Ethereum is a decentralized blockchain platform created by Vitalik Buterin and ethereum co founder Gavin Wood. It introduced the concept of smart contracts, self-executing contracts with the terms of the agreement written directly into code. Ethereum’s native cryptocurrency, Ether (ETH), fuels these contracts and is tradable on various exchanges.
Ethereum uses a proof-of-work consensus mechanism to validate transactions, securing the network by solving complex puzzles. This process, however, consumes a substantial amount of energy and faces scalability issues, often leading to high gas fees, which is the transaction fee on the network.
To address these challenges, Ethereum created 2.0, a major upgrade, was in progress. It aimed to transition Ethereum from proof-of-work to proof-of-stake, reducing energy consumption and improving scalability. The Beacon Chain, a PoS blockchain, was introduced to work in tandem with Ethereum.
Ethereum’s blockchain also hosts non-fungible tokens (NFTs), unique digital assets representing ownership of items, art, and collectibles. These tokens have gained popularity for their use cases, especially in the world of digital art and entertainment.
The Ethereum Foundation is a key organization overseeing the development and improvement of the Ethereum protocol. Ethereum Improvement Proposals (EIPs) are proposed changes to the Ethereum platform, and the community often debates their adoption.
The concept of replacing lawyers with Ethereum is related to the use of smart contracts. These contracts can automate and execute agreements, potentially streamlining certain legal processes. However, they are not a complete replacement for lawyers, particularly in complex legal matters that require interpretation and dispute resolution.
For current Ethereum prices, trading volumes, gas fees, and other specific data, you can check a reliable cryptocurrency data source, as these values are subject to rapid changes in the crypto market. Ethereum’s roadmap and the transition to Ethereum 2.0 represent the project’s ongoing efforts to address its scalability and environmental concerns while maintaining its position as a leading blockchain platform.
Ethereum is a decentralized blockchain that operates a smart contract. These contracts establish a peer-to-peer network that allows straight transactions between parties. Therefore, Ethereum’s straight transactions remove the need for a central authority.
It also provides a high level of intelligence that cannot be compared to conventional paper-based contracts. As a result, several companies are gradually embracing the blockchain-based contracts.
Many tech giants, online gambling platforms like Futureplay Casino, and industry leaders are implementing the ethereum blockchain technology into their businesses. The Ethereum blockchain smart contract offers easy solutions to several legal issues. This removes the need for third-party intermediaries like lawyers.
So what is the hype on Ethereum about, and could this blockchain eventually replace the need for lawyers? Let’s find out:
What is the Ethereum Smart Contract, and How Does It Work?
The Ethereum smart contract consists of a scripted language called “Solidity.” This is coded into a computer algorithm and transformed into bytecode by the Solidity compiler. The computer program allows blockchain operators to define terms and act on the blockchain data.
A smart contract is a trusted and direct form of agreement between parties. As a result, it is binding and eliminates the uncertainty of terms. It then self-executes when the parties involved in the contract fulfill the pre-defined conditions.
For example, consider an Ethereum smart contract between parties A and B about acquiring a building. The smart contract may specify that party A will acquire ownership of the structure after paying party B a specific amount of Ethereum.
This straightforward agreement does not require the involvement of third parties like a bank, an estate agent, or a lawyer. As a result, the commissions or fees that ought to be given to these third parties are avoided. Therefore, the agreement is complete when Party A pays Party B the specified amount in Ethereum. This corresponds to smart contracts taking effect immediately when the conditions of an agreement are satisfied.
From a legal perspective, a smart contract can be recognized as a type of contract. Therefore, all remedies provided under a typical contract would be available if any party violated the agreement.
Therefore, the smart contract is efficient, transparent, and immutable. It can also be implemented in transactional law, regulatory compliance, and litigation. This is why many believe that smart contracts could, with time, replace lawyers (traditional contracts).
