The rapid adoption of smart contracts is expected to help reduce cyber and legal risks, but will still require a watchful eye at times, says the World Economic Forum in a new report.
Smart contracts – self-executing agreements embedded in blockchain – offer the promise of seamless execution without human intervention. This has obvious benefits for businesses and the smart contracts market is projected to reach $73 billion by 2030, expanding at a compound annual growth rate (CAGR) of 82.2% as reported by Grand View Research.
However, the World Economic Forum noted that while the technology itself is positive, it will still require watchful eyes on the human element to stop bad actors or mistakes in contract drafting. ‘Smart contracts are highly dependent on the precision of their code and the security of the blockchain infrastructure they operate on,’ the group said.
‘Even minor flaws or oversights can lead to severe consequences such as unauthorised access, fund misappropriation or unintentional legal disputes. To enhance the security and reliability of smart contracts, adopting a multi-faceted approach is essential.’
The group added that normal verification tools are critical for checking the correctness of code before deployment. ‘Following established best practices and standards in smart contract development, along with comprehensive auditing processes, can further minimise vulnerabilities,’ it said.
‘Additionally, employing advanced encryption techniques and stringent access controls can safeguard sensitive contract data and transactions from malicious attacks. Implementing these measures can help mitigate technical risks and enhance the trustworthiness of smart contracts.’
Smart contracts on the BSV blockchain – the obvious choice
The original Bitcoin Protocol, launched in 2009, included Bitcoin Script, a versatile procedural language. This feature enabled users to create custom transaction types such as escrow transactions, multi-party signatures, third-party arbitration, and more. Additionally, Script supported complex scenarios like paid email or video streaming protocols with integrated micropayments, similar to IMAP or HLS.
Unfortunately, Bitcoin Script was misunderstood and subsequently disabled in Bitcoin’s early years due to early developers’ inability to fully grasp its potential. However, as Bitcoin’s popularity grew, developers exploring the source code sought to restore these scripting capabilities.
Diverging opinions among Bitcoin developers led to the formation of various factions within the Bitcoin community and the creation of new blockchains that promoted the idea of smart contracts. Despite their popularity, these blockchains, such as Ethereum, faced scalability issues and high transaction fees for basic functions, making many use cases impractical.
The resurgence of the original Bitcoin protocol through the BSV blockchain reintroduced Bitcoin Script in a scalable form. The 2020 Genesis upgrade reinstated these scripting capabilities, providing a platform for innovative applications.
Learn more about smart contracts on the BSV blockchain here.
