Unleashing the Future: Extreme Scenarios of How Smart Contracts Will Alter the Course of History
As we plunge headlong into the twenty-first century, an era hallmarked by rapid technological change, we’re constantly challenged to reevaluate and reimagine traditional systems. One such system, as integral to our society as it is ripe for disruption, is the contract system. Inherited from our forebears, it remains a slow, labor-intensive, and often opaque process. However, with the advent of blockchain technology, we’re on the cusp of a significant overhaul: the rise of smart contracts. These digital, self-executing agreements promise not only to streamline and secure transactions but also to revolutionize our industries and society at large.
From real-time tax collection systems to decentralized autonomous vehicles, smart contracts offer a glimpse into a future where trust is algorithmically guaranteed, bureaucracy is slashed, and transactions are seamless. In this column, we explore the potential of smart contracts, delving into a few provocative scenarios where they could be game-changers.
20 Groundbreaking Applications of Smart Contracts
As we cast our gaze into the not-so-distant future, a landscape laden with the potential of smart contracts emerges. These self-executing pieces of code, underpinned by the immutable nature of blockchain technology, promise to rewrite the rules of trust, intermediation, and enforcement.
1. Automated Inheritance and Will Execution:
In case of an individual’s death, smart contracts could be used to automatically execute wills, distributing assets without needing an executor or a legal process, thereby reducing disputes and legal costs.
EXAMPLE: Let’s begin with a will execution scenario, where Wilson Charles, a family patriarch, has passed away, leaving behind an extensive portfolio of assets. This includes multiple houses, cars, securities, shares in various companies, and a vacation home in Vail, CO. He has four children, Donnie, Arne, Beth, and Tiffany, eighteen grandchildren, and a lifelong commitment to three charities.
Wilson, being forward-thinking, had put in place a smart contract for the execution of his will. This smart contract, a self-executing contract with the terms of Wilson’s, will directly be written into code, and is stored on the blockchain. The smart contract was created with the help of a legal expert and a blockchain programmer to ensure the legal validity and proper execution of the contract.
Upon Wilson’s death, the smart contract is automatically triggered. The contract was designed to confirm Wilson’s passing through reliable external data sources, such as government death registry APIs which are integrated into the blockchain network. This confirmation starts the execution of the smart contract, which follows the instructions encoded in it.
Firstly, Wilson’s various assets are distributed to his four children as specified. The smart contract automatically transfers the ownership of the houses and the vacation home in Vail, CO, to Donnie and Arne. The shares in the companies and securities are split among all four children, with the smart contract interacting with the securities registry and the various companies’ shareholder registries to update the ownership.
The cars are divided among the grandchildren, with the smart contract accessing the DMV database to change the registration of each vehicle to its new owner. The smart contract also allocates a specific portion of Wilson’s estate to each grandchild, directly transferring these funds to their respective digital wallets.
Lastly, Wilson’s commitments to the three charities he believed in are fulfilled. A specific sum is transferred from Wilson’s digital wallet to the wallets of these organizations. Since the transaction is recorded on the blockchain, it’s transparent, and the charities can confirm they received the donations.
As you can see from this scenario, the smart contract has automated the entire process of executing Wilson’s will, reducing the time, cost, and potential disputes that might have arisen in its absence. The use of blockchain technology ensures transparency, security, and immutable record-keeping, making the process reliable and efficient.
2. Decentralized Autonomous Organizations (DAOs):
Entire organizations could be run on smart contracts, with decision-making processes, revenue distribution, task assignment, and more all codified into immutable contracts. This could eliminate managerial overhead and allow truly decentralized businesses.
3. Digital Identity Verification:
Smart contracts could be used for identity verification systems, replacing traditional methods. Upon confirmation of an individual’s identity, a smart contract could automatically grant access to secure systems, documents, or services.
4. Automated Supply Chains:
Smart contracts could track goods from raw materials to finished product, automatically triggering payments and shipping processes once certain conditions are met and providing unprecedented levels of transparency.
5. Decentralized Energy Grids:
In a peer-to-peer energy network, smart contracts could automatically buy and sell surplus energy between households, effectively decentralizing the energy grid.
6. Real-Time Insurance Payouts:
Insurance claims could be processed in real-time, with smart contracts verifying claim conditions and automatically disbursing payouts, reducing fraud and increasing efficiency.
7. Smart Property:
Property, such as homes or vehicles, could be tokenized and controlled via smart contracts. Access could be granted or revoked automatically based on payment, eliminating the need for physical keys.
8. Decentralized Autonomous Vehicles:
Smart contracts could govern self-driving cars, handling everything from fare payments to insurance, maintenance scheduling, and conflict resolution in case of accidents.
EXAMPLE: Driverless Rides, a pioneering company in the field of autonomous transportation, operates a fleet of 2,300 self-driving vehicles spread across 13 states, providing services to over 2 million people annually. The operation of these vehicles and the transactions involved are managed by a complex network of smart contracts, making Driverless Rides a truly decentralized autonomous vehicle company.
