As technological advancements take over the world, businesses aim to utilize various innovations to cater to the world. Digitalization is one of the most apparent changes in how people do business. One of the most influential innovations is blockchain.
Smart contracts are digital programs on a blockchain network. They’re slowly replacing traditional contracts due to several of their competitive edges in the modern market.
Understanding a Smart Contract Platform
In simple words, smart contract platforms operate similarly to mobile phones. They can run programs and provide access to various applications. The difference between these platforms and a regular computer is that they’re decentralized and distributed.
Instead of being managed by a single company, they’re hosted on multiple computers scattered worldwide. No singular entity controls the platform, which is an advantage, as no authority can decide what users can or can’t do. Plus, the fact that they’re hosted in multiple locations always allows them to be available.
Anyone can access the platform without permission, anytime and from anywhere. The platform is also permanent; no one can manipulate it. The platform’s decentralized nature also allows it to be completely transparent. Anyone can see every transaction on the platform and audit things when necessary.
Smart contract platforms have the potential to become world computers and the fundamental infrastructure layer of a decentralized economy. This is why they’re also known as “Layer 1” platforms.
Types of Smart Contract Platforms
There are two types of smart contract platforms. Here’s more about them and some of the most popular examples.
Private Platforms
Private platforms are designed for specific organizations. Due to this rule, users accessing the platform require permission. They’re controlled platforms. Thus, participants must be someone other users know and have obtained authorization when joining.
Privacy may sound like a downside for some people. However, it can benefit others, especially those seeking higher platform privacy and confidentiality. Some popular private platform frameworks include Hyperledger, Nem, Monax, and Quorum.
Public Platforms
In contrast to private platforms, anyone can participate in and use public platforms without permission. These decentralized and transparent platforms offer the full potential of smart contracts for diverse business applications.
The most popular one is Ethereum, which was launched in 2013. It supports Solidity (JavaScript), which is quickly available for front-end developers, and has gathered a significant fan base.
Another popular platform is the Solana blockchain ecosystem, which is now known as the third-largest public platform. Many experts prefer Solana for its efficiency. It provides faster transactions due to the support for a low-level virtual machine and the use of C and Rust programming languages. It’s a perfect platform for developers aiming to take advantage of the Solana price with the economic opportunities on the public blockchain.
Why Smart Contract Platforms Appeal to Today’s Market
Smart contract platforms are terrible networks on their own. They run slow, don’t offer customer support, and require more resources than a centralized system. However, they have one advantage that no other network can offer: the ability to operate without the control of a centralized third-party. This advantage tackles various modern problems, and here are some of them.
Decentralizing Economy
When someone thinks of a particular industry, one or two brand names stand out from the rest. These big institutions tend to monopolize the economy and control the flow of the entire market. They’ve contributed significantly to the world but also caused problems. For a better comparison, see the table below.
| Centralized Economies | Decentralized Economies |
| The third party has significant control over the user’s assets. | Users have actual ownership of their assets due to the lack of intermediaries. |
| Centralized entities can abuse their power through censorship (blocking or limiting users’ access to specific platforms without clear reasons). | Blockchains are censorship-resistant, as no specific entity controls the platform. They are also permissionless, allowing any user with internet access to use them. |
| No privacy is offered with procedures like KYC, AML, and CFT that collect users’ personal information. | Platforms offer higher privacy where users won’t be required to share data to make transactions or access any part of the platform. |
| Big companies take profits from contributors (such as Spotify from artists) and control the share that contributors can gain from the platform. | Innovations allow contributors to sell directly to consumers, set prices, and get full profit without sharing with an intermediary. |
| Vulnerable to changes in regulations, hacks, service attacks, and government intervention. | Service disruptions are unlikely as the servers are hosted across multiple computers worldwide. Governments won’t have access to shut down sites. |
Real-World Applications
Smart contract platforms are relevant due to their innovative use of modern, trending technology, and their relevance in real-world cases has grown significantly. One of the industries that benefits most from these platforms is trade finance. Due to blockchain technology, over $20 million worth of savings were registered in 2022.
A significant amount of this number came from smart contracts. As they automate approval and clearing calculations, they simplify processes, making things move faster and complete without requiring too much effort.
Another industry that has been showing big implementations is gaming. NFTs, which rely on smart contracts, have been drawing the world’s attention for a while.
Blockchain in real estate helps with documentation rework and transaction integrations. The Republic of Georgia has been utilizing a blockchain-based land title registry. Now, more countries, like the United Arab Emirates, are following suit.
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