Blockchain
June 19, 2018

Smart Contracts Appliances

Blockchains run code. Transferring tokens, checking accounts, and minting the cryptocurrency are all examples of simple functions embedded in the blockchain.

But this is just the tip of the iceberg. Instead of simulating basic operations on the currency, you can extend it to a point where the code is actually an autonomous, self-sufficient complex program sewn into the blockchain structure.

Such are called Smart Contracts.

Why would you be interested in Smart Contracts?

Smart Contracts allow for the triggering of specific functions when conditions are met.

The whole magic lies in the fact that you do not need a third party to execute the contract – it executes itself, triggering a debt, a payment request, or a derivative at a predefined condition or benchmark.

It allows you to drastically reduce intermediary costs.

Example of a Smart Contract

To better understand this, let’s take a look at an example of a Smart Contract.

“If Alexander applies for 1 ETH of a loan, send it to his wallet and set up request payment after 60 days for 1,1 ETH.”

The contract can do all that, cutting the cost of the middle-man.

Of course, that’s just basic logic. But what if Alexander doesn’t have a credit rating? How to check it? Shall we review the history of the account? And what if he won’t pay? Should the contract notify someone and try again?

You can create a complex Smart Contract program that will do that.

But here comes the tricky part: once it is up and running in the mainnet, it stays there for good. The contract is permanent and immutable.

This doesn’t mean that you cannot influence it in any way – but you can do it only in a way that was provided at launch. You cannot change the code itself. Well… that’s actually the idea of a contract, isn’t it?

Outsourcing blockchain development can be tricky. Check our recent post with insights on this process:

>> Working On An ICO With A Software House

How can you use Smart Contract in business?

The above mentioned financial use is just a tiny fraction of the possibilities. Smart Contracts are usually perceived as a good medium for:

The Insurance industry

Usually, executing insurance policy is extremely slow and expensive. Blockchain could solve this by automating the process.

But to work, Smart Contracts require objective input and parameters. You could use, for example, data from the meteorological institute as a signal for the occurence of catastrophic events, the data from autonomous cars as a trigger for car malfunction, and so on.

It saves a lot of time and administrative work. Everyone involved knows from the start exactly how it works, and what the triggers and results are.

Real Estate

The processes surrounding the Real Estate industry are complicated and expensive.

Blockchain can simplify it, connecting each side directly and avoiding additional transaction costs.

Ecommerce

Smart Contracts in ecommerce can allow for quick payments and make conditional payments depending on product delivery.

The internet of things is one of the best examples – it allows machines to make transactions – a fridge can refill itself, and the car can pay to charge its own battery.

Voting

In one of the most widely discussed scenarios, Blockchain can create a secure environment for voters which will be fraud resistant.

It saves manual work in counting votes and saves you the time spent visiting the polls.

Supply Chain Management

Blockchain technology offers a powerful way to streamline supply chain management. With Smart Contracts, the need for manual verification at various stages of the supply chain can be eliminated. Consider a scenario where goods are automatically verified when they pass through checkpoints. The Smart Contract triggers payments and updates to inventory without human intervention. This not only speeds up the process but also reduces the likelihood of errors and fraud.

Enhancing Transparency and Security

Smart Contracts provide an unparalleled level of transparency. All parties can view the terms and actions of the contract, but none can alter its history. This immutable record builds trust and security, making blockchain-based systems robust against tampering and fraud. This transparency is particularly beneficial in sectors like:

  • Financial Services: Reducing fraud in transactions and providing clear records of asset ownership.
  • Healthcare: Safeguarding patient data while allowing for secure sharing between entities.
  • Government: Enhancing the integrity of governmental operations such as public records.

Key Benefits of Smart Contracts

  • Cost Efficiency: By cutting out middlemen, Smart Contracts save on transaction costs and fees.
  • Speed: Transactions and contractual agreements are executed rapidly since manual processing is removed.
  • Accuracy: Elimination of manual entry reduces errors.
  • Trust: With encrypted records of transactions, trust is established without the need for intermediaries.

The Future of Smart Contracts

The potential of Smart Contracts extends far beyond the current uses. As technology advances, we can anticipate more complex algorithms capable of handling intricate tasks. This will further revolutionize how businesses operate, offering smarter, more efficient, and increasingly autonomous systems.

Blockchain development, while complex, holds a promising future for various industries. As businesses look to integrate these technologies, the role of Smart Contracts will become more central, providing a critical bridge between traditional business practices and cutting-edge technology.

Keep an eye on our blog for more dynamic discussions and fresh perspectives on how Smart Contracts and Blockchain are shaping the future of digital transactions and business operations. Stay tuned!

June 19, 2018