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An Overview of Smart Contract and Use Cases in Blockchain Technology

Conference Paper · October 2018

DOI: 10.1109/ICCCNT.2018.8494045

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 IEEE - 43488

An Overview of Smart Contract and Use cases in

Blockchain Technology
Bhabendu Kumar Mohanta Soumyashree S Panda Debasish Jena
IIIT Bhubaneswar IIIT Bhubaneswar IIIT Bhubaneswar
Odisha,India 751003 Odisha,India 751003 Odisha,India 751003
C116004@iiit-bh.ac.in C117011@iiit-bh.ac.in debasish@iiit-bh.ac.in

Abstract—In the last decade blockchain technology become

mainstream research topic because of its decentralized, peer to
peer transaction, distributed consensus, and anonymity proper-
ties. The blockchain technology overshadows regulatory problem
and technical challenges. A smart contract is a set of programs
which are self-verifying ,self-executing and tamper resistant.
Smart contract with the integration of blockchain technology
capable of doing a task in real time with low cost and provide a
greater degree of security. This paper firstly, explains the various
components and working principle of smart contract. Secondly,
identify and analyse the various use cases of smart contract
along with the advantage of using smart contract in blockchain
application. Lastly, the paper concludes with challenges lie in Fig. 1. A basic blockdiagram of Blockchain [3]
implementing smart contract the future real-life scenario.
Index Terms—Smart Contract,Blockchain,Event
Driven,Distributed II. BACKGROUND STUDY AND RELATED WORK
A smart contract is a computer program having self-
verifying, self-executing, tamper-resistant properties. The
I. INTRODUCTION smart contract concept was proposed by Nick Szabo in 1994
[5]. It allows executing code without the third parties. A smart
In the year 2008,Satoshi Nakamoto explain peer to peer contract consists of the value, address, functions, and state [6].
cash transaction without the centralized system [1].Till date It takes transaction as a input, executes the corresponding code
1639 different cryptocurrency available in the digital currency and triggers the output events. Depending upon the function
market. The growth of cryptocurrency is changing rapidly. logic implementation states are changes. Since 2008 when
Bitcoin being the first as well the mostly capture market share blockchain technology come into existence through Bitcoin
[2].Blockchain technology concept derived from initial Bitcoin cryptocurrency. The importance of smart contract integration
transaction system. A blockchain is a digital ledger which store of blockchain technology become a focus area to develop
transaction publicly after verifies the transaction by nodes. because it give peer to peer transaction and database can be
The basic structure of the blockchain technology is shown maintained publicly in a secure way in a trustful environment.
in this figure [1]. Each transaction is validated by the nodes Smart contracts are trackable and irreversible. All the transac-
and transactions are secured by cryptography hash function. tion information are present in a smart contract and it executes
A transaction is link by their previous transaction hash value. automatically. The programming language Solidity is used to
Once transaction added to the blockchain no one can modify implement the smart contract in various blockchain platforms.
or alter it, but that transaction can be view openly which bring Some characterizes of a smart contract are:
transparency to the system. Blockchain uses some of the proof • Smart contract are machine readable code run on
of concept and proof of work as well as proof of stake concept blockchain platform
to validate the transaction. • Smart contracts are part of one application program
A smart contract is a computer program consists of a set of • Smart contracts are event driven program
rules run on the blockchain [4].With the rise of blockchain • Smart contracts are autonomous once created no need to
technology in the last decade which shows it has many monitor
application areas. The integration of blockchain technology • Smart contracts are distributed
and smart contract give lots of flexibility to develop and design Solidity is a high level language used to implement smart
as well as implement some of the real world problems in less contracts.Developing blockchian platform of solidity are
cost and time without involves of traditional third party based Ethereum,ErisDB,Zeppelin and Counterparty.
system. The work by Tatsuya Sato and Yosuke Himura in [8]design

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 IEEE - 43488

Fig. 2. A basic structure of Smart Contract [5]

an operation based smart contract in a permission blockchain Fig. 3. Different use cases of smart contract
and execution of these services is considered as unified and
synchronized way. In [9], Hiroki Watanabe et.al explains
the smart contract in digital right management application regarding the property can be stored in the blockchain and
and proposed consensus method. Ahmed Kosba et.al in [10] anyone belonging to that network can access those information
proposed a Hawk which provides a new way to write a smart but they cannot change it. In this way you can find a buyer
contract in a cryptographically secure way. Joshua Ellul and for your property without the need of any third party. For a
Gordon J. Pace in [11] explain virtual machine AlkylVM to wide range of potential applications, blockchain-based smart
create a smart contract in Internet of Things application. The contracts could offer a number of benefits:
authors in [12] and [13] explain about the smart contracts • Speed and real-time updates.
execution process and some security issue.Similarly Authors • Accuracy.
in [14], [15] and [16] described the financial uses of smart • Lower execution risk.
contracts.The authors in [17] and [18] online detection of • Fewer intermediaries.
effective call back and scalable issue of smart contracts are • Lower cost.
explained. From the study of various article related to smart • New business or operational models.
contracts ,we found most of these are have security issues and
are implemented on financial domain. IV. USES CASES
Our contributions are: A smart contract is pieces of a program executed in
• We analyze the smart contract properties and working blockchain system that uses consensus protocol to run a
principle. sequence of events. A smart contract can be used different filed
• We Identify 7 different Important use case of smart to eliminate the third party transaction as well as automate the
contract enable blockchain application. system. In this work, we have identified 7 different use cases
• We design and proposed the architecture of 7 different of smart contract and blockchain based application shown in
smart contract enable blockchain application. Figure [3]. The various type of application area of blockchain
technologies already discussed [19].
III. WORKING PRINCIPLE OF SMART CONTRACT
The concept of smart concept was introduced by Nick Szabo A. Supply Chain
in the year 1994, who defined it as a computerized transaction The supply chain management system is consists of the
protocol that executes the term of a contract. According to different level of the transaction. Each level consists of some
him, the contractual clauses (collateral, bonding, delineation term and condition. Multiple systems are engaged in supply
of property rights, etc.) should be encoded and embedded in chain system. The various sector of supply chain systems like
the required hardware and software. This helps to minimize food processing system, transport sector, shipment system. In
the requirement of any trusted third party for communication all these case digital ledger database makes a system more
using smart contracts and at the same time makes the system transparent, reliable and most importantly without third party
secure against any malicious attack. In case of blockchain involvement. Blockchain system makes supply chain sector
based smart contracts, contracts are nothing but scripts residing more reliable and trustful, everything is present in open system
on the blockchain, which has the ability to execute them. in a distributed manner. If a smart contract is used along with
One can trigger a transaction to a smart contract by using the the blockchain system like shown in Figure [4] then system
unique addresses assigned to it by the blockchain technology. become autonomous as well as secure .some smart conditions
Let us take an example to better understand the working of are needed to developed in the form of program and put into
smart contracts. Suppose you want to sale your house or rent the blockchain system whenever any transaction occurs these
your apartment to someone, then you can simply deploy a smart contract will be executed.The verification and validation
smart contract in an existing blockchain network. Information are done by the blockchain nodes. If conditions are agreed

