How Smart Contracts Can Reduce Fraud And Aid In The Improvement Of Africa Poor Service Culture
How smart contracts can reduce fraud and aid in the improvement of Africa's poor service culture
It's understandable that if you're new to the world of blockchain technology and crypto asset management, the term "smart contracts" might seem a little intimidating at first. However, if "smart contracts" are the foundation upon which Defi will operate, or will invariably operate, it is necessary for everyone to be aware of what they are and why they are important.
Examining the history of smart contracts is one of the most effective ways to gain a better understanding of what they are. For many people, it is surprising to learn that the term "smart contracts" existed long before the creation of the world's first cryptocurrency, Bitcoin.
Origin of smart contracts
The concept of smart contracts was first discussed by Nick Szabo, a lawyer who also happened to be a computer scientist and cryptographer, in the early 1990s, decades before the generation that would become the primary adopters of this technology, the Generation Z, was even born.
Given the enormous popularity that blockchain and the technologies built on it, such as DeFi, now enjoy, it is reasonable to assume that these discussions did not resonate as strongly with the broader community at the time as they do now.
As a practicing lawyer, Nick Szabo was particularly concerned about the fact that contracts could only be enforced by traditional governments, resulting in them being both expensive and unreliable. As a result, he devised smart contracts with the goal of applying "evolved contract law and practice to the design of electronic commerce protocols between strangers on the Internet," as he puts it.
So, what exactly are smart contracts?
Smart contracts are pieces of code that exist on the blockchain. Do you remember what the blockchain was? Bitcoin, also known as the Bitcoin blockchain, is simply an electronic data storage method in which it is impossible to alter or even cheat the system.
The first thing you should know about "smart contracts" is that they are defined by three characteristics that you should be aware of. They are visible to everyone, which is the first of these benefits. Second, they are impenetrable to alteration or tampering of any kind. In addition, and perhaps most importantly, they have the capability of carrying out their own operations without the intervention of a third party, whether rogue or legitimate.
If I agree to send 1,000 satoshi to Mr Pinky Brain's wallet every day for ten days, the codes, also known as smart contracts, will be in charge of making sure that the agreement to send the coin is carried out without fail.
Aside from that, the smart contract makes certain that Mr Pinky follows through on his end of the bargain. Imagine that he is assigned to me in this case to assist me in the development of a digital robot army that is programmed to assist me in achieving global dominance.
Mr Pinky Brain will avoid the need to involve the courts in enforcing my compliance with my end of the bargain if we use a'smart contract,' as described above.
The smart contract's role is to act as an incorruptible judge and enforcing authority in the event of a disagreement.
"Smart contracts" have never been this straightforward, am I correct in assuming that? I am fully aware of the situation!
For the reasons stated above, we want to be able to incorporate specific contractual provisions or clauses into the hardware and software that we use today and that we will use in the not-too-distant future. This is the goal of the "smart contract" concept.
Consequently, contract breach is either impossible or prohibitively expensive for us to accomplish.
Fraud prevention and disrupting business
Summary: Smart contracts are computer-controlled transactions that are carried out without the involvement of a third party. All of the processes are automated, all of the transactions are traceable, and all of the transactions can easily be used as a replacement for legally binding contracts.
Smart contracts will be used to execute contracts in the future. The use cases – real-world applications – will change the way we do everything in Africa's extremely inefficient service culture, which will benefit everyone.
In my previous six years of professional experience, I've witnessed firsthand the unreliability of contractual agreements in Africa, from debt access to debt servicing and repayment, insurance provisions and investment returns.
With the widespread adoption of smart contracts on the blockchain, the financial services industry, including insurance companies, banks, and fintechs, stands to gain significantly in terms of revenue and profits.
Businesses that are not directly related to stem, such as those in the legal or asset management industries, will be completely disrupted as a result of its adoption and implementation.
The administration of wills after a person's death is an excellent illustration of this. When it comes to death in Africa, this is frequently a highly contentious issue that results in unnecessary deaths as well as time-consuming court appearances by parties interested in the deceased's inheritance.
Several cases have been reported in which families have challenged wills, resulting in protracted legal proceedings in which all parties involved expend a great deal of time and money on the cases.
All of these issues, on the other hand, can be avoided if the deceased executed a smart contract prior to his or her passing. Using a smart contract, the deceased can automate the process and complete execution without the need for the assistance of lawyers or notaries in the future.
For example, he or she could create a smart contract that would distribute his or her assets in the event of his or her death.
How Smart contracts work
In order to demonstrate that they are still alive and well, the deceased can configure the system so that every 30 or 60 days, he or she uploads a digital key to the blockchain.
If they do not enter the keys into the smart contract in the manner specified in the smart contract, the estate's assets are automatically distributed to the dependents or beneficiaries who have been designated in the smart contract.
The smart contract does nothing more than carry out the instructions provided by the estate's owner. We can avoid a story in the vein of Nollywood if we do it this way.
It's as simple as ABCD
The blockchain can also be used by financial services organizations to develop products, with smart contracts serving as both the backbone and executors. Users can borrow money in fiat currency or even cryptocurrency by pledging their coins as security. This has the immediate effect of reducing the number of default transactions recorded in their records.
Many financial services companies have gone bankrupt or been forced to close their doors as a result of nonperforming loans. Here are some examples: This is possible through the use of smart contracts, which are computer-generated agreements.
These loans are closely monitored, and the user is penalized if he or she fails to pay.
As a result, if the facility ceases to operate, users will lose their cryptocurrency or NFT ownership.
African governments require disruption in their operations in order to function properly. Smart contracts, I believe, will be used by the government to automate operations in the not-too-distant future, making it more efficient, reliable, and transparent. This is due to the fact that smart contracts allow for complete visibility into a decentralized blockchain network.
Moreover, smart contracts can be used by the government to conduct censuses, collect regional data, and conduct the mighty elections, which are frequently plagued by everything the blockchain is supposed to combat, from transparency to agency efficiency to speed and cost reduction, among other things.
With smart contracts, we can put an end to multiple duplications at polling stations, underage voting, and the wanton violence that has plagued the electoral process in Africa.
As a result of blockchain technology and smart contracts, the possibilities are virtually limitless, and the benefits to us in Africa are staggering.
The African Bitcoiner Ediri Asher Unoroh is a technology developer for Defi and Web3 applications. In his current position at Safi Africa, a cryptocurrency service and decentralized application platform, he is in charge of product development.
