Looking at the nearest future in Africa where smart contracts take up the export/import trade system of sugarcane as a private manufacturer, a more deliberate act upon risk management is observed.
It is beneficial in all aspects of our daily activities such as enabling transparency, creating a more secure network, efficiency in carrying out contract agreements, low cost of transacting and fast means of carrying out responsibilities, Also summing up with a trust structure.
Although the state might come into this contract if not executed properly in a real-life setting. This new world method of transacting without a third party in between this system makes it reliable, accurate, and transparent unlike the traditional method of agreement.
Therefore smart contracts' impact on the economy increases with time.
What is a Smart Contract?
The general knowledge about
However, the processes involved are usually cumbersome and require a lot of time, money, and a lot of documented paperwork agreement.
Smart contracts are a digital form of a set of promises or performance encrypted using a mathematical matrix between two parties without a third party. These promises can be in exchange for another set of performances between the two parties, or a promise made in exchange for a performance.
In other words, it can also be a performance in exchange for a promise made, or a performance in exchange for a performance.
However you want the smart contract to be made, it involves two parties agreeing to a set of promises or performances without a centralized authority involved. For some persons who believe it is not a realistic system and is considered a dumb contract, its applications cannot be overemphasized.
Types of Smart Contracts
1. Smart Legal Contract
This is a more efficient legal system of the first world countries such as the United States, Canada, New Zealand, Australia, and Japan. Although a more expensive transaction cost of operation is most efficient in carrying out responsibilities.
A breach in the contract will result in legal action that will automatically activate the smart contract against the opposing party.
2. Decentralized Autonomous Organizations
These are communities known to have been in the blockchain ecosystem. Cryptocurrency in smart contracts involves the use of code and a set of mathematical rules in carrying out an agreement.
Each party is subject to a set of unanimous rules given in enforcing the task. Here the transaction cost is lowered and it is effective. Increase transparency and quick access.
3. Application Logic Contract (ALCs)
This type of contract makes use of the blockchain algorithm in connection to dApp. They communicate across different types of internet devices, which are applied in the managerial ecosystem for database encryption.
When a contract is multifunctional and can access any platform for a smart contract to be effective.
Which Country Uses Smart Contracts?
Most developing countries in Africa are unable to compete with the effective legal structure of the first-world countries, due to their failed system of governance. The relative resolution is the use of smart contracts in the blockchain ecosystem.
Here there is a trusted community that can decipher any malicious act without the involvement of a central authority.
Subsequently, this infrastructure in Africa served to replace a failed legal structure and reduce the transaction cost of the legal system, making it profitable for both parties.
In countries like South Africa and Ghana where smart contracts are linked to decentralized finance and dApps as a means to operational activities in the blockchain.
It is plausible to say that Africa is growing tremendously in using this method of transaction for their activities.
Although a great number of people are yet to have a mobile network for internet usage in these developing countries, it is surprising to know that between July 2020, and June 2021, cryptocurrency adoption in Africa grew to about 1200%.
The main Bitcoin economies in Africa include; Nigeria, Ghana, Botswana, Kenya, and South Africa.
Most people are beginning to gain trust in blockchain technology, hence smart contracts are inevitable shortly for the African continent.
Currently, the smart contract is more applicable in decentralized finance compared to the non-financial agreement between two companies or parties. An example is the insurance company adopting smart contracts, loans, investments, renting, and purchases.
Smart Contract in Blockchain Ecosystem
The
The blockchain that allows the use of this contract increases the value of the native currency swiftly unlike those that do not support the system.
In Africa crypto, token initiation by various companies has been embedded using this digital agreement. The inflation rate of these tokens or their volatility can place doubts in the minds of innovators on the best token to invest in.
However, this digital contract enables some sort of trust in blockchain technology.
Also, the minting of NFT is another valuable way of creating a smart contract which in turn enables you to make money.
The non-fungible token minted for instance could be set to a standard operational rule to enable a percentage of royalties given to the original owner in a sequel of transactions made for each token.
Conclusion
Smart contracts are of benefit in third world countries like in Africa where there is a failed legal structure and the high rate of transaction cost of the legal system hinders the activities of the average man to be transparent.
The blockchain infrastructure, however, enables an accurate method of secured transactions between two parties without the involvement of a third party or a centralized system.
Privacy is obtained effectively from this method of contract and it is of a low transaction cost for the common man in Africa.
This blockchain network serves as a trusted system that will enable easy and efficient methods of transaction. Africa’s involvement in the blockchain niche helps speed up the innovation processes taking place in the locality.