Blockchain and cryptocurrencies have been gaining popularity since 2009 when bitcoins first appeared on the market. Nobody knew back then how much it would change financial operations in the world and how many opportunities it would bring. Now there are hundreds of other cryptocurrencies on the market, and applying certain regulations is a necessity.

To start, the cryptocurrency market is now working with smart contracts. Etherscan states that 49% of all operations with ether are held with such contracts. If you’re about to invest your money in this branch, you should know more about smart contract development, its cost, and the decision-making process.

The Definition and Benefits of Smart Contracts

A smart contract is a program that facilitates and regulates transactions carried out with cryptocurrencies. There’s no need to engage third parties because smart contracts are a secure environment for all operations. The basic principle is quite easy to explain. Imagine that you have a contract written on paper – you’ll find a list of rules that two parties must follow. Smart contracts are the same, but written with code and executed automatically if all conditions are met.

With blockchain technology a certain part of the smart contract’s code is visible for everyone. Currently, most of the operations are carried out on the Ethereum blockchain, the second best known cryptocurrency in the world. In this case, a smart contract is built by developers using a language called Solidity. It’s quite similar to JavaScript; that’s why professional engineers have no difficulty working on the blockchain.

The Smart Contract’s Flow

Some researchers believe that smart contracts may replace humans who work in the legislative branch – this is how far coding can take financial operations. At the same time, changes on the market are not an easy thing for business owners. We’re going to help you figure out what to do next.

Things to Consider Before Building a Smart Contract

Blockchain is a hot topic right now, but there can be no rush when it comes to decisions that have a big impact on your business. This is what you have to think about.

The value a smart contract brings to your business

First, you need to evaluate the industry you’re working in. You may have a company that fully or partially relies on the blockchain market and operations within it. However, there are a bunch of other business spheres which have nothing to do with blockchain technologies just yet. Depending on the balance between blockchain and non-blockchain activities, you will decide whether you want to move forward with contracts.

Existing limitations

Despite the fact that smart contracts are the only way to regulate cryptocurrency transactions, you have to consider the limitations you will face when the work starts. The initial idea of the smart contract first appeared in 1994, but even two decades later it’s not perfect. Remember these three points:

Smart contracts become useful when your business or separate project is held in the digital environment. Keep in mind that blockchain is a decentralized system and has no legal regulations. If you feel that third parties are necessary for your work, choose another option.

Smart blockchain contracts are a program, and this program is not subjective. On the other hand, documents on paper may imply lots of negotiations and interpersonal communication. Decide what you need more.

Basically, a digital document is not a sophisticated thing where you can set intricate rules and conditions. It works according to the principle “if something, then something”, so there’s no place for complex solutions.

Outlined requirements

Before turning to smart contract developers, decide exactly what you want to achieve when you build a new program. For instance, you want to verify a financial transaction or exchange cryptocurrencies. Feel free to search for already existing projects, or explore the market in general to embrace the opportunities you can get in your situation.

Credible smart contract development company

Poor coding is the greatest risk when you choose the wrong development company. According to recent research, there are 34,200 potentially vulnerable smart contracts on the market. This huge number serves as a motivation for you to carefully look for the right development partner.

Developers who will create the document should have enough expertise in the blockchain sphere and a good knowledge of Solidity. But the process of smart contract development deserves a separate chapter, so here are more details for you.

Smart Contract Development Process

Let’s look at blockchain documentation from the developer’s perspective. Of course, this isn’t a tutorial on how to develop smart contracts, but rather some general information allowing you to understand step-by-step actions. You can also use this guide for picking the right technicians for your project.

1. Planning

Just like you did research to understand the goal of your project, the developer does his own research to gather the latest information on the smart contracts with similar purposes. The code is open-source and changes every day – that’s why catching up on the news is crucially important.

2. Development

Since you already know what security means in the blockchain, give developers some time to get to every detail of your smart contract right and set all the nuts and bolts in the right place.

3. Testing

They say that a ready-made smart contract is similar to a spacecraft – once it’s launched, there is no way back. In web development as we know it, any bug is a temporary thing and can be quickly squashed by a skilled technician. It’s not the same for smart contracts – they can’t be changed upon request. The final product should be fully armed and ready to meet any malware attacks. This is the main reason why there is so much talk around the security of smart contracts. At first, the developer checks the product via a local blockchain.

4. Deployment to a testnet

A testnet is another level of protection for a smart contract. Here developers can double check everything and play around with real cryptocurrencies to see whether a contract is ready or not. In the case of Ethereum, Robstens or Rinkeby are the testnets that can be used by the team you’ve hired. Here developers work with the testnet ether – they can get it for free on the platform.

5. Deployment to production

Your smart contract should go live only after all the necessary checks have been made. It is okay if the developers need some more time for testing – this will save you some gray hairs in the future. Once everything is ready, the contract is deployed to production; this is the last step of the process.

The Cost to Develop a Smart Contract

Now that you know more about the development process, you wont be surpirsed that the costs of smart contract development services are driven not only by perfect coding but also by testing. Catching bugs in this niche differs from popular software testing; it requires more skills which are quite new for the market.

Depending on the complexity of the work, the pricing for developing smart contracts varies widely. If you’re going to hire a team, expect that a simple contract costs around $7,000-$10,000. For big enterprises, expect to pay up to $45,000 for such documentation. But this number is not the limit – there are higher prices on the market although they’re still rare.

Also, you should do your own research on the Gas price for your transactions. Gas is a pricing system for all operations and transactions that are made within the Ethereum network. As of August 2018, 1 gas equals $5.06. For example, you have a contract already and within it, you pay 3 gas for a transaction. Now we know that it’s about $15.

Conclusion

Smart contracts are not a common thing for small and medium businesses yet, but the market moves with such speed that it’s necessary to know current updates. When you know how to develop a smart contract, blockchain stops looking like an unsafe place for investments. The only thing you’ll need is to hire professionals who help you avoid any slippery slopes.

Make one more step towards smart contract experts.

Contact Softmedialab team