Smart contracts offer a number of benefits and are proving to be revolutionary as we learn about how they can be used in different sectors. However, most people have little or no understanding of smart contracts.
The words used can be confusing. For instance, do you know what a hyperledger fabric smart contract is? Therefore, it is important to first talk about what smart contracts exactly are.
In simple words, smart contracts use blockchain technology to allow the exchange of funds, digital assets, information or anything that users think is appropriate to start a smart contract for.
The decentralized nature of blockchain technology allows for peer-to-peer transactions, which means that these smart contracts don‘t require any third-party intermediary.
Before blockchain technology and smart contracts, individuals, banks and solicitors were needed in order to create legally binding contracts.
However, with smart contracts, now anyone can bypass these slow and costly intermediaries as smart contracts allow users to agree on a contract directly.
Smart contracts are simply codes or programs stored on blockchains and have been defined as self-executing contracts that can control or document legally relevant actions or events according to the terms of the contract. Let’s now look at some of the benefits that these programs on blockchains can offer.
Benefits of Smart Contracts
The decentralized nature of the blockchain technology behind a smart contract means that there is no need for any outside party to be involved in the process, and this means complete autonomy.
In addition to that, smart contracts are more secure as blockchains create ledgers that cannot be modified or altered, which become definitive proof of transactions. Peer-to-peer transactions on a blockchain network offer a high level of security.
Without third-party intermediaries, smart contracts offer faster speeds. And while humans can make mistakes, smart contracts are designed to avoid any possible mistakes in order to increase accuracy. Moreover, automated processes with smart contracts can significantly lower costs.
Last but not the least, smart contracts automatically duplicate all transactions so that any party involved has records of the transitions, which means that the likelihood that all parties will suffer data storage failures is practically nonexistent.
It is worth noting that smart contracts run on top of blockchains, so Ethereum Smart Contracts will run on the Ethereum Blockchain. Now that we‘ve cleared this up, let’s look at some examples and use cases of smart contracts.
Trade Finance will benefit greatly from smart contracts. Santander Innoventures is going to be investing in blockchain technology as they believe the technology behind smart contracts could lead to more than $20 billion worth of savings every year.
Most of these savings will be coming from smart contracts automating approval workflows and clearing calculations, which currently are very labour-intensive and costly.
Not only can smart contracts help reduce work hours but also significantly reduce the time taken for these calculations to happen and any chance of human errors.
Many businesses in different industries around the world are looking to make use of smart contracts in order to improve the security and speed of their record-keeping systems.
While many different types of businesses are looking for a reliable smart contract development company that can help them, one industry in particular that will benefit enormously is the healthcare industry.
In the present time, most healthcare institutions have computer systems that hold millions of medical records.
While most healthcare institutions do invest heavily when it comes to keeping these records secure, the storage method they use is much more vulnerable to cyber-attacks than blockchain-based solutions.
Smart contracts and blockchain technology will not only allow entire databases of personal health records to be securely encrypted, but can also help healthcare organizations with issuing prescriptions, storing test results, storing receipts, general stock management, and so much more.
The first use that smart contracts have when it comes to property ownership is that they can record property ownership very accurately.
What makes smart contracts a better alternative to current systems is that smart contracts are faster and much more cost-efficient. Smart contracts can be used for recording the ownership of any kind of property, from real estate to watches and mobile phones.
In the real estate sector, smart contracts will remove the need for costly services like those provided by brokers, dealers and lawyers. This revolutionary technology means that for the first time ever, buyers and sellers will be able to handle the transactions all by themselves.
Despite using computer systems, voting fraud continues to be a very big problem in so many countries around the world. Even with computer systems worth millions of dollars, fraudsters continue to find new ways around the system and are able to manipulate them.
Smart contracts offer a one-step, simple and cost-efficient solution to this big problem. Smart contracts can validate a voter‘s identity and record every vote accurately.
The data collected could then be used for results once all voting has ceased. Since all data recorded on a blockchain is immune to modifications and alterations, manipulation would no longer be possible.