A major benefit of Blockchain technology is that it eliminates middlemen altogether. You won’t have to pay any intermediaries as long as you’re on the blockchain network. Why not introduce smart contracts into the blockchain technology that alters the very nature of how we do business to this day?
There are a lot of benefits when using this system as well as problems. However, it’s one of the fastest, cheapest, and most secure methods. Only because of these reasons are banks or governments not too fond of this system.
Nick Szabo proposed smart contracts back in 1994, but he did not create Bitcoin until 1998. This was way before Bitcoin existed. It wasn’t a real currency when it was developed, but it could be used to perform tasks in code.
Under Nick’s system, the system was supervised by other computers on the network, and, in addition, they were able to implement monetary and product transactions as feedback.
People think Nick is Satoshi Nakamoto (founder of Bitcoin) because the idea is so similar to modern smart contracts and blockchain technology. Funny, right? But no.
What are Smart Contracts?
It is a series of programs stored on a blockchain that function when criteria are met. Smart contracts are typically used in order for all parties to be confident of the outcome of an agreement, without the need for an intermediary.
Your deal will be done without the need for a middleman with smart contracts.
Generally, for any extra payment to be made such as lawyers, or hospitals, you would have to pay them and wait for the services or documents to be sent. That’s the primary difference between regular contracts and smart contracts.
Ethereum code translates assets or currency into programs. The program runs code and determines whether to transfer the asset or return it to the owner. In this way, the process is streamlined and the terms of the project are fair to both parties.
This graphic credit goes to 101blockchains.com
A Smart Contract Example
Assume Ian wishes to purchase a car from Mark. Mark can easily accept Ian’s payment through a blockchain network and by means of cryptocurrency. Ian will receive a virtual receipt that will be added to the smart contract.
The network will process a refund if Mark does not give you the key within the specified time period. Ian releases the payment once Mark gives you the key. You will be held responsible for the fee and the key if Mark provides you the key within the specified timeframe.
It will release the keys and fee to Ian and Mark once it has all the components for release.
As long as someone tries to hack into the code, a message will be sent to every party involved. If anyone tries to gain access to the code, everyone will be notified immediately.
There is no doubt the system is reliable to the core, and if Mark gives Ian the key, Ian will get the payment, so there is no doubt there. The contract will get automatically canceled after meeting certain conditions. It’s a simple process.
Note: This awesome technology can be used for a variety of things including breach of contract, credit enforcement, financial services, insurance premiums, and property law.
What Are the Benefits of Smart Contracts?
Let’s consider a scenario where you are wanting to sell a house. The process isn’t easy; you need to deal with a lot of people and fill out a lot of paperwork.
The selling process is made extremely complex by all these factors. Therefore, many people hire a real estate agent who will take care of all those things, so you can relax and focus on the sale.
In any case, you will pay an agreed % amount of your total sale price to the real estate agent, which can be a lot for some people. In addition, the real estate agency will use escrow services to make sure you receive your house without being ripped off.
The use of smart contracts will eliminate the need for the middleman (the real estate agent), as well as the trust issue. This way, you won’t have to worry about your money or the property.
Your house will be sold without additional fees after you have passed ownership to the buyer.
I am just offering one example; there are many more. The company will facilitate asset transfers and payment and ensure you receive the item you ordered. Isn’t that easy? This new technology has the potential to change the world and is already doing so.
Why are smart contracts so appealing?
Here you’ll find all the information you need and you’ll love smart contracts. Smart contracts examples will amaze you with their modern and digital applications.
This graphic credit goes to 101blockchains.com
Smart contracts offer the following benefits
No interruptions
With smart contracts, there will be no interruption from third parties. It will be just you making all the decisions and making any agreements.
You don’t have to wait for the confirmation from any lawyer or broker. Thus the total process will be completely free from manipulation.
Safety
Public open source blockchains are net positive, primarily because flaws are eliminated faster than private blockchains, and they are most secure if the programmer is an expert in this field.
Hacking has become a huge issue in modern times. Everyone wants to keep their documents protected from piracy. Smart contracts can offer you completely safe websites free of hacking.
These sites are going to be encrypted with high-level coding, which is nearly impossible to crack or hack. So they’ll be one of the most secure places for storing documents.
High performance
Manually processing everything involved in paperwork and documents takes some time. Manual processing is what manual contracts do. Smart contracts, on the other hand, automate everything.
All the tasks will be completed by software and the internet. It will save a lot of time. The whole process will be completed in a flash. No manual work will be necessary.
Revenues
A third party, such as a broker or intermediary, typically costs a little more. A smart contract eliminates these middlemen. They eliminate the massive chain of intermediaries. Thus, you can save on costs.
You will be required to pay to monitor your transactions, so blockchain helps you save money.
Effortless
Definitely, when you fill out a form manually, there is a possibility of making a mistake. However, the whole process will be carried out automatically, and there will be no errors.
