Smart contracts on blockchains such as Ethereum widen the capabilities and use cases from the original Bitcoin blockchain. These smart contracts, written in Solidity’s programming language, expand blockchain technology’s use cases beyond cryptocurrencies. While many recognize smart contracts as code that carries balances and can send various transactions over a network, their use cases go beyond this. Therefore, if you’re looking to program Solidity smart contracts but haven’t figured out what niche or what use case you’d want your contracts to target, then this article will be highly beneficial. First, we’ll go back to basics and look at the origins of Solidity smart contracts. Then, we’ll dive deeper into the use cases for Solidity smart contracts, empowering you to take your blockchain development skills to the next level.
Solidity smart contracts offer a major competitive advantage because they allow you to build dApps on Ethereum. However, what are smart contracts written in Solidity? Smart contracts are self-executing code that enables and enforces agreements between two or more parties. Such codified agreements exist on the blockchain and are, therefore, written into an irrevocable public record. The terms of the agreement are embodied in the code. Solidity, the primary language of Ethereum, was the first smart contract language ever developed. Therefore, it is a crucial backbone of the rapidly growing dApp and Web3 ecosystem.
Solidity smart contracts have numerous use cases. In this article, we are going to explore some of the most pertinent use cases for Solidity smart contracts. Moreover, we will discuss how they impact today’s systems and bring them into a new Web3 and DeFi-powered environment.
However, if you want to go right into building your first Solidity smart contract, check out this excellent tutorial from Moralis’ YouTube channel:
Solidity Smart Contracts Use Cases
Origins of Solidity Smart Contracts
Solidity smart contracts form the backbone of Ethereum. In 2013, Vitalik Buterin first proposed the idea of Ethereum. He intended it to expand the capabilities of the world’s first cryptocurrency, Bitcoin. Whereas Bitcoin only allows currency or money transactions to take place, Ethereum enables more than that. Being “Turing-complete”, it can execute numerous types of transactions.
Furthermore, Solidity is statically-typed. Solidity’s smart contracts run on the Ethereum Virtual Machine or EVM. The EVM determines the state of the entire Ethereum network. It is a sandboxed stack embedded in every full Ethereum node. Moreover, it executes smart contract bytecode. Basically, it translates Solidity, a high-level language, into bytecode that the EVM can understand.
EVM and Smart Contracts
The EVM is central to the Ethereum network’s protocol. It is responsible for consensus in the network. Using Solidity smart contracts, anyone can execute code in a trustless manner or without a trusted central authority. Furthermore, an internal gas mechanism governs the incentives around smart contract execution. Gas costs determine how the network prioritizes transactions. However, as Ethereum updates its protocol and moves into a new proof-of-stake (PoS) algorithm, the incentives around gas fees will change.
Solidity was designed to grow the Ethereum ecosystem as quickly as possible. As such, this necessitated a level of simplicity that allowed fast onboarding of developers. Therefore, they needed a language that was quick to learn. In addition, it needed to mirror human ways of thinking about agreements. Solidity smart contracts reflect this desire to be as close to human transactional behavior as possible.
Top Use Cases of Solidity Smart Contracts
You can apply smart contracts to almost any kind of transaction or business model. To develop a smart contract-powered dApp, you just need Solidity programming skills, initiative, and imagination. What’s more, you can benefit from using Web3 development tools such as Moralis. Moralis helps cut down your backend development time so you can focus on creating an excellent frontend. Therefore, Moralis is an excellent shortcut that gives you time to develop better UX/UI to attract more users to your smart contract-powered dApp.
The following are some of the most exciting use cases of Solidity smart contracts:
1. Financial Services
Smart contracts have wide applications in the banking and finance sector. You can program smart contracts to represent and enforce the rules governing a financial product or service. Moreover, they can facilitate automated payments, trades, settlements, and claims. Furthermore, they can also create blockchain-based mortgages, bonds, foreclosures, and loans.
DeFi (decentralized finance) dApps present new alternatives to traditional finance, and they break down traditional finance barriers. Moreover, they allow the “underserved” to experience financial services even without a bank account. The World Bank Group estimates the number of unbanked to be about 1.7 billion as of 2017. Therefore, this number represents a large market that can be addressed by DeFi services.
