The Power of Smart Contracts

In today's livestream I'll be talking in depth about one of the most amazing (and mostly ignored) technologies for businesses of all sizes - smart contracts. I'll be giving practical examples, talking about real use cases, pros and contras. This is something every entrepreneur should be learning about.

Fore more informaion, please visit https://greenlight.digital/networking/the-power-of-smart-contracts/

Hey, hello, welcome one more day one more live stream here on LinkedIn one more soliloquy from a very secluded soapbox. Hi, I’m Dennis Lewis, I appreciate you being here. And today we’ve got a really great topic to talk about. It is something that I am passionate about it something that you as an entrepreneur must know about. And yeah, I’m just really excited to be able to share with you today and talk to you about smart contracts. Okay. This is, you know, literally one of the most powerful technologies that almost nobody even is talking about except in the blockchain community and even still, they’re there they’re there.

They’re not you know, they’re not the main focus people talk about crypto they talk about you know, the markets, they talk about blockchain technology as a, you know, as a as a distributed ledger. They talk about distributed applications. They Talk about lots of things. But smart contracts, which are one of the most amazing, most powerful, you know, innovations that blockchain has to offer, often get kind of lost in the shuffle. So today we’re going to talk specifically about smart contracts. And we’re going to talk about, you know, how they apply to your business how, how they can, you know, I’m going to give you examples, we’re going to talk about, you know, just the absolute power of this technology. And it all starts with a concept very, very important, called trust. Okay, and I’m just gonna ask you a direct question today as an entrepreneur, have you ever taken a loss because someone reneged on their word, they didn’t do what they said they were going to do. They didn’t pay what they say it said they were going to pay they didn’t. You know, they didn’t deliver what they said they work in the deliver. You know, if you can’t raise your hand and honestly say, yeah, it’s That’s happened to me many, many times, then you’re not an entrepreneur, because that’s just a reality of being in business. It happens. Okay. But what we’re going to talk about today about smart contracts can go a very long way towards resolving this very fundamental problem of trust when we’re doing business. So that is the key thing I want you to keep in mind.

This is, I’m sure, it’s sophisticated tech, I’ll grant you that we’ll talk about the pros and the cons that contrast the pros and the cons. But the the true power of this is that it really goes right to the core of one of businesses most critical problems and that is, you know, will keep people keep their word, will they deliver what was promised, will they pay what was promised? So let’s, let’s jump into this and talk about it and Let me start off just by talking about the this pyramid of blockchain technology so that you guys understand a little bit better what we’re talking about. So the very basis of blockchain is a decentralized a global decentralized ledger, okay? It’s a fancy bookkeeping system. It’s a way of keeping track of transactions, okay? I mean, literally, that’s it, you know, wallet, a account a sins X amount to account B. And the power of that is that there’s no centralized server, so there’s nothing to be hacked. It is immutable forever. Once a transaction is committed to the blockchain, nobody’s getting rid of it. It can’t be in amazingly secure because of that.

And there is uh, you know, and it’s very fast. I mean, compared to you know, you Compared to other ways of moving money, it is very fast. Okay. And it costs the same amount to send $1 as it does to send a billion dollars okay. Very, very powerful. On top of that are what we are cryptocurrencies. Okay. And cryptocurrencies were basically invented to reward the the people who give their computing resources to the network to keep the blockchain up to date. Okay? Imagine this, the blockchain is maintained by millions of computers all over the world, and they’re all connected, right? They’re all connected over the internet. And they work together to keep track of the transactions, okay? And, you know, that costs money, it costs it costs, it costs electricity, it costs power, it costs computing power, right. So you Whenever blockchain was invented, there was the question was, well, why would all these computers do this? What do they get out of it? And so they created this thing called cryptocurrency, which is a digital money. And that is kept track of on the blockchain and the computers that mine is called mining, the computers that actually, you know, keep track of the transactions, they they’re rewarded with cryptocurrencies, and in the beginning that were worthless, that nobody really knew what they were good for. But it as a proof of concept, it started working.

