We can expect to see a significant increase in the use of smart contracts in the weeks and months to come. Government, insurance, finance, and other industries. It is predicted that the next five years will see explosive growth in this field, for several reasons. This type of work is speculative at best, though it does make sense from a practical perspective. The idea behind smart contracts is that they essentially streamline the process and remove any chance for human error at the same time.
What is the role of the blockchain in smart contracts?
To understand blockchain, we first need to understand what smart contracts are and the ways they can benefit you. Smart contracts are bits of code that get executed in response to events on the blockchain, keeping records of those transactions in a series of blocks. Every record written to the ledger is unique and tied to the records before it. Every node on the network can see the data being written, making it impossible for anybody to alter or otherwise destroy important information. Regular audits can detect and correct inconsistencies before they become an issue.
Smart contracts, in their simplest terms, are agreements between parties. This can be valuable when putting together complex chains of events that involve transactions and need to comply with specific regulations. With the contract process, when the contract has users sign off on them, any amendment will be seen by them at all times. With this workflow, there can be many signatures and so in a retro way, it involves printing, copying, and mailing.
This not only slows things down in the real world, but it can also cause unnecessary issues such as overnight delivery expenses, security risks from copies/printouts, and schedule problems. Smart contracts solve all of these problems by being:
- Realistic: Smart contracts are executed after a blockchain-based transaction is identified and authorized. They ensure that the signatures are gathered in the proper order needed to execute the relevant agreement.
- Opaque: Contracts can only be effective if all parties involved have the same knowledge. Because of the transparency offered by blockchain technology, all parties can see both contract status and signatures. It also makes things easier because it is a single source for all papers.
- Perpetual: Permanence may be one of the most important aspects of any contract. Many situations can arise where revisiting what was agreed on years ago is necessary, even if it just involves language or dates from the contract being re-evaluated. On the blockchain, smart contracts provide a single source of truth, eliminating any confusion about modifications or dates.
- Prudence: With modern-day digital technology, it is possible to transfer documents between parties in seconds. As a result, they are a more efficient and simplified method of contract change. This is good because it means that there will be fewer intermediaries and legal hassles.
Blockchain Smart Contracts: Use Cases
As we said before, smart contracts on a blockchain make a lot of sense. According to this report, the government, insurance, and financial businesses are the most excited about using them. In this post, we’ll review a few of the business fields in which AI and smart contracts are making waves:
- Government: Even the government deadlines can get delayed by all these agency layers. And that’s just to speak about human mistakes like printers, fax machines, and mailed copies. Smart contracts just like any other type of blockchain-based project have sets of rules that determine how it is executed. When it comes to these types of projects, the rules and transactions can be programmed directly into the smart contract – to create a more streamlined approval process. You may access any important information you need when signing the contract, such as supporting papers, photographs, or drawings. If anything is missing, please send it over by email. With all of the information on a single smart contract instead of email chains or multiple copies, everyone can easily keep track of who has given it their approval and the up-to-date status.
- Insurance: When it comes to getting auto insurance, many clauses and rules correspond to different conditions and incidents. For example, if a driver is in an accident, the whole process goes much smoother thanks to the blockchain. Start the process by uploading your police report and photos to the smart contract. The adjuster can then assess the damages and give an accurate cost for repairs. The other party’s information is needed to ensure that you get paid for a job well done. When an e-commerce company needs to fulfill a customer order and the merchandise arrives at their door, they also have to deal with UPS. All a business has to do is log in and create a new shipment – this not only saves time but ensures that the one source of truth is. Perhaps the biggest benefit of using smart contracts in the insurance industry is that it offers important safety against records getting lost or disputed. For this reason, you should use these contracts to make sure that everything is accurate.
- Banking: Mortgages are one of the most complicated contracts someone might ever be involved in. They’re also one of the most common. Commercial contracts are a fairly new phenomenon and they are complex because they involve consumers. It’s different from professional contracts because those deals are related to people within the supply chain management industry who deal with contracts daily. Smart contracts have become so popular because they’re so simple & guided. It’s a good idea to use one if you have a complex contract like a mortgage, and some contracts stipulate that certain inspections or insurance are needed before the sale will complete. In this case, the seller may waive the need for an inspection on the contract. Then when you buy insurance, the provider sends proof to your bank and fulfills that stage to move even further forward.-Rephrase a given input text into convincing output text. As more parties become involved in smart contracts, a level of transparency must be achieved to make sure everything goes through correctly. The way this works is by providing real-time information which shows each stage of completing the task.
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