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INN4SCIENCE BLOG

INN4SCIENCE BLOG

Blockchain

How to Create a Smart Contract: Prices and Process

how to create smart contract

What are Smart Contracts?

Pieces of code integrated into the blockchain, which control financial and asset operations between its parties that are based on certain events, without any outside control, are smart contracts. Essentially, these are simply contracts that not only describe the required actions under outlines circumstances but also execute them. To build a smart contract is often the best solution for those seeking to control and perform the operations in a provable, privacy-friendly, secure and transparent manner.

The majority of the smart contracts are implemented on the Ethereum blockchain using its own Solidity language, based on JavaScript, but recently more and more smart contract development services turn their heads towards other Turing-complete blockchains (EOSIO, NEO), and their corresponding languages, that are also purposed for smart contract development, and are based on languages of broader functionality, like Java or C++.

Smart contracts can be of any complexity. It can be a small application that triggers once by some event (a certain date, for example) and sends out assets to specific addresses (often used for faucets or airdrops). At the same time, smart contracts can also be complex blockchain-based software suites, often working with risk management (Deloitte), collection and processing of large amounts of 3rd party data (AXA Fizzy), sophisticated financial calculations (WeiFund), and so on.

How Smart Contracts Can Change Your Business?

smart contract development process

In most cases, companies build smart contract applications for the features that already exist in the form of a standard centralized application, with an ultimate goal to bring cheaper operation, trustfulness, reliability and speed of decentralized blockchain-based applications. Sure enough, an well-established smart contract development company can bring even more into the contract, based on their hands-on expertise.

Advantages

Data Security

First, it’s about data security. Blockchain has a great way to compare, proof and save lots of kinds of data without actually storing them anywhere at all. This is one of the most considerable advantages of blockchain: instead of the data, in most cases, anyone who creates a smart contract, can store the hash of this data, and compare hashes as a measure of provability, in the future.

As for the smart contracts, they provide the comprehensive security for both data and assets, as they fully rely on the immutable information stored in the blockchain, and can trigger actions automatically, without any manual input. This way, smart contracts guarantee the precise following to the contract terms and provide all necessary actions automatically, without any possibilities to perform harmful actions, trigger fraud transactions or scam any other contract’s party. Possibly harmful functionality, for example, backdoors, can’t be added to a smart contract, as at the moment of publication its source code becomes available for everyone, and any discrepancies can be easily found by a public or third-party audit before the parties start to use this contract.

Embedding Trust

Utilizing smart contracts has a significant advantage of the blockchain: any action, made by the smart contract, is verifiable and traceable, without any hassle at all. Any contracting party can verify any transaction, hence any backdoors or fooling are impossible. The contract will perform exactly as it is written. Smart contracts discard middlemen and embed trust between the parties.

Operating Cost-Efficiency

Because the smart contracts are based on the blockchain, neither those who run them nor the developers need costly server infrastructure, data input points, or employees to manage them. The blockchain works on its own thanks to millions of other people who work with it, on your company’s holidays, nights and weekends. Of course, there are commissions, but they are paid only if your smart contract actually does anything. Hence, your contract operation will be absolutely free if it’s in standby. If you use traditional server infrastructure, it would require electricity, cooling, and maintenance even if it would wait for outside actions and do nothing.

Decentralization

Once you’ve launched your application to the distributed ledger, it’s literally everywhere in the world. If you need to add new modules to your smart contract infrastructure or connect new machines, you don’t need to download terabytes of excessive data or large complicated databases. Once connected, it will be ready to work right away. This is also helpful in case of unforeseen circumstances, as nothing influences the work of your program, be it fire, flood, or absence of electricity.

Disadvantages

develop smart contract

Human Aspect in Development

The immutability of blockchain has its own disadvantage: once you’ve uploaded a smart contract, it will work foreverIf you detect an error in its operation, you will need to implement and set it all up from scratch, and the new smart contracts will most probably lose all the old data. Enterprises that know how to create smart contracts in the blockchain, always insist on modularity and excessive testing. Thankfully, all major blockchains have test networks for that. A test net is actually a copy of the main blockchain with a free operation. They don’t support big amounts of operations and data, but they do behave like the main network, which offers an excellent testing environment for the smart contract in the development. For Ethereum, there is an official test net, but there are also unofficial community-powered test nets, like Rinkeby or Ropsten. EOS also has test nets, such as Jungle or CryptoKylin.

Regulatory Status

In general, as of now, blockchain is good for calculations and actions within a company, or a group of companies, but is not supported as an official proof or contract carrier in the most jurisdictions. However, there is a strong movement towards embracing blockchain on the official level. Although there are some government applications, like e-Estonia, they still are used within one organization with rights to access given to other bodies. Currently, only Swiss law is starting to recognize smart contracts as a lawful way of contracting between private bodies, but other countries are also on their way to follow the study.