All terms and conditions will be recorded with every detail. All your processing will be error-free, faster, and cheaper.
With smart contracts, new possibilities open up
Those industries that can benefit from an automatic process should use smart contracts.
Health care, banking, commercial real estate, and insurance are some industries in which smart contracts blockchain are well-suited. By adopting this technology, they will gain a lot of benefits. All the processes are automated through algorithms, rules, and intelligent collaborations.
The smart contract may not be as helpful in industries that provide services such as food, beverage, and hospitality.
Smart Contracts Applications
Surely you would like to know where you can use the smart contracts blockchain. Smart contracts are great where traditional records and agreements are concerned. The smart contracts embody the traditional recordkeeping and contracting procedures.
Records Storing
They can store records, release and renew them automatically whenever they need them with the smart contract, which includes the digitalization of Uniform Commercial Code filling.
Furthermore, if a law requires that a record be permanently removed, it can also be removed by automatic means.
Trading Activities
It used to require a broker or a middleman to perform traditional trading financial activities, which made the process cumbersome and costly. With the smart contract, the middleman part of the process is eliminated.
Thus, the buyers and suppliers benefit from this simplicity, efficiency, and low cost of the whole trading finance process.
The Management of the Supply Chain
Smart contract blockchain is a potential application for the supply chain management. When a smart contract blockchain is used for supply chain management, the records are maintained for the entire process from the procurement of materials to the shipment of the product. They record every detail of the entire process along with the concerned persons.
A smart contract can track all the movements of products beginning from the manufacturer and ending at the supplier through the Internet of Things (IoT) sensors. Furthermore, they keep a record of whether the products have been delivered to their customers. Furthermore, they keep a record if they are lost or delayed, as well as their exact locations.
The smart contract makes the whole supply chain transparent to all the relevant parties. It enables them to check if any stakeholder has failed to meet the terms and conditions of the contracts. As a result, the supply chain industry is becoming more advanced.
Mortage System
A smart contract blockchain could be very beneficial in an economic area like mortgages, as the process is not up to par. The owner and the mortgagee have a lot of information to share.
Whenever any mortgage agreement is made, some information about credit, income, expenses, and other important factors must be assessed. This, in turn, makes the whole process complicated, time-consuming, and costly.
It will be easy, cheap, fast, and safe to get a mortgage with smart contract technology. All the paperwork will be handled automatically with great care with this technology. The process will be straightforward, there will be no complications, no extra charge, and no confusion.
This means that all the involved parties will be able to see all of the procedures. By using this technology, both the interested parties can sign an agreement completely electronically and without errors. They both will know what they’re signing.
Real Estate Market
The real estate market is another application of smart contracts. Smart technology has simplified the real estate business and made it easier to deal with. Due to the smart blockchain technology, there is no need for face-to-face negotiations to close any deals. The whole deal process can be completed digitally without interruption or error thanks to the smart blockchain technology.
A smart contract will look at the validity of the information by checking the digital signatures of the seller, buyer, and property owner. It will use identity tracking protocols to review the information. Upon receiving the payment, the new owner shall be informed of the ownership of the property.
Aspects of Employment
There are certain expectations for each party. Some are fulfilled and some failed. But, at the end of the day, neither of them really knows what those expectations are. Different companies have different rules, terms, and conditions. What if the employee does not know about those terms.
The smart contract example will provide you with the solution. This technology will keep all the records of the terms and conditions of an organization, which its employees must follow. Furthermore, there will be records of all the information and the salaries of its employees.
The individual will know their position and achievement because everything is transparent to them. This will help them to achieve their goal and to maintain a good relationship with their employers and with each other. Whenever any terms or conditions are changed, everyone will be informed.
Copyright protection
Smart contracts can preserve the content of the copyright in a blockchain. Sometimes, it can be confusing to figure out responsibilities and rights when more than one person is working together. The members of a team will be able to effectively communicate with each other if they have a list of all their responsibilities and rights.
Teamwork with smart contracts is easy. A blockchain-based decentralized system will keep track of everything. No more confusion over responsibility and rights.
Reclamation
As you all know, the process for filing a claim for an insurance company can take a long time. It is extremely frustrating for both the customers and the companies. This is not their fault. The claim process requires so much paperwork and formalities. This is an excellent example of the use of smart contracts.
By using smart contracts blockchain technology, we are able to streamline and modify the entire claiming process. It will recognize any condition automatically and notify the claim. Thus, the rest of the process will be managed with out errors.
Services for voting by the government
The government is largely based on the voting system. We are fully aware that the manual voting systems are not completely accurate, and most of the voting processes are lengthy and inefficient.
As part of a smart contract, there is a ledger-protected voting system. This system is highly secure and requires a lot of processing power. The system is nearly impossible to hack, and it requires a lot of computing power.
In comparison to manual voting, this system is both more accurate and faster.
A healthcare service
Blockchain technology will be able to keep a large number of records for healthcare institutes. In such places, there is a great need for information for service and security.
