Imagine a future in which contracts are automatically enforced and require no outside mediators. Trust is built through code instead of paperwork. That's the world promised by intelligent contracts.
Let's start by explaining what they are and what their benefits are, before looking at how using them can increase transparency, productivity, and safety in any area. If you're an entrepreneur, business manager or just keeping up with the latest tech trends, this post is for you.
What are smart contracts?
Smart contracts are contracts that operate on blockchain technology and are based on a simple if-then function. They can be fully automated and define conditions and actions, much like traditional contracts. Smart contracts leverage blockchain properties, such as immutability, transparency, and the ability to operate without intermediaries, for settlement.
The implementation of smart contracts on the blockchain allows for contracts to be automatically executed based on predetermined events, without the need for human supervision during the terms setting process. This is particularly useful for developers who issue licenses or develop applications.
In a blockchain, transactions are verified by a computer network and stored as a hash on the blockchain, which is then distributed to all computers connected to the network.
What are the benefits of smart contracts?
Smart contracts have a number of benefits for everyone, such as greater transparency, process automation, and reduced costs for various transactions. They also provide a very high level of security with their use.
The main advantages of smart contracts include:
Well-protected against data loss
They are immutable and well protected against unauthorized modification or data loss, which is guaranteed with the help of decentralized storage.
They are self-verifiable and self-executable.
Smart contracts are impossible to bribe - clear mathematical algorithms are at work here.
Reduce costs by eliminating the middleman process.
Fast response requiring minimum time
High speed, thanks to automation - what today takes days or even weeks, thanks to the contract, can be completed literally within minutes.
What Аre Smart Contracts Use Cases By Industry?
Smart contract applications are often used for financial purposes, such as trading, investing, lending, and debt underwriting. They can also be used to build entire corporate structures, as well as in the gaming, healthcare, and real estate industries. These industries are built around a set of rules, algorithms, and measurable interaction terms.
Banking institutions can use smart contracts to issue debt for automated transactions. The insurance industry can use this technology to optimize specific requirements. For example, a person has an insurance policy that pays out a certain amount of money if a certain event occurs. The customer does not have to do anything, does not need to contact the insurance company, and the funds are automatically transferred to the customer's account.
Such contracts are preferred in some industries over others because of their self-activating nature. Automated contracts are less suitable for industries that require a high level of service, such as hotels, hospitals, and restaurants.
The following industries could also benefit from smart contracts:
Transport and Logistics
Travel and Tourism
Banking And Finance
Smart contracts cover the entire banking process and can be fully automated. You can enter into loan agreements, open deposits and transfer money on terms set by the software. As an illustrative example, let's say you have a car loan with your bank. If you don't make your monthly payments, your car gets locked.
Blockchain also has excellent prospects in the healthcare sector. To date, there is still the problem of rapid access to domiciliary documents. However, immediate access to information in emergencies is crucial. Another problem is patient identification. It is curious that the rate of inappropriate treatment appointments due to errors of identification type is quite high.
With the help of smart contracts, it is easy to automate access to clinical records. Thanks to decentralized data storage systems, unauthorized entry is impossible. Blockchain technology establishes a direct link between the identity of the customer and the medical data, which means that the risk of medical errors tends to be zero.
A blockchain can help you complete any transaction without having to hire a third-party law firm. There is no need to pay for notarization or spend time traveling to another location. Smart contracts perform legal services and ensure each party's obligations are met.
Legal use cases for smart contracts include:
the cross-machine remittance
decentralized self-ruling institutes
restricted liability autonomous organizations
Let's say you decide to rent out your apartment - instead of listing it on Airbnb or similar sites, you sign a smart contract with a potential client. Using this program, you give the tenant the apartment number and the code to open the door, and they deposit the money.
As soon as the tenant enters your apartment, you receive the money. If you give the wrong code, the customer gets their money back. If the tenant doesn't show up, you get money for the time you didn't work, minus the amount paid to you by the tenant.
As a rule, oil and gas companies have to go through a number of agencies to sign and execute contracts. For example, the highest levels of government are directly involved in the transportation of gasoline, delivery is done by transport companies, and many workers are involved in related activities. In practice, it is not easy to establish a smooth process with so many participants. Inefficient methods often lead to losses for the companies, and environmental conditions can deteriorate due to poorly thought-out measures.
Smart contracts can solve this problem by clarifying the roles of the actors. This is only part of what these contracts can do. The World Economic Forum lists 65 illustrative examples of smart contracts that contribute to global sustainability.
Blockchain experts encourage online elections at the local and state level. This is achieved through digital identities, which are combinations of relevant, high-quality digital data distributed across a vast network of data repositories. Smart contracts in a blockchain prevent access to sensitive information by anyone other than the data owner. It also ensures people's identities cannot be mistaken.
In conclusion, smart contracts offer a new way of doing business that could revolutionize many industries. Using blockchain technology, these contracts offer advantages such as transparency, immutability, and the ability to work without intermediaries. As you've seen, smart contracts have many potential use cases in a variety of industries, including finance, healthcare, and real estate.
By automating processes and reducing costs, they can increase efficiency and productivity while ensuring security and trust. As technology continues to evolve, it's important for entrepreneurs and business managers to keep up with the latest trends and innovations, and smart contracts are definitely worth considering for those looking to stay ahead of the curve.
INDUSTRIA is a global technology consulting, development, and ventures company with expertise in the field of enterprise blockchain, confidential computing, process automation, and digital experience. As one of the official partners of R3, we are implementing cutting-edge blockchain technologies and reshaping the fintech world. At INDUSTRIA, we are focused on providing permissioned blockchain solutions, such as Central Bank Digital Currencies, Electronic Bill of Lading, and Smart Contracts. Our solutions apply to a wide range of industries and use cases to empower and modernise society.
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