Objects of Smart Contracts
Smart contracts on the Ethereum blockchain have evolved into one of the most transformative and revolutionary applications of blockchain technology. These self-executing contracts, first introduced by Ethereum’s co-founder Vitalik Buterin, have significantly reshaped the way we conduct and automate various processes across multiple industries. This article delves into the objects of smart contracts on Ethereum, exploring their functionality, Ethereum’s transition to a new consensus mechanism, and the implications for the broader market.
Ethereum, the world’s leading decentralized smart contract platform, has long been associated with a proof-of-work (PoW) consensus mechanism, similar to Bitcoin. However, in its quest for greater scalability, security, and environmental sustainability, Ethereum transitioned toward a proof-of-stake (PoS) model, known as Ethereum 2.0. This transition, which is still in progress as of my last knowledge update in January 2022, is set to have a profound impact on the entire Ethereum ecosystem.
Market capitalization is another critical metric in the world of cryptocurrencies. It represents the total value of a particular cryptocurrency, calculated by multiplying its current price by its circulating supply. The market cap of Ethereum was substantial and reflected its status as one of the largest cryptocurrencies by market value.
Ethereum addresses are an integral part of the ecosystem. These addresses serve as unique identifiers for participants in the network, allowing them to send, receive, and store ETH and other tokens on the Ethereum blockchain. These addresses are the foundation for interacting with Ethereum’s smart contract functionality.
Decentralized finance (DeFi) has been one of the most significant use cases for Ethereum’s smart contracts. DeFi applications leverage the capabilities of Ethereum to create decentralized lending, borrowing, trading, and asset management platforms. These platforms enable users to engage in financial activities without relying on traditional financial intermediaries.
The Ethereum smart contract has three essential features or elements known as objects. These objects are:
- The signatories to the proposed agreement: These are two or more parties involved in an agreement drafted in the smart contract. These parties show their agreement with the contract terms by signing their digital signatures.
- The subject of the agreement: This is the action or purpose of the contract.
- The specific terms of the contract: This involves a set of rules set by the parties. These terms often include each party’s responsibility (the expected action), rules, rewards, and penalties.
Smart contracts on Ethereum have the primary function of automating and executing predefined agreements without the need for intermediaries. These self-executing contracts are coded to perform specific actions when predetermined conditions are met. For example, a smart contract can facilitate a trustless exchange of assets, such as tokens or digital collectibles, between two parties. It can also automate complex processes like multi-signature wallets, decentralized applications, and even voting systems.
Ethereum’s total supply is an essential concept to understand. It refers to the maximum number of ETH that can ever be created. At the time of my last update, Ethereum operated on a PoW model with ongoing issuance, meaning new ETH was created as block rewards for miners. Ethereum’s transition to PoS, known as the “Ethereum merge,” is set to change this dynamics and reduce new ETH issuance.
The circulating supply, on the other hand, represents the amount of ETH that is actively in circulation and available for trading. It excludes ETH that might be locked in long-term holdings or inaccessible. Circulating supply plays a crucial role in market dynamics, affecting the liquidity and price of the cryptocurrency.
How Ethereum Impacts the Legal Profession
Ethereum (ETH) is starting to look like a disruptive force in the legal industry. This blockchain technology reduces the manual processes associated with certain traditional contracts in the legal sector.
The Ethereum-based contract is unalterable data that is cost-effective, accessible, and transparent. Being self-executing” means that traditional contracts and lawyers are excluded from the legal process. As a result, intellectual property owners can register trademarks, license property, and authenticate ownership rights.
This contract could also be applied to crowdfunding agreements, insurance premiums, and property transfers. In theory, this contracting process is quicker and cheaper to manage. So all parties involved can follow the contract’s progress through various stages.
These contracts aren’t mere digital versions of paper-based contracts. The smart contract can penalize the offending party when the agreement is breached. For instance, if Party B does not transfer the property title after receiving the agreed-upon payment from Party A, a smart contract may give a refund.
If a party violates the conditions of a traditional contract, the other party can sue that party in court to have the verdict upheld. However, with smart contracts, the offending party will be penalized automatically without needing a third authority.