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 IEEE - 43488

Fig. 4. A Smart contract based Supply chain system Fig. 5. A Smart contract based Healthcare system

by the network node then smart contract events are triggered.

Finally, a transaction is recorded into the blockchain system.
Making supply chains more transparent via smart contracts is
helping to smooth out the movement of goods and restore trust
in trade.
B. Internet of Things
The internet of Things is one of the promising areas of
research. The IoT devices are resource constraint device hav-
ing less memory power as well as less processing power. The
number of IoT devices connected to the different application
are already cross the number of total population of the world
as mention by CISCO report. Blockchain technology-based
smart home, smart city, smart transportation, smart monitoring
of environment application are already some research being
done. If smart contract concept integrates with the blockchain Fig. 6. A Smart contract based Insurance system
system then IoT become more autonomous.
C. Healthcare System
royalties go to actual recipients by using ownership right in
With the technology growing fasting human living standard blockchain system.
also growing fastly. The using recently developed devices
and supporting technology human can monitoring his or her E. Insurance
health condition in sitting home. There are lots of devices Traditional insurance system takes very long time process
are already developed to read different attributes in human a claim. There is much ambiguity arises between different
body. These data can be collected using low-end device and stakeholder during processing. A smart contract-based system
processing locally to get quick information [20]. Blockchain can streamline the process and using blockchain technology
technology helps to maintain the privacy of the patients and everything can be made transparent as well as system secure
maintained data in digital ledger format. A smart contract without third-party intervention. whenever smart contract exe-
can be used in that system to make the system more reliable cute successfully it trigger the corresponding events the details
and automated. Using Smart contract human can write some shown in Figure[6].
term and condition which could be applied once data are
F. Financial System
collected. Then it will execute these smart contracts and trigger
corresponding events.the details is shown in Figure[5]. Blockchain technology invented by Bitcoin cryptocurrency
system, initially used for the financial system only. Traditional
D. Digital Right Management banking system involves a third party to transfer money from
Digital right industry involves multiple parties to create an one account to another account. But in blockchain system, it is
event. The percentage of payment and copyright is one of the a peer to peer transaction and no central storage is used. Using
issues arises. Using smart contract-based system guarantee that smart contract and blockchain technology financial sector can

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 IEEE - 43488

be beneficial.but still, a lot of research needs to be done in [12] Dickerson, T., Gazzillo, P., Herlihy, M., Koskinen, E. (2018). How to
this sector to implement the smart contract. add concurrency to smart contracts. BULLETIN OF THE EUROPEAN
ASSOCIATION FOR THEORETICAL COMPUTER SCIENCE, (124),
22-33.
G. Real Estate [13] Cruz, J. P., Kaji, Y., Yanai, N. (2018). RBAC-SC: Role-Based Access
Control Using Smart Contract. IEEE Access, 6, 12240-12251.
Real estate system in the traditional way of involves lots of [14] Gatteschi, V., Lamberti, F., Demartini, C., Pranteda, C., Santamara, V.
risks as well as time taking. It also passes through different (2018). Blockchain and Smart Contracts for Insurance: Is the Technology
Mature Enough?. Future Internet, 10(2), 20.
stages of legal action are also need to lot of paper signings [15] Chen, T., Li, Z., Zhou, H., Chen, J., Luo, X., Li, X., Zhang, X. (2018,
as well as manual verification of the documents. Blockchain May). Towards saving money in using smart contracts. In Proceedings of
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and Emerging Results (pp. 81-84). ACM.
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allow buying as well as sell properties without the third party. S., Speed, C. (2018, April). GeoCoin: Supporting Ideation and Collab-
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where everyone can see. N., Sagiv, M., Zohar, Y. (2017). Online detection of effectively callback
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V. CONCLUSION ACM on Programming Languages, 2(POPL), 48.
[18] Gao, Z., Xu, L., Chen, L., Shah, N., Lu, Y., Shi, W. (2017, December).
Research point of view smart contract is still in early stages. Scalable blockchain based smart contract execution. In Parallel and Dis-
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automatic, deterministic program unit to process various mod-
ules in a certain way and trigger the corresponding events.
The smart contract taxonomy and architecture workflow are
discussed clearly in this paper. Finally, 7 different application
areas are considered as the use case of smart contract. Each of
these application areas is discussed benefit of Smart contract.
In future work, we would try to implement these application
areas in term of blockchain Smart contract.

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