What are smart contracts and how do they work?
Smart contracts are self-executing digital contracts between the two or more sides (for example the buyer and the seller) in a transaction. In other words, they are a computer code that runs on a decentralised network and automatically executes all parts of an agreement. Whereas blockchain plays the role of a data storage and confirmation of a transaction that took place, smart contracts are used to execute the conditions that have been determined beforehand.
Smart contracts are a vital component of services that are based on the distributed ledger technology. Not only do smart contracts improve and secure transactions of assets, they also dismiss the need for a middleman. The self-sufficiency and lack of a third party makes them a very attractive feature associated with blockchain technology. Additionally, smart contracts play an important role in the cryptocurrency and digital tokens transference.
In some cases smart contracts execute the agreement due to external conditions (so outside of the blockchain they are stored on). A deterministic smart contract is a smart contract that does not require any information from outside the blockchain and a non-deterministic smart contract is a contract that depends on information from an external data feed to set things into motion. Such data feeds are called Oracles, and they play a vital role in providing blockchains with information that smart contracts may need for the execution of an agreement, as are used to retrieve and verify the required data with the help of tools such as web APIs or market data feeds.
How can smart contracts improve crowdfunding?
Let’s discuss how smart contracts influence the investment process on crowdfunding platforms in the most basic terms. First, investors put their funds into projects during the fundraising stage. The money is then secured by smart contracts and only after the campaign is successful (so when the agreement meets the predetermined conditions) the funds are given to the creators for project realization. In case the project fails to meet its objective — the funds are automatically given back to the investors.
More ways crowdfunding platforms can benefit from the introduction of smart contracts:
- automating the process of investment, funds allocation and withdrawal
- no middlemen — there is no need for a third party involvement
- increased transparency — the investors know exactly what happens to their funds when fundraising is successful or if it does not reach its goal
- improved safety and credibility — encryption ensures that all documents are protected from any kind of interference
- secure data storage — all the documents are stored digitally on blockchain, and the distributed ledger technology allows to secure and backup the data and therefore removes the risk of data loss
- reliability — smart contracts are much more foolproof due to the elimination of manual filling of numerous forms typical to traditional contracts
- distributed assets — no physical parties are in control of the allocated funds; the output of your contract is validated by everyone on the network
- immutability — once a smart contract is created it cannot be changed, so investors know exactly what is going to happen to their capital
- speed and efficiency — smart contracts work as automated computer codes, which helps to significantly increase the time efficiency and save hours upon hours on drawing up agreements
In the future smart contracts will be able to improve crowdfunding even further. Rapid advancement of blockchain technology will allow social-based platforms to take the form of Decentralised Organizations (DO) or perhaps even Decentralized Autonomous Organizations (DAO). In a more distant future we might even come to witness a creation of more complex organizations that, thanks to blockchain and advanced use of smart contracts, will provide credibility in the areas lacking in it, in order to reduce human interference to a minimum. Using an advanced software executing an open source code is a good and more credible alternative to putting blind confidence in people who tend to be prone to errors and slip-ups.
Tecra Space is one of the pioneers in this area. In a few years we all might find yourself witnessing a true digital transformation. Now is the perfect time to create an account on app.tecra.space to avoid missing out on the many opportunities coming your way.
Smart contracts on Tecra Space platform
2021 will undoubtedly be a busy year in Tecra’s headquarters, and one of the most major plans is the introduction of smart contracts to Tecra Space. Smart contracts are an important milestone on Tecra’s roadmap and their implementation is currently estimated to take place in July 2021.
The main goals our platform wants to achieve through blockchain are more traceability, transparency and credibility. Smart contracts will be used to generate Space Tokens and in the future they will help to ensure the investment process on our crowdfunding platform is secure and transparent by automatizing agreements between investors and project creators. Safety on Tecra Space is achieved thanks to our blockchain solution adjusted especially for the financial transaction system and serves as the basis for proper work of the smart contracts and tokenization processes. The implementation of smart contracts and tokenization based on blockchain technology will ensure the clarity of property rights and the identity of the patent owner. Moreover, smart contracts are vital to build a blockchain-based crowdfunding platform with a high transaction volume.
Smart contracts will also be linked to other products of Tecra — such as digital wallets and the web interface of Tecra platform — thus ensuring a well-working and self-sufficient ecosystem of various functionalities.
Tecra’s developers and researchers are hard at work to find solutions that will further improve the functioning and benefits of smart contracts. The technology has potential to be used for much more than to simply serve as a record and an agreement of asset transactions. Smart contracts could also be used to implement a voting system, a token distribution and generating tokens without the requirement of a specialized knowledge and programming skills. One of the biggest novelties Tecra’s developers are working on is a smart contract generator, which will further automatize and speed up the process of creating smart contracts.
We cannot wait to share more with you once smart contracts will have been introduced to our crowdfunding platform. We are very excited about what is to come and have high hopes that, with the use of smart contracts, Tecra Space will become a unique and trustworthy place for our investors.
Visit tecra.space and find out more!