Other legal fields where Ethereum can be utilized include:
Corporate Filings
Most law firms record various data, including transaction histories and corporate documents. However, this information is protected and secured with the blockchain-based smart contract. As a result, a corporate lawyer isn’t needed to carry out this legal process.
Property Rights
Before this time, land ownership was recorded locally, requiring lots of paper documentation. This paper documentation may be vulnerable to loss or fraud. However, with Ethereum, real estate sales can be tracked and finalized easily.
Contract Review
The need for contract review is reduced with Ethereum-based smart contracts. It’s because the terms of an agreement are directly coded into the contract, unlike traditional contracts. Therefore, lawyers aren’t required to review and draft new contracts. This shift in the role of lawyers indicates that a good portion of the work handled by lawyers may be automated.
Impact of Smart Contracts on Other Industries
Ethereum smart contracts are set to influence not just the legal field but several other industries. Here are industries that are already benefiting from the implementation of smart contracts.
Real Estate
Real estate owners and investors can make lots of money with smart contracts. When selling an apartment, homeowners do not need to follow up with brokers or agents. They can interact directly with the buyer thanks to the smart contract instead of hiring a middleman.
Once the house meets the standards of a potential buyer, the payment can go straight into the seller’s account. This way, parties involved will need to play their part as agreed on the contract before payments will be made.
Education System
The education system in the world can improve significantly with smart contracts. This technology can track educational materials used in institutions. It can also strengthen relationships between students and teachers.
Digital Identity
The problems of data misuse and identity theft will be eliminated by introducing smart contracts. This will be enforced by making KYCs mandatory before transactions take place. So by introducing smart contracts to digital identities, the overall security and privacy of these entities are protected.
Logistics
Supply chain and logistics businesses can be strengthened with the help of smart contracts. The system keeps track of all transactions while ensuring all parties uphold their parts of the deal. This increases trust and transparency in the sector.
Health Care System
Smart contracts in the health care system will help providers safely record and transfer patient data. Patients can also be given some rights to their data and choose to sell it to researchers if they wish.
Why Smart Contracts Are Considered Better Options Than Traditional Contracts
Blockchain-based smart contracts have proven to be quite beneficial compared to traditional ones. This explains its growing popularity among business owners.
The use of smart contracts ensures that both parties get what they want. And since the arrangements are virtually impossible to alter, all parties can rest easy, knowing that all agreements will be upheld.
Smart contracts are preferred over traditional contracts for many reasons. This includes:
- Efficiency: Ethereum smart contracts are much more efficient than drafting text-based contracts or agreements. They allow both parties to share contracts at any time without involving a legal team. Their simplicity allows for speedy execution, which conventional contracts cannot offer.
- Security: Smart contracts use high-level cryptography, which can hardly be penetrated. All documents and confidential information are safe from manipulation or hacking once they have been executed. Thanks to encryption technology and decentralization, all parties involved remain appeased.
- Lower Transaction Fees: With smart contracts, there are no third parties to carry out transactions. This saves business owners from paying legal and consultation fees. As a result, the services of consultants and agents are not required. So there’s an increase in resource management.
- Self-Sufficiency: Smart contracts are self-sufficient and execute automatically without delays. This gives the parties involved full control over the deal while guaranteeing transparency. As a result, no time is spent correcting errors that may occur when filling out documentation by hand.
- Real-time update of the contract: Unlike the traditional contract, you can get real-time updates on a proposed agreement. So parties involved would know when a proposed agreement or term was met.
Are Ethereum (ETH) Smart Contracts Legally Binding?
Yes, they are if the smart contract follows the basic features of contractual agreements. Simply put, a contract is an agreement between two parties to carry out or refrain from carrying out a specific responsibility. Therefore, for a smart contract to be legally binding, all parties must discuss and accept the terms of the agreement.