Each vehicle in the Driverless Rides fleet is not just an autonomous entity in the physical sense but also in the digital world. Every car is essentially a ‘node’ in the blockchain network, operating based on a set of rules defined by smart contracts. These smart contracts govern everything from fare calculations and payments to maintenance schedules and accident response protocols.
When a user books a ride through the Driverless Rides app, a smart contract is triggered. The contract interacts with the GPS data of the vehicles and the user, selecting the most appropriate vehicle based on factors like proximity, traffic, and the vehicle’s current state of charge. Once the vehicle is selected, the ride details are sent to the user and the car.
The fare for the journey is pre-determined by the smart contract, using real-time data like distance, current demand, and local regulations. The user pays the fare in a digital currency, and the payment is held in escrow by the smart contract until the journey is completed.
During the journey, the vehicle’s sensors continuously feed data into the smart contract. This data includes information about the vehicle’s speed, route compliance, and any unexpected incidents. If the vehicle is involved in an accident, the smart contract automatically triggers the insurance claim process, using the sensor data as an irrefutable record of the incident.
After the ride is completed, the smart contract releases the payment to Driverless Rides, records the transaction on the blockchain, and updates the vehicle’s availability status. It also schedules any required maintenance based on the vehicle’s usage data.
In the case of Driverless Rides, smart contracts essentially act as the company’s decentralized management system. They ensure efficient and reliable operations, reduce the need for intermediaries, and provide an enhanced level of transparency and security for both the company and the users. This decentralized model of operation represents a paradigm shift in the transportation industry brought about by the convergence of autonomous vehicles and blockchain technology.
9. Personal Data Marketplaces:
Individuals could sell access to their personal data via smart contracts, with terms and conditions, such as the type of data and the duration of access, being enforced automatically.
10. Automated Clinical Trials:
In pharmaceutical research, smart contracts could manage patient consent, automatically collect and anonymize data, ensure compliance with trial protocols, and even distribute compensation, all while maintaining the privacy and security of patient data.
11. Automated Intellectual Property Rights Management:
Smart contracts can manage the sale, distribution, and usage of creative works, automatically ensuring creators receive their due royalties.
12. Decentralized Voting Systems:
Smart contracts could enable secure, transparent voting systems that automatically tally votes and prevent fraud, making elections more democratic and accessible.
EXAMPLE: Landis Marketing, a leading sports marketing agency, has taken an innovative approach to deciding the host city for the inaugural Pickle Ball Pickle Bowl Tournament. Rather than having the decision made by a select few in boardrooms, they have decided to democratize the process by conducting a global election. After a vigorous campaign, eight cities across the globe have thrown their hat into the ring, and it’s now up to the people of the world to choose the host city.
To ensure a fair, secure, and transparent election process, Landis Marketing has decided to leverage blockchain technology and use decentralized voting systems. The use of smart contracts in this scenario is set to revolutionize public voting, making it more inclusive, efficient, and trustworthy.
The process begins with voter registration. Individuals worldwide who wish to participate in the voting process must register their details on the decentralized voting platform developed by Landis Marketing. Once registered, each voter will receive a unique digital ID linked to their blockchain wallet.
As the voting period commences, each registered voter will receive a voting token in their blockchain wallet. This token is unique and non-transferable, ensuring one person, one vote. Voters can then cast their vote by sending their token to the blockchain address corresponding to their chosen city.
The use of smart contracts in this process ensures a high level of transparency and security. Once a vote is cast, it gets recorded on the blockchain, making it tamper-proof and auditable. The smart contract also automatically verifies each vote, checking it against the list of registered voters to ensure validity.
Throughout the voting period, the tally of votes remains visible to everyone, but the connection between voters and their votes is anonymous, maintaining voter privacy. The decentralization aspect of the process also ensures that no single entity has control over the voting data, preventing any potential manipulation.
Once the voting period ends, the smart contract automatically tallies the votes and announces the winning city. This instantaneous result calculation eliminates any waiting period or room for human error.
Through this innovative use of decentralized voting systems, Landis Marketing ensures a fair and transparent selection process for the Pickle Ball Pickle Bowl Tournament host city and positions itself as a pioneer in leveraging emerging technologies for democratized decision-making.
13. Automated Student Records and Certificates:Smart contracts can validate and store student records, automatically issuing certificates once certain criteria are met, reducing administrative burdens and fraud.
14. Decentralized Job Markets:Smart contracts could enable a decentralized job market where tasks are automatically assigned to qualified individuals who meet specific criteria, and payment is released upon task completion.
15. Sustainable Development Verification:Smart contracts can automatically verify that companies meet certain sustainability criteria, enabling transparent, decentralized sustainability certification systems.