And you know, Bitcoin was one of the first ones, you know, and liquid is now today it’s, you know, trading at over 70 $200 per Bitcoin and it started off at a fractions of a penny, you know, okay. So that’s cryptocurrency. That’s the next level up, the third level up and we’re going to talk about that today are smart contracts. And smart contracts are enforced business process. It’s their algorithms that do business. Okay, so think about it like this and we’re going to talk more about this obviously. But, you know, think about being able to create a computer program that actually does that actually handles transactions does transaction doesn’t just handle them. Okay? So think about it this way. You have an accounting system, right? You have an accounting system in your in your business and that’s where you keep track of your of all your, you know, your accounts receivable, your payables, your payroll, whatever. That keeps track. That’s the blockchain level, okay? But it doesn’t actually do anything, right. If your accounting system doesn’t do payroll until you go and tell it to and say pay payroll. Right. Well smart contract is much more sophisticated than that it can actually do stuff. And then on top of smart contracts are what we call distributed applications.

So they’re fully functional distributed applications that live on the blockchain. So you could have a fully functional er p system built on the blockchain that would actually interact with with your business partners, for example. Okay, let’s keep going. Let’s get in there. And let’s, let’s talk about some examples. And let’s let’s really, you know, dive into what this means because I just listening to me talk isn’t going to be okay. But remember, smart contracts are going to change business, this is changing business and it is going to change business a lot more. So as an entrepreneur, you need to know about it. This is a, this is a wave, a big wave. I’m not gonna say it’s a tsunami. It is a big wave that is coming fast. And you can either surf it and write it too, you know, and have Fun and get a, you know get you know be a hero or you can crash and wipe out and get drowned by sharks. Okay, but the wave is coming. So with that, you know, let’s smart contracts are a whole new business mechanism. Okay? Yeah let’s let’s think about this Okay. One they have a life of their own once they’re deployed on the blockchain smart contracts, they can theoretically do their job forever as long as that blockchain exists in it and as long as it’s alive that smart contract will do what it was programmed to do, okay. They can move money. So most business applications can only move data. A smart trying track can actually initiate real transactions, okay.

They have, you know, what we call unchangeable reliability if pre determined kitchen conditions are met the outcome is certain. You know, there’s no recurring reneging. There’s no tampering, if there’s nothing can be you can’t, you can’t fiddle with it. Okay? Once you deploy a smart contract for good or bad, it will do what you programmed it to do. So, remember, they are a business algorithm that’s deployed onto the blockchain network. And they actually do stuff on the on on the network all by themselves, okay, they you don’t have to, once you deploy them, you don’t have to do anything else. Okay. Let’s do an example. Let’s talk about a very simple joint venture. Okay. And this is about Bob and Mary and they decided to collaborate. Here they are Bob on the left Mary on the right there, and Dave, they’re going to help Anna. Okay, they’re going to do a service for him, and Bob is going to get 60% and Mary’s going to get 40% That’s, I’m sorry, I should have done it the other way around. But in this case, that’s the that’s what they’ve agreed on. Okay. So here’s the deal. You know, the way it works is Anna pays the smart contract. Automatically, Bob receives his share and Mary receives her share. There’s no uncertainty, there’s no delays, there’s no disputes. This is that this is maybe one of the most simplest types of of a of a smart contract. Okay. And that pays Bob and Mary get their share. Okay. It’s really simple, but it’s also really, really powerful. Okay, think about this.

How many times you know, normally, you know, Anna would pay Bob and Bob would have to send Mary her her share, and what can happen Bob can be a jerk and not pay, okay? Or he can say, you know, Mary, you know, I don’t think you did really as much as you said. You were going to Do and then there’s a dispute and there’s back and forth and and you know, it just becomes a problem with the smart contract it is immutable, okay, if anatase both Bob and Mary get paid and that is a done deal, okay? Just think about that in your business in your just just how many times you’ve been in sort of that situation and the security that that gives you. Okay, that’s just the tip of the iceberg. So let’s go a little bit farther. Let’s think about an investment plan. Let’s create greenlight investments. Okay. And, you know, the way we’re going to set this up is that each partner in the fund is going to receive tokens, okay. So some digital tokens corresponding to the percentage that of the fund that they are. Okay, so, every time a new partner comes into the fund, they’re in the smart contract issues, the new tokens and greenlight my company, at least set it up. We receive a fixed percent as a management fee. Okay? This is a bit more complicated because now there are multiple partners in this thing. They’re people that come in, you know, a partner could sell his his tokens to somebody else and now they’re split now there, then you know that that’s okay, too.

