Ethereum smart contracts

Limitations

Creating a program on the blockchain requires a certain amount of professionalism from users. If a mistake is made in the code, the digital contract may hang or not work the way the author planned. There are other limitations as well:

• It is difficult to get random numbers or other uncertainty in the program. That’s why some participants manage to calculate lottery jackpots.
• The Ethereum smartcontract is slow, performing 3-5 operations per second.
• The program implements a small number of functions so that miners are able to repeat the actions and check the result.
• The terms of the digital contract cannot be adjusted. If the circumstances of the transaction change, they cannot be entered into the program. A new contract would need to be entered into.
• If the contract requires data that is not in the blockchain, there is a need for a trusted person or service to add information to the chain. For example, the current cryptocurrency exchange rate can be obtained from CoinMarketCap or another monitor.

The complexities of smart contracts are gradually being eliminated as we move from applications to their decentralized counterparts.

Benefits and applications

Digital contracts save a lot of time in business processes. It takes a few minutes to complete transactions. There is no need to visit different organizations and get references, just a couple of mouse clicks. Other pros of smart programs include:

• Security. The transaction record is stored in the blockchain. It cannot be changed or deleted.
• Absence of intermediaries. There is no need to engage a specialist who will act as a guarantor of the fulfillment of the terms of the agreement.
• Reliability. Unlike a paper document, a digital agreement cannot be lost or damaged.

Experts say: anything can be automated, but it will be expensive and pointless. It is reasonable to use the Etherium smart contract for typical operations, the result of which is easy to trace (logistics, provision of guarantees, license payments and others). There are many other applications of blockchain programs: investments, voting, notary public, lotteries, airline ticket sales, airplane refueling, and others.

Examples of smart contracts

Smart blockchain programs were created in 2015, but they began to be massively implemented only in 2020. Years of testing have shown that the use of digital contracts increases the transparency of business processes, reduces financial expenses and time costs. For example, Sberbank was the first in Russia to patent the conversion of repo transactions (sale of securities with an obligation to repurchase them within a certain period of time at a predetermined price) into smart contracts. Commerzbank and BASF use digital contracts for instant payment of suppliers. Russian Railways has started implementing Ethereum programs to automatically perform financial transactions in freight transportation.

In 2021, Nestle, Walmart, Mercedes Benz Cars, and by 2025 Russian Post are using ETH smart contracts to track supply chains.

ETH and ICOs

Ethereum smart software has gained immense popularity due to its massive use for investing in startups. In 2017-2018, ICOs raised about $14 billion, with the majority of tokens created and launched on the Etherium platform. In January 2017, the ETH rate was $8, and already in June the price of the coin reached $360. At the beginning of 2018, Ethereum cost $1360.

The standard scheme of crowdfunding (collective financing) is as follows:

1. Developers generate an idea that requires money to realize.
2. The project launches an ICO, accepting ethereum from investors and issuing tokens in return.

Fundraising is time-limited, which creates excitement among investors. At the peak of ICO popularity, amounts of $10-20 million could be raised within minutes or days. During the tokensale, the developers raised $35 million in 24 seconds. To get into the number of participants, investors paid up to $6600 per transaction.

Smart contracts fully automated the ICO. The program itself remembered from whom and how much money came, credited tokens and allowed participants to transfer or sell tokens. Thanks to the transparency of the blockchain, investors could see how many coins were issued and how they were distributed.

How to create a smart contract in Efirium

Personal programs on the Etherium network can be written in different languages. Most developers use Solidity. Creating a digital contract can be divided into 4 steps:

1. Opening a wallet in MetaMask (or any other that supports the Ethereum blockchain).
2. Selecting a test network.
3. Writing and compiling the code.
4. Launching and testing the program.

Preliminary settings

A prerequisite for writing code is the preparation of the development environment. First, you need to install tools for creating a private blockchain:

1. Download Ganache – a separate Ethereum test network.
2. Install the MetaMask browser extension.

After that, the user will have the option to register a new Ethereum cryptocurrency wallet or import an existing one. Some Ethereum will be required to deploy the digital contract on the network.

Writing and compiling the code

The program is handled at remix.ethereum.org. This is a convenient platform for all Etherium users to deploy and interact with contracts. Transaction participants can switch between accounts and invoke any functions of the program.

The Remix online editor contains a code compiler for the Solidity language. This is a tool for converting the original cipher into machine code that the computer understands. When you visit the page for the first time, the service downloads a sample code, it can be painlessly deleted and replaced by a contract program. The compiler first reads the source cipher and then begins to process it line by line, translating it into instructions for the Ethereum Virtual Machine (EVM).

Server startup

Further work moves to Ganache. The service checks the new blockchain and docks it with a previously created copy of the wallet. The developer’s procedure is as follows:

1. Unzip the previously saved MetaMask zip folder.
2. Open the index.html file.
3. In the upper right corner of the site change Network ETH to Add Custom Network/Node.
4. In the opened window insert the RPC Server data provided by Ganache. You can choose the name of the node yourself.

From now on, the local copy of MetaMask is connected to the test server.

Deploying a smart contract

Once the node is up and running, you need to connect Remix to the RPC address and load the digital contract. The algorithm of actions is as follows:

1. Open an account in MetaMask.
2. In the top navigation bar, click Contracts, select Deploy.
3. In the opened window insert the bytecode of the program from Remix IDE. The Gas Limit parameter is determined automatically.
4. Import an account to download the program by clicking the button at the bottom of the page.
5. Select 1 of 10 addresses issued by Ganache to interact with the contract. To do this, click on the icon next to the wallet number.
6. Copy the private key and paste it in the opened window.
7. Press Unlock, confirm the transaction.

You can check the processing of blocks in the Current Blocks section of the Ganache server: the indicator will change from 0 to 1. Now the digital contract is loaded into the local blockchain. After successful completion of the transaction, the wallet address will be visible on the right side of the Remix screen. At first, the tokens will be stored in the wallet of the program creator. To check the balance of ethers, you need to go to the MetaMask window, select “Add tokens”, enter the contract address and click “OK”.

Setting up interactions

For the full functioning of the personal blockchain, developers create applications that are able to communicate with it and supply data if necessary. Setting up interactions allows the participants of the transaction to perform any operations within the framework of the agreement. To do this, you need to:

1. In the MetaMask account, select Interact With Contract.
2. In the Contract Address field, insert data from Ganache (Transactions section).
3. In the ABI line add the corresponding information from Remix (Details).
4. Click Access.

If everything is done correctly, the Read/Write Contract section will appear on the screen, where you can select the functions written in the contract.

Testing

Before running the program, it should be tested. Even a minor error in the digital contract can have consequences. Individual mechanisms of the smart contract are tested:

• Electronic signature.
• Conditions for fulfillment of obligations.
• Sending of messages.
• Code and fixing its changes.
• The tools required to fulfill the contract.

To do this, it is necessary to simulate the conditions written in the program. For example, to test the increment function (transaction fulfillment), the developer goes to Read/Write Contract and clicks Write, agreeing to the transaction. A new getCount request brings up a 1 instead of a 0 and increases the number of transactions in Ganache. Other functions can be tested similarly.

Summary

While some companies are generating another folder of paper contracts, others are leasing cars and refueling airplanes in a few clicks. Smart contracts perform tasks ranging from selling tokens to managing decentralized organizations. Digital contracts can be created independently with basic programming skills. The community has already gained a lot of experience with EVMs, so it’s easy to find answers to all questions about running a personal blockchain online and in forums.

Frequently Asked Questions