Smart Contract Development Essentials
In this article, we dive into the world of smart contracts by discussing their benefits and development challenges. We give you a few tips on how to make a smart contract and provide you with a list of essential smart contract development tools.
What is a smart contract?
A smart contract is a program — a piece of code that helps regulate transactions with digital currencies and assets between parties. Similar to a traditional contract, a smart contract is a set of rules that define what must happen under specific circumstances.
However, a smart contract is created in such a way that execution of the contract occurs automatically when all conditions are met. If something goes wrong, the contract is terminated and no exchange of assets takes place. This algorithm protects the property of all parties involved, ensuring that no losses are incurred.
Smart contracts are based on blockchain technology, so the code describing a smart contract is completely transparent to all blockchain participants.
There is another important advantage to using smart contracts. Using a smart contract does not require recourse to a third party to ensure that all parties fulfill their contractual obligations.
But contracts aren’t always that simple. They can be complex and involve transactions in a variety of areas, such as premiums or crowdfunding (with the WeiFund app). Smart contracts have great potential to replace some of the functions that are currently performed by lawyers or notaries. As such, various industries will eventually have to adjust to keep up with the growth rate.
The benefits of smart contracts
There are several potential business benefits to using smart contracts.
- Cost efficiency: Smart contracts can automate business processes outside of an organization. This can help you eliminate many operating costs and save resources, including the staff needed to oversee the progress of complex processes.
- Processing speed: Smart contracts can increase the speed of business procedures that run across multiple enterprises.
- Autonomy: Smart contracts are automatically executed by the network and reduce the need for a third party to manage business-to-business transactions.
- Reliability: Smart contracts can also use blockchain ledgers and other distributed ledger technologies to maintain verifiable and unmodifiable records of all activities involved in complex processes. Additionally, they support automated transactions, eliminating the possibility of human error and ensuring accuracy in contract execution.
Challenges of smart contracts
There are many questions and concerns that need to be taken into account when planning a smart contract deployment.
Smart contracts secure key elements of business processes involving multiple parties. However, this technology is new, and hackers continue to find new attack surfaces that allow them to compromise the intentions of rule-making companies. In the early days of Ethereum, smart contract hackers managed to steal $50 million in crypto.
An oracle (a streaming data source that sends event updates) must guard against event spoofing hackers that trigger smart contracts to execute when they shouldn’t. It must be programmed to assess events accurately, which can be difficult for complex scenarios.
Smart contracts can speed up processes involving multiple parties. But this capability can also increase the damage that can occur when events get out of control, especially when there is no way to stop or correct unintended behavior. Gartner has noted that this creates scalability and manageability issues for smart contracts that have yet to be fully addressed.
Smart contracts are complex to implement and manage. They are often set up in such a way that they are difficult or impossible to change. While this may be considered a security benefit, parties can’t make any changes to a smart contract agreement or include new details without drawing up a new contract.
Essential tools and frameworks for smart contracts
Chainlink is a blockchain oracle. It is a device that allows your smart contracts to become hybrid smart contracts, which means that they include some components outside the network.
Now, in order to use any off-chain component (like data or external computing) to decentralize your smart contracts,you also need to decentralize that component, which is what the Chainlink network and tools are for. Most of the leading smart contract platforms offer hybrid smart contracts and use these oracles as a critical component of their infrastructure.
Remix is an open-source desktop and web application that is an integrated development environment (IDE) specialized in Ethereum mining. This makes Remix a great tool for Solidity smart contract development. The development environment features a fast development cycle with a rich set of useful plugins. Remix IDE is great not only for smart contract development but also for learning.
Since the Remix IDE specializes in Ethereum and smart contract development, the environment has several valuable tools that can be used throughout the entire development process. An example is the built-in compiler, which allows you to compile your contracts right in your development environment. You can also deploy contracts via Remix and test them directly. You can also customize the IDE with plugins according to your specific needs.