So let’s think about what happens when quarterly dividends come through. So all the profits are automatically deposited into the fund smart contract. Okay. Whatever it is that we’re doing, we set up so every time every quarter the funds profits are deposited into the smart contract. greenlight gets their fee automatically. And then each partner receives their share of profits based on the number of tokens that they have and in that moment, okay, so if they’ve done Send some to somebody else then that somebody else is going to get their share, okay? And it all happens without human intervention. Okay, there is no need to have somebody you know building a spreadsheet and calculating percentages and keeping up to date the each partners percentage and, and then doing transfers and wires and you know, all that stuff. This eliminates an enormous overhead of grunt work, you know, just administrative work, okay. And, you know, this is a simple but very powerful example of how you can take a smart contract and just completely make something that is a pain in the in the ass to say, just honestly to maintain and boom, it’s done. It’s deployed onto the onto the blockchain and it happens every time exactly like it has to happen and there’s no you know, no partners can say, Hey, I didn’t get my share my calculation was wrong. My no it’s it’s it’s an algorithm that does it automatically.

Money come profits come in, everybody gets paid instantly. No, no, no, nothing more has to happen. Really cool stuff, right? Start thinking about processes in your business that are kind of similar that have, you know, have the same kind of complication in them and think about how you could use this. Okay, let’s go on. Let’s think about an escrow operation. Okay, let’s sell a house. Okay. Jane is selling her home to Bob. And Jane has a mortgage with big bank incorporate. And Bob has the obligation to cancel the mortgage before he can take ownership of the house, right. So how are we going to make this all simple? Well, we’re going to use a smart contract. That has a proof of ownership token is created on the blockchain and goes to Jane. So Jane now has a token that says, This is the deed to this house. Okay, I have it. It’s my house. I own the token, right? Okay. And Jane sends this token to the smart contract. Okay, now, the smart contract is is acting like an escrow. It owns the token, it now possesses the token for the house, Bob sends all the funds to the smart contract. The smart contract since the mortgage amount to big bank automatically, big bank confirms that it’s received. J receives the remaining funds, and Bob receives the ownership token pool all without human intervention, all without having to do anything else other than deploy the smart contract in the beginning.

Wow. You think about all the the The the steps that this normally takes in the real world, okay? And I personally know, companies that are working to do exactly this. Okay? So, you know, this is this isn’t science fiction, this is being done as we speak. Okay? This is, you know, the kind of revolutionary business process changes that smart contracts are going to bring about. So, let’s keep going. This one, I like to think about government budgets. Now let’s think about the the 2 trillion that’s gonna end up being four or $5 trillion surplus, you know, stimulus that we’re doing right now. Okay. Imagine that. The budget for that was put onto the blockchain and every transaction was registered. So every time a small business got alone, it was recorded on the blockchain every time You know, somebody in the White House stuck their thumb in the in the in the pot to pull out a cookie in the cookie jar. It was recorded on the blockchain every time you know, big businesses, small businesses, you know, the every transaction that was sent to every citizen for their, you know, the the 1200 bucks that they that they can that they’re giving out. That was on the blockchain. Okay, first of all, think of how this could be so much simpler than what they’re doing right now. So much simpler. And then think about the transparency. Now think about how important it would be how great it would be that visible for all citizens.