High Maintenance in Terms of the Engineering Expertise

Although the blockchain is spreading over the world more and more, there is not a lot of software developers who know how to make a smart contract, still. Solidity’s syntax by itself is clearly understandable to coders with a JavaScript background, but it has lots of differences that change some concepts completely. For example, unlike JavaScript, Solidity doesn’t work with time and time signatures. These simply don’t exist in the Ethereum ecosystem. Instead, the block height must be used, which can be converted back and forth into a time variable, but very approximate. The difference between the time calculated from the block height and the real timestamp of operation can be up to a day.

Also, people who create a smart contract, can’t rely on the net speed. While the most modern blockchains can work with a speed of a few blocks per second, this is still will be much slower, than with almost instant server-based calculations, and any smart contract development company understands it.

Industries Where Smart Contracts are Used

Blockchain is widely used in logistics (Maersk, DHL), supply chain (IBM Blockchain, Provenance), healthcare (Chronicled, Hashed Health), gambling and lotteries (FunFair, Edgeless, Etheroll), insurance (Lloyd’s, RSK, Safe Share), personal data security (Civic, Sum&Substance), automotive industry (Discoperi), financial technology (SALT Lending, MinexSystems), and much more. Lots of current projects combine several fields of knowledge to provide special automated and trustful features.

For example, the French tourism holding AXA has built a smart contract for automatic compensation for the flight delays. For the passenger, this system takes a small fee and some necessary personal information to prove that the flight has been taken, and pays out the insurance in case the flight is delayed for two hours or more.

From a technical point of view, it is a smart contract, that collects user payments, hashes the information, and using an oracle, connected to the international flight database, traces the delayed flights, and makes the payouts automatically. The encrypted personal information can be used to prevent getting compensation by the passenger through any other service, without storing it directly. If a check is needed, the same set of information will be encrypted, and the hashes compared.

How to Make a Smart Contract for Your Business?

blockchain smart contracts development

The approach of a company wanting to create a smart contract doesn’t differ much from the approach of building any specialized piece of software. Firstly, the enterprise will need to get a smart contract development provider: either to hire an in-house team of blockchain developers or to select a smart contract development company.

  1. Product roadmap. On this stage, the requirements for the project and its development are outlined. Which features will be present, how it will look like, what should the operating cost be, for how long should it be in development and testing?
  2. Architecture. The developers select the blockchain, upon which to build a smart contract, design its modules to provide extendability and scalability and in the future, design the off-chain parts, such as the interfaces, output modules, and oracles. The developers will understand here, that the process of building any kind of software doesn’t vary much from how is it to make a smart contract at this stage.
  3. Development. In small iterations, the coders build the smart contract and all infrastructure around it, bit by bit, and test everything in parallel. The test nets are here to help: every aspect of the software complex can be tested without costly implementation in the crowded main network.
  4. Deployment. When all the previous stages are ready, the smart contract is deployed on the main net. After which it is launched and will work forever. Later on, all the contract’s actions will be stored in the distributed ledger, and all the data processed by contract will be impossible to modify.

As a rule, after the contract is up and running, the coders are continuing working with the contract owner, by supporting, training and supervising the smart contract. If it is the in-house use by a company, updates are possible, and the programmers create a smart contract version with bug fixes and implement it again, disregarding the previous version at all. If the contract is public for anyone (like ICO, decentralized exchange, mutual credit contract), the promotion work will be required to make sure that the whole public starts to work with a renewed contract.

How Much Does it Cost?

The knowledge of how to create smart contracts in blockchain is comparably new, so it definitely raises the development cost a bit. However, thanks to the trends, use of common programming languages and the possibility of re-using the already developed parts of the code, the prices are constantly going down. This being said, the full development cycle of a crowdfunding or ICO smart contract costs start at $3500, while 2 years ago it would cost you over $10,000. For comparison, standard funding applications with all legal specifics and fiat payment system, which will perform about the same things, will cost well over $100,000, will take up to a year in development, and will drain lots of funds for its support once running.

The hourly rates for a developer in 2019, regardless of if they know how to build smart contracts, varies from $40 for juniors to $200 for superior system architects. The other things to should be taken into consideration are the blockchain developers’ high ability to re-utilize the code, and the low after-launch support and direct operational expenses.

Leave it to the Experts

All in all, one article is not enough to explain how to build smart contracts in blockchain. Even if you have general awareness and theoretical knowledge, hands-on portfolio of building smart contracts is already half of success. And this is an crucial criteria for the developer’s background for us, at Inn4Science.

If you are willing to drastically change your business processes using smart contracts and are searching for experienced coders in this field, do not hesitate to contact us today.

DO YOU HAVE ANY QUESTIONS?

LET'S DISCUSS! BOOK A CONSULTATION WITH OUR SPECIALIST


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