Abstract
Innovation in smart contract systems helps to create decentralized payment systems. These developing concepts will be a new perspective to solve transparency issues. Smart contracts can prove all transactions and flow of funds and money between parties. Business deals and financial payment methods are expected to be a hybrid approach in both traditional and smart contracts in the future. Empirical analysis of smart agreements among their emerged platforms, different applications, and design views will enlighten future needs of trade payment methods. This chapter investigates the concept of smart contracts and critical issues for developing on financial payments environment. This research also aims to examine possible advantages of the application of smart contracts as innovation, legal, and technical aspects of the emerging business environment. The analysis will compare new mechanisms securing a block-chain applied to financial payments. This chapter also reviews the mechanisms of smart contracts and block-chain and focus on predicted future areas on the financial system.
TopLiterature Review
Smart contracts widely found in the literature along with the application area of blockchain technology. Lian Yu et al., (2017) stated that work processes are doing consist of operational processes and that these processes are related to contracts and regulations. They have evaluated the use of smart contracts to model, organize and implement these processes and to maintain a provable reliable data history. They stated that smart contracts are executable code that runs on the blockchain. The definition of smart contracts defined as “a collection of computer protocols that verify, enforce, or enforce contract negotiation or performance, by automatically implementing the contractor's conditions, reducing the transaction costs associated with the contract, and hoping to provide better assurance than traditional paper-based contract management.”
This study also emphasized that smart contracts operate on a blockchain supporting a digital currency and that they are used to build smart contracts, as an open source project which is called Ethereum. They pointed out that a smart contractor is mostly an automated device in the Ethereum blockchain that has an address and a balance and can send and receive transactions.
In the smart contracts at the base of the blockchain, there are a number of distributed authentication nodes that communicate and synchronize with each other over a high-speed peer-to-peer (P2P) network. There is a voting mechanism to keep each node consistent. In order to store the transaction states and save the results, the account block-chains are separated, and in case of a fault, there is a recovery mechanism to recover the transactions.
Key Terms in this Chapter
Bitcoin Platform: The Bitcoin platform is a publicly available blockchain platform that can be used to perform crypto-currency transactions, but with limited processing capability.
Ethereum Platform: It is a platform for writing customized smart contracts developed with the help of Turing-complete programming.
Smart Contract: A contract consisting of numerical computer code representing any entity or attribute data and properties.
Solidity Programming Language: Solidity programming language is a statically written programming language built for the development of smart contracts in the Ethereum Virtual Machine (EVM).
Ethereum Virtual Machine (EVM): Ethereum Virtual Machine (EVM) is a virtual machine written by Ethereum smart contracts.