these processes.
Smart contracts continue to evolve into more robust applications that increase the number of use cases. One of the limitations of smart contracts is the user experience and therefore current developments focus on facilitating the usability of said contracts.
Regarding the development of programming languages, different experts point out how they are becoming easier to use and more efficient. Therefore, they reduce the barrier to entry and help the developer community grow.
Challenges of Ethereum Smart Contracts
Security is one of the biggest challenges, with tens of billions of dollars lost each year to malicious actors and smart contracts being prime targets for hackers.
Bugs in development also pose a threat, for example, event ordering and reentry errors can be exploited by hackers to introduce malicious data to enable their goals.
While it is true that smart contracts can speed up cross-border transactions and eliminate unnecessary intermediaries, there is no defined regulation in most countries. Therefore, legal challenges are also an obstacle in the expansion and adoption of this technology.
The immutability of blockchain, that is, the impossibility of modifying data within the chain (and what is one of the main qualities of blockchain). This feature becomes an obstacle when the terms of the contract need to be readjusted. Therefore, flexibility is one of its shortcomings.
Finally, developing contracts on Ethereum requires that programmers need to use less conventional programming languages such as Solidity. In addition to needing commercial knowledge, cryptography and networking. Without a doubt, it is a much more complex area of development.
By Audy Castaneda