16. Trustless Online Gambling:Online gambling could be entirely governed by smart contracts, ensuring fair games and automatic payout of winnings, eliminating the need for a trusted third party. EXAMPLE: Polychain Casinos, an innovative digital gaming company, has decided to disrupt the global online gambling industry by launching a trustless online gambling platform entirely powered by blockchain technology and smart contracts. This move aims to solve some of the most common challenges in the industry – including lack of transparency, trust issues, and delays in payout. First, every player interested in participating in Polychain’s online gambling platform must create a digital wallet that securely stores their cryptocurrency. This wallet acts as their unique identity on the platform and ensures the security of their funds. Once the wallet is set up, players can deposit funds into it, which are converted into Polychain’s unique gambling tokens. It’s important to note that Polychain’s platform is cryptocurrency-based, removing the need for traditional banking intermediaries and their associated delays and fees. The games on Polychain’s platform, whether they are card games, slots, or roulette, are powered by smart contracts. Each game is essentially a self-executing contract with the rules of the game, the payouts, and the odds coded into it. When a player places a bet, they are essentially interacting with the smart contract. The result of each game is determined by a random number generator built on blockchain technology, ensuring complete transparency and fairness. Once the game is over, the smart contract automatically executes the payment based on the game’s outcome. The winnings are instantly transferred to their digital wallet if the player wins. If the player loses, the bet amount is automatically assigned to Polychain. One of the most significant advantages of this approach is that it’s trustless, meaning players don’t have to trust the casino to be fair or to pay out their winnings. Everything is governed by code, and the blockchain’s transparency means that anyone can verify the games’ fairness and the payouts’ integrity. By launching this trustless online gambling platform, Polychain Casinos has not only removed the need for players to trust them but also significantly increased the speed and efficiency of payouts. This innovative approach could well be the future of online gambling, opening up the industry to a new wave of players who value transparency, fairness, and efficiency.
17. Automated Charity Donations:
Donations could be released to a charity only when specific, verifiable conditions are met, ensuring that funds are used as intended.
18. Decentralized Content Reward Systems:
Content creators could be rewarded automatically and transparently based on engagement metrics, ensuring fair compensation.
19. Transparent Public Budget Management:
Governments could use smart contracts to manage public budgets, automatically distributing funds when certain conditions are met, improving transparency and reducing corruption.
20. Real-Time Tax Collection:
Governments could use smart contracts to automatically collect taxes at the moment of a transaction, reducing tax evasion and increasing efficiency.
EXAMPLE: In response to the increasing complexity of the traditional tax system, the government has decided to implement a groundbreaking solution: a real-time tax collection system leveraging blockchain technology and smart contracts. This system, known as “Transparent Transaction Taxation” (TTT), aims to make the taxation process virtually invisible and painless for taxpayers, all while ensuring the fair implementation of taxes.
The TTT system assigns a unique digital identity to each individual and corporation. These digital identities are linked to their financial transactions and securely stored on a blockchain network, providing transparency and maintaining the integrity and privacy of data.
The novel aspect of this system is the shift from income tax to transaction tax. Rather than manually filing income tax returns annually, the TTT system automatically calculates and collects a small tax on each financial transaction in real-time, making the process mostly invisible and painless.
A smart contract is activated every time a financial transaction occurs, be it a paycheck deposit, a stock trade, a property sale, or a business transaction. This smart contract – a self-executing contract with the agreement terms directly written into the code – automatically computes the transaction tax based on the pre-set tax rules and regulations.
The calculated tax is immediately deducted from the transaction amount and transferred to the government’s account, making the process seamless and efficient. This approach reduces the administrative burden for taxpayers and provides the government with a steady, real-time stream of revenue.
In this system, the tax burden is fairly distributed across all transactions, mitigating the common criticisms of income tax systems, such as the perceived unfairness in tax rates between different income brackets. It also significantly reduces the possibility of tax evasion, as every transaction is automatically recorded and taxed.
Moreover, the TTT system provides taxpayers a user-friendly dashboard linked to their digital identity. This enables them to easily track their tax payments and understand their financial obligations, promoting transparency and better financial management.
With the implementation of the TTT system, the government effectively eliminates the traditional, time-consuming, and often intrusive process of income tax filing. Instead, it offers a more streamlined, efficient, and equitable approach to taxation, harnessing the power of emerging technologies to revolutionize a crucial societal process. This innovation in taxation could potentially become the norm in the future, setting a new standard for tax systems worldwide.
As we’ve illustrated with these examples, smart contracts have the potential to usher in a new era of efficiency, transparency, and trust. Whether it’s through automating will execution or managing an entire fleet of autonomous vehicles, the possibilities seem boundless. As with any disruptive technology, there are undoubtedly challenges and potential pitfalls that we must navigate carefully. However, the benefits of smart contracts are compelling enough that they are undeniably, part of our future.
We stand on the precipice of a new paradigm, one where smart contracts can and will reshape the fabric of our digital society. The transition won’t be overnight, and it won’t be without its hurdles. But as we stare into the promise of this technologically augmented future, one thing is clear: the potential of smart contracts goes far beyond a mere upgrade of our current systems. They can rewrite the rulebook, shifting how we interact, transact, and trust.
The future is brimming with promise. As we unravel it thread by thread, our society will inevitably find new ways to adapt, evolve, and thrive. And in this dynamic tapestry, smart contracts are set to be a defining weave.