If you have gone through a bunch of blogs and still have no clue about what are the applications of smart contracts, itâ€™s advantages over traditional contracts and how it is going to boom in the near future, you are in the right place. Weâ€™ll help you to sort it out and weâ€™ll explain why it is essential to your business too.Â
In recent years, the rapid development of blockchain technologyÂ and Cryptocurrency has influenced the financial system and other industries too. Then, next-generation decentralized applications without involving a trusted third-party have evolved, thanks to smart contracts. And trust me, this technology is going to rule every industry in the near future.
Wondering why thereâ€™s been a lot of hype around Smart Contracts?Â
Well, this article enlightens you about:
- A brief revision on Blockchain and Smart Contracts.
- Why Smart Contracts may become essential to your business.
- Advantages of smart contracts.
- Potential impact of smart contracts in various businesses.
- The future of smart contracts.
Letâ€™s get started, shall we?
Blockchain and Smart Contracts:
Before digging into its widespread adoption and future potential, itâ€™s equally important to recap the fundamentals. Letâ€™s have a look at some basic points about them.
As Smart Contracts are supported by Blockchain, it is important to recap a little about Blockchain.
Blockchain technology is rapidly gaining traction, but the majority of senior executives (63%) still donâ€™t know what it is.Â
Blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words â€œblockâ€ and â€œchainâ€ in this context, we are actually talking about digital information (the â€œblockâ€) stored in a public database (the â€œchainâ€).
Organizations must know what it is because blockchainâ€™s emerging trends are making a way for many other technologies to adopt it.
One of the finest examples is Smart Contracts.Â
Â Do you know? Algorand is a permissionless proof-of-stake consensus mechanism.Â
Smart Contracts are computer programs built to run on the blockchain and designed to execute automatically once the underlying conditions are met. Just like any other computer program, smart contracts are pure code that contains the terms & conditions for the execution of the contract. Thereâ€™s been so much hype around Smart Contracts these days, day by day we are getting to hear new updates regarding it.
Why Smart Contract may become the counterpart of your business, letâ€™s have a look.Â
They provide solutions for a wide range of domains, from financial services, insurance, medical health, and supply chains, to trade, mortgages, land title recording, etc. The key concept that makes Smart Contracts so powerful is that they are implemented over a Blockchain backbone, inheriting the benefits from it.
It may become crucial to your business going further, because of its following advantages.
Advantages of Smart Contracts:
1. Speed and Direct communication with the clients: Smart contracts eliminate the need for mediators and allow for clear, transparent, direct relationships with clients.
2. Cost: The operating and clerical costs associated with the performance of smart contracts are low as there is almost nil human involvement at the performance stage.
3.Fraud reduction and Recordkeeping: Smart contracts are kept in chronological order in a properly distributed blockchain network, wherein the outcome of such contracts is validated by everyone in that network and hence no one can publish and steal other peopleâ€™s data.
Potential impact of Smart Contracts in various businesses.
Smart contracts are well suited for business activities that involve purchase or exchange of goods, services and rights, especially when frequent transactions occur among a network of parties.
Let us look, additional possibilities of how it may impact other businesses:
Agriculture: Sensors reading the environment and automatically initiating activities such as irrigation or deployment of insecticide, based on programmed trigger values.
Insurance: The insurance industry can leverage blockchain technology in a significant way to transform their processes, such as claim fraud detection and claim settlement.
Health care: Securing access to personal health records, enabling doctors to provide insurance proof of completed surgeries, supervising drugs and other supplies, and enabling secure and timely sharing of patient information for clinical trials and research.
Legal Issues: The traditional model of resolving legal issues and certifying documents is also giving way to smart contracts.
The future of Smart Contracts:
Despite various advantages and benefits of smart contracts and its use in the various industries, the blockchain technology is still in its nascent stage and it will take time to go mainstream.The benefits of taking oneâ€™s business into the digital era are widespread and fraud prevention, reduced cost and immutability of the smart contracts are unquestionably huge. Smart contracts can be used in almost all industries, from payment gateways to electricity bills etc.
With smart contracts slowly getting more attention, we urge various industrialists to continue researching and experimenting with smart contracts.