Decentralized DeFi applications are creating more agile and independent versions of traditional finance services. Moreover, such dApps are not owned or governed by any central authority. As the name suggests, they enforce their rules using Solidity smart contracts and “trustless” public open-source blockchains.
DeFi platforms offer the advantage of being available 24/7. Unlike traditional platforms, they deliver financial services round-the-clock, most of which settle in real-time. Furthermore, the innovation capabilities of Solidity smart contracts let them include new functionalities and benefits. Moreover, such platforms tend to offer higher interest yields as a way to attract users. They are also borderless and remove centralized custody and fees.
Moralis presents one of the fastest ways to create smart contract-powered DeFi dApps. With Moralis Speedy Nodes, you can run a blockchain node in a matter of minutes. Moreover, you can enhance your dApp’s functionalities easily using code snippets provided by Moralis. As such, you can fetch data from Moralis’ database with short lines of code.
As the ultimate Web3 development platform, Moralis provides tools, such as Moralis’ Price API, to supercharge your DeFi dApps. Moreover, Moralis’ Price API gives you real-time on-chain data to monitor and calculate the price of various tokens relevant to your dApp’s transactions. Therefore, you can utilize the API as you develop DEX’s (decentralized exchanges) or other dApps that handle token management and trades.
2. Digital Identity
Smart contracts have interesting use cases regarding digital identity. While it is still not possible to fully engage in all kinds of online transactions anonymously, especially when they involve regulated environments, Solidity smart contracts offer new alternatives. They present unique solutions that offer speed, convenience, and data protection. Moreover, in cases that require solid proof of identity, Solidity smart contracts can add privacy layers or features where desired.
Solving Identity Theft and Data Monopoly
By giving self-sovereign identity to users of Ethereum dApps, Solidity smart contracts offer a new way to manage personal data without having to limit it to a centralized database. Instead, vital information (such as passport information) is stored on the Ethereum blockchain and accessed only through the dApp.
By disintermediating identity databases, smart contracts solve the problem of data monopoly exercised by large institutions. Moreover, smart contracts also give people more power over their personal information. Thus, they can minimize the massive multibillion-dollar problem of identity theft.
Applications of Digital ID in the Internet of Things (IoT)
In the cutting-edge “internet of things” sector, Solidity smart contracts perform a vital role. Connected machines must correspond to accounts for transactions to occur. Thus, smart contracts offer a bridge for trust to be facilitated among machines in IoT. Moreover, Solidity smart contracts can establish identity-based relationships among devices.
By now, you’ve probably heard of DAOs or decentralized autonomous organizations. DAOs provide the framework for decentralized governance of various types of organizations. Such organizations may be composed of anonymous individuals on the internet. Alternatively, they may also apply to private businesses and corporations.
Today, businesses can employ Solidity smart contracts and blockchain technology to enable a new management structure. Moreover, some governments have introduced legislation on DAOs, thus paving the way for DAOs to run various types of private organizations without having to worry about penalties or compliance. Interestingly, you can build ownership and compensation structures using Solidity smart contracts. Furthermore, such frameworks can include corporate structures and enforce incentives within a corporation legally.
Additionally, Solidity smart contracts are useful in corporate administrative functions. Solidity smart contracts can lead to cost savings by automating payments and incentives.
4. Legal Applications
By their name alone, smart contracts may appear to pose a threat to the legal profession. However, can Solidity smart contracts truly automate the law? All indications point to a future that merges traditional law and blockchain technology.
Solidity smart contracts have the potential to become just as binding as traditional legal contracts. Since we are already using e-signatures in binding agreements, it’s only a matter of time that these agreements become fully automated using smart contracts.
You can easily customize smart contracts to duplicate features of any legal contract. If such smart contracts become acceptable among regulatory bodies and governments, they can greatly increase transaction speed and lower administrative costs. Furthermore, they eliminate the need for many intermediate steps. Certain states in the U.S., such as California, already allow blockchain-issued marriage licenses. It’s only a matter of time before other types of smart contract agreements reach the mainstream.