The agreement must be of either monetary or intangible value to each party. The terms of the contract must be identifiable and legal to enforce, too. The signatures of the parties, in this case, electronic signatures, must also be included in the smart contract. An Ethereum smart contract may be enforceable if it contains the above-mentioned properties.
Will Smart Contracts Replace Traditional Contracts?
Smart contracts may replace conventional agreements as long as businesses continue to utilize them. And without a doubt, the Ethereum smart contract will continually improve with technological advancement. Soon, virtually every nation, business, and industry may leave traditional contracts behind. So there’s a high possibility of smart contracts replacing traditional contracts in the future.
How are Smart Contracts Perceived Globally?
Smart contracts are gaining recognition in both the US and Europe. In Europe, the EU’s electronic signature law (eIDAS) has been implemented. This law embodies three tiers of recognized electronic signatures. They include the standard electronic signatures, the advanced electronic signatures, and the qualified electronic signatures.
For the qualified electronic signatures, the parties involved will undergo an identity verification procedure. They will also be required to go through other security measures, including encryption. Several protocols can be incorporated into smart contracts for easy adoption and enforcement.
How Smart Contracts Are Created
Since smart contracts are completely digital, they require the services of a blockchain expert to execute. Here are the steps involved in executing a smart contract:
- Join the Ethereum Network: Connecting to the Ethereum main network is necessary to set up a smart contract. You can achieve this by installing the MetaMask wallet using your Chrome browser and connecting to the Ethereum mainnet.
- Select a Test Network: Once you open the Metamask wallet, you’ll find a list of test networks available. Choose one that is convenient for testing the smart contract once you finish building it. The networks you’ll find are the Rinkeby Test Network, Kovan Test Network, and Robsten Test Network.
- Fund Your Wallet: When you are done creating your smart contract, you’ll need to fund your wallet. To proceed, go to “Deposit” and choose “Get Ether,” then proceed with the instructions. This will fund your wallet with Testnet ETH, which you’ll be using for the contract.
- Write Your Contract: To write your contract, the Remix contract is the best option due to its ease of use. You can use the editor in the Remix browser to begin.
- Create Your File Extension: After getting your Remix Browser, create a .sol extension file to make the file compatible. Then compile the smart contract code using the compiler on the browser to complete the contract.
- Deploy and Launch the Smart Contract: You may deploy the smart contract on the test Ethereum network. This can be done by selecting the deploy option in the Remix browser. Once this is done, the contract address will be provided to you. Then you can proceed to launch the contract on the Ethereum main net.
Conclusion
Ethereum (ETH), without a doubt, is changing the way contracts are executed. We have several articles on the adoption and benefits of cryptocurrencies on Futureplay News. This blockchain poses a shift in technological change. And this is bigger than anything the legal industry has ever experienced in the last few decades. As discussed above, Ethereum can be utilized to more effectively and cheaply resolve a range of legal issues.
Smart contracts on the entire network have introduced a paradigm shift in how we conduct and automate various processes. Ethereum’s ongoing transition to Ethereum 2.0, the ability to buy and trade Ethereum, its market cap, market capitalization, and its role in DeFi all contribute to its prominence in the blockchain space. Smart contracts’ ability to automate processes, execute predefined agreements, and the concept of circulating supply and total supply are essential aspects to grasp in order to appreciate Ethereum’s significance and potential impact on the broader market.
For those interested in participating in Ethereum, the process begins with buying Ethereum (ETH). ETH, Ethereum’s native cryptocurrency, serves as the fuel for executing smart contracts and facilitating transactions on the network. Ethereum’s price, like most cryptocurrencies, can be highly volatile, with fluctuations driven by various factors, including market sentiment and adoption. At the time of writing, Ethereum today price was approximately $1,300, but it is essential to check the live ethereum price before you buy ethereum or make any investment decisions.
Also, the demand for some traditional legal services may decline as a result. To avoid falling behind in this evolving world, lawyers need to stay current. Adopting Ethereum’s smart contract in back-office operations is one approach to go about it.
