To hear the experts talk about it, blockchain is the next greatest thing since sliced bread. And if growing investments in this technology are any indication, those experts are probably right. According to recent research, the global blockchain market is expected to be worth $20 billion by 2024.
Blockchain, which is essentially a decentralized peer-to-peer network database, is giving rise to smart contracts that automate processes in today’s digitally connected world. Leveraging blockchain technology, smart contracts consist of several nodes that store data for each transaction, making items available for review, negotiation, and eventually enabling the completion of the contract.
In a nutshell, the way this works is that the blockchain receives data and uses its software code to validate that certain pre-established contract conditions have been met. The system then triggers an action. Because smart contracts take the form of program code on the blockchain, they can be viewed by all authorized parties and all actions and files receive a time stamp that represents legal proof of existence.
Since blockchain is decentralized across countless servers with no single authority in control of the contents, the accuracy of smart contract documentation is assured. Many consider smart contracts to be largely forgery-proof.
In the case of public blockchain, smart contracts offer some major advantages, such as the fact that there is no central release point or that large computing power is not required. The contents of these smart contracts can be revised quickly by rewriting and uploading the program code. This makes the technology easy and cost-effective to implement in existing IT infrastructures.
Of course, smart contracts are only useful if the blockchain technology they are built on is reliable. When many conditions are defined in a contract, it is likely that some nodes of the blockchain will be in different systems. This creates tremendous complexity, putting greater stress on IT to ensure there is no failure. As blockchain systems are spread across multiple servers, it becomes far more challenging to pinpoint errors and ensure the stability of the technology.
In short, if the root cause of any problems are not quickly identified and mitigated, smart contracts can fail. Ensuring the functionality of the blockchain, and in turn, ensuring the viability of smart contracts, requires that monitoring mechanisms must be put in place. Disruptions can be avoided by using a holistic end-to-end view of packet and data streams, gateways, servers and the network to achieve service assurance. By taking such an approach, IT can more effectively detect and correct errors before they cause extensive harm to chain operations.
The future success and acceptance of smart contracts rests largely on the ability of blockchain operators to control all network interfaces and connected applications.
This blog is based on the article, Opportunities and Challenges of Smart Contracts, written by Dr. Martin Klapdor, Senior Solutions Architect for NETSCOUT, which was published at Funkschau.