MetaMask is a tool that just about everyone in this space knows about or should know about.
The concept is simple, and MetaMask is great for testing things in the browser, which is a must for all frontend developers. MetaMask is a hot wallet that’s easy to use.
The problem with hot wallets, however, is that once your secret key is out, you’re screwed! Plus, they are always connected to the internet, so if someone gets access to your computer, you might be out of luck too.
The Gnosis Safe is known as a multisig wallet, which means it takes signatures to send a transaction. Thus, if one wallet is compromised, it doesn’t matter, as the attacker would need to compromise at least half of the key holders.
Gnosis Safe is a powerful tool for smart contract developers — especially for those who deal with large amounts of money and want to make sure their assets are safe. Many DAOs also use the Gnosis Safe to store their crypto. Additionally, Gnosis Safe integrates with many other DAO tools such as Snapshot for voting.
Things to consider when developing a smart contract
If you’ve decided it’s time for you to try out the benefits of smart contracts for yourself, there are a few things that you need to consider before you start.
Does it make sense for your business?
Because smart contracts are built on blockchain technology, digital currencies are used for payment. If your business is already connected to some kind of blockchain platform, the answer is simple. However, if you are working in a field where you have not yet encountered the blockchain, you should learn more about it before implementing smart contracts.
Find out the limitations of smart contracts
It’s time to delve into more details about smart contracts: in particular, their limitations. Smart contracts have come a long way since 1994, when they were invented. Yet there are still some constraints.
- Contracts can only apply to things that are done completely in the digital world. The entire blockchain system is decentralized and not regulated by law. Thus, any cases that require participation outside the network are not bound by these contracts.
- Smart contracts can only operate on the basis of facts. They rely exclusively on objective facts and not on the subjective judgments of the parties.
- Their execution is carried out in the form of “if-else” statements. This leaves little room for sophisticated variations.
Now that you have an idea of what you can and can’t do with a smart contract, you can adjust to those specifications. It’s important to understand exactly what you want the contract to do. You can create a contract to validate transactions, transfer payment for a service, perform a cryptocurrency exchange, and so on. To do this, you can study a similar contract that has already been created. You can also study the market in order to understand how smart contracts can be beneficial to you.
Choose a trustworthy developer
Deciding who will build your smart contract is of the utmost importance. Because smart contracts are based on the blockchain, they usually require at least some knowledge of blockchain development.
You need to look for someone who understands the blockchain and all that is connected with it. Put in some time and effort to find the person or team that fits your needs.
the most fundamental parts of any smart contract developer are language and experience.
Solidity is the language most used for developing smart contracts, and that’s not surprising. Solidity runs on most smart contract platforms such as Ethereum, Avalanche, Moonbeam, Polygon, and BSC. This is because most blockchains use the Ethereum Virtual Machine (EVM), which is what Solidity was created for. This language is actively maintained and has mass support.
Vyper is another language that is compatible with the EVM. This Python-based language is not as widely used as its sibling. However, if you like Python, you might want to try Vyper instead of Solidity.
With Rust, developers can deploy on networks such as Solana andTerra and create blockchains with Polkadot. Rust is a general-purpose, productive language that is used even outside of smart contracts; hence, other networks choose it. Rust is a good choice if you’re looking to take advantage of these promising blockchains.
Researchers from Singapore and the UK found that there are 34,200 smart contracts vulnerable to hacking. Thus, during and after the creation of your contract, it’s important to test it to ensure it can’t be exploited.
Any mistake in your contract can lead to a loss of your resources or your client’s money as well as a loss of reputation. Audits and quality control tests can help you create a successful smart contract that will bring great value to your business.
The value of smart contracts is undoubtedly high, as they’re necessary for the development of decentralized applications. They are an essential part of building a decentralized web filled with useful and revolutionary applications.
If you want to find out more about smart contract development or if you have any questions regarding this topic, contact Mobindustry for a free consultation.