Everybody can look at those transactions and say, Hmm, that looks like a sketchy deal. Maybe that money that went to some hotel owner shouldn’t have okay. I can check it, I can look, maybe there’s, you know, you could use forensics. And you could look for kickbacks and other fraudulent practices and you could look for loops and you know, money that goes from here to here, from A to B to C to A, you know, all those sorts of things that that kind of, you know, forensic accounting is much simpler if every transaction is on the blockchain, okay? This is something that isn’t, you know, the only obstacles right now are scale and political will. When I talk in these live streams about a new world and new rules, these are the kinds of new rules we need to be thinking about. This is how this this can reduce fraud, it can reduce corruption, it can make things more efficient, it can reduce the need for so many, you know, bureaucrats in the middle of doing you know, accounting stuff because it can all be public. be visible, okay, and we could do this, you know, tomorrow if we if we really wanted to. And now that we’re all sitting at home and we’re all thinking about you know, how fragile society is and how, how close to the edge we become, okay and here I am under lockdown right now.

So, you know, I go when you go to the store you know, luckily that you know, things are okay there’s there’s food on the shelves, but it makes you think how how fragile it is. And why aren’t we thinking about new rules for World thinking about using smart contracts, thinking about making sure that our governments and our democracy responds back to us and answers back to us with being good custodians. Okay, so this is just a big example. Okay. Um, all right, some limitations. Let’s talk about some of the things limitations, okay. smart contracts can interact with the outside world. But it’s there are limitations there. It isn’t. You know, this blockchain doesn’t have eyes, it doesn’t have ears, it has to interact with something that is data oriented. So, yes, could it operate off of information from the stock market? Yes, it could, could it operate off information from, you know, unemployment or, you know, whatever, you know, it can interact with the outside world, but those interactions are still maybe not as mature as they should be. Okay. So, it’s a little bit complicated. They use something called Oracle’s. But, you know, there there is, that can be improved. These are computer programs still, okay? What does that mean? That means that you have to be Careful with them that they’re not you can’t. They’re not humanly readable right now, okay, most smart contracts are written in a programming language, they need to be written by a programmer, they need, you know, there are legibility issues that, that make this not as trivial as it as it might seem.

They need to be verified, okay? Like I said, once they’re deployed, they’re immutable, they can’t be changed. So you have to be careful, they have to be done. Right. Okay. And they have to be debugged and you have to make sure you have to test on the test net, you, you know, it’s not quite to the point of just you know, sitting down with a Word document and writing a contract. Okay, you know, this is a little bit more complicated still. And then funds that are inside are not accessible. You cannot stick your hand in the cookie jar. Okay? Once that’s a smart contract receives money. It does. What it’s been told to do, okay? And if you screwed that up, you’ve got a problem. Because there is nobody in literally no one can go in and undo what you’ve done unless there’s a some sort of a safety mechanism built into your smart contract. Okay? So these are things that are limitations that you have to be aware of. And you have to know that. Yes, this is revolutionary. Yes, it’s very innovative. But hey, this is on the forefront of where we are, it is a wave, okay, you can get wet. All right. Don’t you know this isn’t over. But I really want you to think how could smart contracts improve your business because they can. And I also want you to think, you know, now that we’re looking at new times and new, you know, a new world that’s going to be coming up. This is something you should be thinking about when we talked about business resilience, you know, part of business resilience is anticipating the future.

This is the future so So how could they improve your business? And also, could they be a threat to your business? If you don’t prepare? They could be so very I mean, if you are a you know, if you’re in title insurance for the real estate market, do you need to be thinking about this because this could be you know, this could end your your, your business model, so maybe you need to be thinking maybe you need to be positioning yourself as the leader for this anticipating that these changes coming to your market, okay. Very important stuff. Okay. Questions. I’m, I’m hoping that you have lots of questions about smart contracts. If you do, leave them below and I will get back to you. I’ll answer you in the comments or we’ll do a you know on a next live stream on one of our future live streams, we’ll answer your questions. If you would like to talk about smart contracts and your business. By all means getting in touch with me send me a direct message they Give me a comment below, or just reach out you’ve got, you’ve got the my contact information here as well if you want to use it. So take advantage of that. If you’d like this copy of this presentation also reach out. I would appreciate a like on this video, it helps with the LinkedIn algorithms. And I would really appreciate some comments and feedback. I hope you’ve enjoyed this live live stream. And yeah, thanks again. And we’ll talk to you tomorrow. Take care stay safe. Bye for now.