Tokenization is a general use case of Solidity smart contracts. Interestingly, this use case gives rise to numerous other use cases. Tokens can be applied to any type of value or transaction. Their most prevalent use case remains in the area of currency or stablecoins. However, they can also be used to represent fractions of an asset, whether real or digital. They have major applications in real estate, wherein they can represent ownership in real property assets.
They also have exciting applications in the world of NFTs. NFT fractionalization is where creative digital assets are divided and sold as tokens. If you want to learn how to generate NFTs – a key step before offering NFT fractional ownership – you can watch this video on “generating NFTs and uploading to OpenSea” on Moralis’ YouTube channel.
As the image above shows, NFT assets can be fractionalized and sold as tokens.
The real estate sector has already demonstrated successes in property tokenization. Some platforms have succeeded in merging the worlds of blockchain and real estate. Some governments, such as the Republic of Georgia, have been working on blockchain and smart contract-based land titles since 2016. As such, the application of smart contracts in property and real estate is well underway.
We can expect Solidity smart contracts to play a bigger role in the registration, record-keeping, sale, brokerage, transfer, and management of real property in the near future. What’s more, investment opportunities for retail investors who can’t afford to buy entire properties will be available through a whole new range of instruments that tokenize real estate. In addition, through Solidity smart contracts, retail investors can share in a property’s sale profits and value appreciation.
One of the hottest use cases of Solidity smart contracts is in the gaming industry. Fueled by the rise of NFTs and NFT marketplaces, gaming has become more exciting and profitable for many users.
With mastery of Solidity smart contracts, it has never been easier to launch an NFT marketplace. As such, avatars, special objects, and other gaming assets can sell at higher rates. Moreover, they can even be used in multiple games. Top Web3 development platforms such as Moralis provide cross-chain capabilities to bridge multiple dApps and platforms. Therefore, Moralis is the perfect vehicle to supercharge NFT games.
Inside a game, NFTs facilitate player identity, ownership, and the immutability of a player’s transactions. Moreover, they add properties to tokens such as scarcity or rarity. Thus, they can make gaming objects more valuable because of their digital uniqueness. Furthermore, they can also facilitate interoperability with other platforms. Hence, you can easily transfer any NFT object you own to another NFT game with ease.
Building Smart Contract-Powered dApps with Moralis
Solidity smart contracts are driving innovation in multiple industries and technologies. Using Moralis, the ultimate Web3 development toolkit, you can make smart contract-powered dApps even more powerful.
Whether it’s in DeFi, blockchain law, real estate, gaming, art, governance, business, or emerging technology, Solidity smart contracts are proving their worth. They could become indispensable in creating a new and more interoperable Web3-driven world. Hence, if you are a dApp developer interested in any of these use cases, you should explore the benefits of using Moralis.
Moralis provides you with excellent IaaS (infrastructure as a service) and backend support, so you can focus on creating unique experiences that your users need. Furthermore, you can register on Moralis for free! With Moralis, you can create a new server in minutes, use Moralis snippets to enhance your smart contract-powered dApp, and use Moralis Speedy Nodes for hassle-free node infrastructure.
What’s more, in terms of smart contract development, Moralis is the fastest route from start to finish. It shortens your dApp development time to a fraction of what it usually would take. As such, by shipping your dApps faster, you get the first-mover advantage, giving you an edge over the competition!
Use Cases for Solidity Smart Contracts – Summary
In this article, we’ve looked at where the whole concept of smart contracts started and why innovators came up with the idea. Moreover, you’ve discovered the top use cases of these smart contracts. As such, you have a deeper understanding of how smart contracts can be utilized and how they can disrupt sectors in the near future.
Whether you’d like to program smart contracts in Solidity for DeFi projects, gaming, art, etc., you now possess the necessary knowledge regarding Solidity smart contracts’ use cases and can take the next step in your blockchain journey. If you would aspire to become a blockchain developer, Moralis Academy offers blockchain-certified courses. If that sounds interesting, check out Moralis Academy’s Ethereum Smart Contract Programming 101 course. As such, you’ll be able to develop and deploy your own Ethereum smart contracts in record time!