It will be possible to keep all research work, manage testing reports, and manage drugs and healthcare supplies stored in the ledger, only with the private key. The private key will be supplied to all the pertinent individuals.
Internet of Things (IoT)
IoT, Internet of Things, makes smart contracts far more impressive when paired with blockchain. Together, they can create the best and most advanced solutions for the industries. Smart contracts are much more powerful when paired with IoT.
They make the perfect technology by using both hardware and software, making it available to be applied in the real world. They use the perfect technology by combining hardware and software.
How Do Smart Contracts Work?
This is really simple. It requires the same amount of cryptocurrency as a vending machine. All you have to do is put that into the contract along with the information you want to keep. Prior to signing any contract, guidelines, conditions, and rules need to be defined.
Interdependence
Unlike regular contracts, a smart contract can work both alone and in conjunction with another smart contract. The single smart contract will work independently. The users can set up groups of smart contracts to carry out tasks between them since they need to work together.
A few companies already have connected several smart contracts blockchains together. These are synced automatically in dependence on one another.
Inputs and outputs of smart contracts
A deal is made up of three parts, or objects, one of which is the digital signature of the concerned parties.
There should be no hidden information or conditions on the contract. Every interested party should have access to the contract, which is the second object.
The smart contract should contain relevant terms and conditions mathematically described. Suitable programming languages will set those terms in the smart contract. Once a deal is signed, everyone involved with it must accept and follow the contract’s rules.
Environment
It is essential to set up a smart contract correctly for it to function correctly. First, users need their own cryptographic codes so as to enable the transactions in a secure manner.
To implement smart contracts, it is necessary to have an automated, decentralized, and open database which is such an excellent environment for the technology.
It is imperative that all the advanced contract data must come from trustworthy sources. To make sure this happens, they can use advanced software and protocols such as HTTPS and root SSL certificates.
How Do Smart Contracts Benefit You?
They already have a lot of advantages, and in the future, they will increase in number and improve. Here are some of the advantages of smart contracts.
Total Transparency
Anyone involved in the contract will be able to see all the terms and conditions. Any changes to the terms and conditions must be negotiated before the contract is signed. Smart contracts are transparent to all parties concerned. This will not be contested once the contract has been prepared.
No Miscommunication
It is evident that smart contracts examples have the information of all the details and are entirely automatic. This means there is zero chance of misunderstandings or miscommunications. There will be no communication gaps in the network since all communications will be instantaneous and automatic.
Efficiencies
The smart contract will perform the contract process efficiently and without any errors. The combination of accuracy, speed, and automation will ensure that the whole process is completed without a middleman getting in the way. With their higher efficiency, they will be able to process an incredible number of transactions.
No Paperwork
Smart contracts are reducing the amount of paper in the world by reducing the use of paperwork. They are using the virtual world for all of their processing. This considerably reduces the amount of paper in the world.
Backup
Banks have a possibility of losing your documents and accounts. Smart contracts always come with backup. There will be many copies of your documents on the blockchain, so there will be no chance of losing any of them.
Every document you ever need is permanently recorded with explicit details in smart contracts so that you can easily retrieve any information you need in their storage, even in the event of data loss.
Trustworthy
No one can vouch for your confidentiality, can they, but smart contracts encrypt all records on a shared ledger so that they can’t be accessed by unauthorized parties.
As smart contracts execute all their work using the blockchain network, there are no risks related to losing, manipulating, or having errors in any document. They ensure that each process is executed in a completely dependable manner.
Guaranteed Outcomes
Members of the smart contract community can create any agreements they wish for themselves. However, they need to follow a few rules that make the deals more substantial. External courts will not interfere with the process. You just have to follow the contract’s rules.
Disadvantages of Smart Contracts
A smart contract can also have some weaknesses, but we’ll need to see what they are. In the world, there are no problems or weaknesses.
Confidentiality
There is something good about transparency. However, not everything needs transparency. There are some things that need privacy. Some smart contracts examples, such as Hyperledger, provide their users with private smart contracts.
Error
As you may already be aware, code encrypts smart contract technology. It can be quite challenging to decode them. But what if some errors occur in the code, leaving users at risk? It will be a question of accuracy.
Unreliable Information
The recorded data will be processed without error. However, there is a possibility that some information will be incorrectly stored at the beginning. In that instance, the whole process will be affected by the false data.
Rogue Contracts
It’s amazing that smart contracts run on a blockchain. However, if a hacker managed to hack the system accidentally, he could conduct illicit activities as well.
Smart contract companies that are ahead of the game
Since Ethereum was the first smart contract platform, most of the companies now use Ethereum to create contracts on this platform. Since their introduction, smart contracts have begun to spread throughout the industry realm.
Here are some smart contract examples of companies who are already using the new technology to lead in the competitive world. Let’s check them out.
to be continued…further details coming soon!
to be continued…
