Enterprise Digitalization and Blockchain-based Smart Contracts
It is necessary to understand the fundamentals of Ethereum Smart Contracts and digitalization to realize the importance and
impact of this technology. We can start by answering questions such as what is Blockchain? Why is it different? What is
Ethereum? And what are Smart Contracts?Blockchain
Blockchain is a decentralized, unchangeable, immutable database used for tracking transactions and assets in a network. It uses consensus algorithms that work in a distributed manner to securely validate and add new transactions onto the database and prevent bad ones. Bitcoin (BTC) and Ethereum (ETH) are among the pioneers, but many aspects make Ethereum different from Bitcoin.
Ethereum
The practical applications of the Ethereum blockchain ecosystem are not offered by Bitcoin, which provides more value and features for Ethereum users. The Ethereum ecosystem includes encoding possibilities to make self-executing Smart Contracts that communicate with other applications.
Smart Contracts
Smart Contracts are the conditions of an agreement, similar to any paper-based contract, with the terms carried out as code running on a blockchain, as opposed to traditional contracts. Smart Contracts send and receive money, without the involvement of any third party, by enabling secure automation and decentralization. Smart contracts also offer security, trustworthiness, and transparency because they operate on a Blockchain.
Various businesses are now considering the utilization of Ethereum-based Smart Contracts as they offer simpler transactions and increased security. The investments in Blockchain technology by the corporate and governmental sector grew 89% year on year in 2019.
Blockchain Technology in Business
A company can use Blockchain technology in various scenarios to boost its growth, such as using Ethereum in supply chain management. It connects suppliers, manufacturers, and distributors using a decentralized and transparent process; enables tracking of the origin and destination of tangible goods; and makes inventory management simpler.
There is widespread fraud in business and identifying the offenders is challenging due to the lack of transparency around the exchange of money and its final destination. However, Ethereum's Smart Contracts can effortlessly keep track of and record every transaction in business. The global food supply industry could save around $31 billion by 2024 by tracking food shipments using Blockchain technology, according to a Juniper Research study released in late 2019.
Criticism on Blockchain Technology
A primary criticism of Bitcoin and Ethereum blockchains is their astronomical energy consumption due to Proof of Work consensus. Ethereum recently moved to Proof of Stake consensus mechanism to validate and introduce new blocks resulting in a significant reduction in the energy requirement to add blocks and improving its feasibility for commercial applications.
Currently, many global and international businesses are utilizing the potential of Ethereum-based features to boost their operations and transactions. Amalto (now part of Sidetrade), a top data management business, uses enterprise blockchains to create a platform for order-to-cash (ticket-based) procedures for automation in the oil and gas sector. Amalto's former President and Founder Jean-Pierre Foehn said in an interview with The Fuse forum that “by leveraging blockchain for the exchange of B2B documents, we transform, we convert, and we validate, and as a result, supplier experience significant benefits, including quicker payment, cost reductions, and cash-flow management."
Travel business company Webjet is also using Blockchain to streamline the resolution of transaction disputes in the travel sector. The travel industry's biggest concern is its reservation conflicts. Webjet's Rezchain project will provide data reconciliation for the sector, powered by Enterprise Ethereum, which will enable a seamless flow of transactions immune to errors.
Figure 1. Weekly Ethereum Smart Contract Creations (Source: Dune.com)
The world of Blockchain, Ethereum, and Smart Contracts is like an ocean, and we have just started exploring the first few drops of this technology. The weekly Ethereum Smart Contracts creations have grown from low 100s in 2015 to more than hundred-thousands nowadays (See Figure 1), but there is still a lot of room for creativity, freedom, and innovation.
A primary criticism of Bitcoin and Ethereum blockchains is their astronomical energy consumption due to Proof of Work consensus. Ethereum recently moved to Proof of Stake consensus mechanism to validate and introduce new blocks resulting in a significant reduction in the energy requirement to add blocks and improving its feasibility for commercial applications.
Currently, many global and international businesses are utilizing the potential of Ethereum-based features to boost their operations and transactions. Amalto (now part of Sidetrade), a top data management business, uses enterprise blockchains to create a platform for order-to-cash (ticket-based) procedures for automation in the oil and gas sector. Amalto's former President and Founder Jean-Pierre Foehn said in an interview with The Fuse forum that “by leveraging blockchain for the exchange of B2B documents, we transform, we convert, and we validate, and as a result, supplier experience significant benefits, including quicker payment, cost reductions, and cash-flow management."
Travel business company Webjet is also using Blockchain to streamline the resolution of transaction disputes in the travel sector. The travel industry's biggest concern is its reservation conflicts. Webjet's Rezchain project will provide data reconciliation for the sector, powered by Enterprise Ethereum, which will enable a seamless flow of transactions immune to errors.
Figure 1. Weekly Ethereum Smart Contract Creations (Source: Dune.com)
The world of Blockchain, Ethereum, and Smart Contracts is like an ocean, and we have just started exploring the first few drops of this technology. The weekly Ethereum Smart Contracts creations have grown from low 100s in 2015 to more than hundred-thousands nowadays (See Figure 1), but there is still a lot of room for creativity, freedom, and innovation.