BlockLoan Releases “Getting Smarter On Blockchain” Using Smart Contract Benefits
There are a lot of banks and governments across the world starting to explore the various ways in which blockchain technology, and how smart contracts can be built effectively built on the blockchain.
Taking into consideration that it operates as a decentralized system, there's often no real need to use any particular middlemen, allowing for transparency, allowing them to save time. And while blockchain technology can be far more in the way of inexpensive, faster, and far more secure than previous methods that have been used. At the moment, there is a massive, and growing incentive to try and harness this technology across many arduous processes.
Compared to any other system, smart transactions are carried out in a profoundly different way, between numerous and, often anonymous parties. It's through this system that the need for any centralized consultant or legal system is needed in order . to oversee the enforcement of the countless contracts.
Being a self-executing system, these contracts are written between lines of code and distributed in a blockchain network. These same transactions between buyers and sellers can then be traced and are completely irreverible, making them incredibly transparent.
Through these smart contracts and their use of blockchain technology, businesses are already becoming smarter by being exposed to them, using a mix of paper content and digital documentation, all on the blockchain. Through this system, contracts can be verified through blockchain and proven through paper documents, however creating a streamlined, completely digital approach is their ultimate goal.
A Tale of Smart Contracts
Nick Szabo initially proposed the development of what became known as Smart contracts back in 1994. The ultimate aim of these smart contracts? perform digitalized transactions that could passively enforce the terms and conditions of an agreement, Szabo believed in developing the kinds of contracts that . went far beyond the POS, and extended to the digital realm.
Even though an earlier manifestation of electronic contracts already existed, the vast majority of them required some level of interface physically before any meaningful transaction could be instigated. For example, checking out at a supermarket, you make an electronic payment, but you still need to be present at the store when you finalize that payment.
From this reality, Szabo went ahead to suggest that there should be a contract system for wholly synthetic assets such as derivatives and bonds. In order to come up with these new concepts, you would have to combine both securities and derivatives in a number of ways. One being a computerized analysis of intricate term structures, which has made it possible for multifaceted structures of payment to be included in our current line-up of contracts at relatively low prices.
A lot of the things that Szabo predicted have become true. Just like derivate trading is now being traded through the computer with the help of intricate term structures.
On the other hand, Szabo has been explicit that he wanted more than just this. Szabo talked about having smart contracts in place which dealt with a large number of products, as opposed to just physical products, but to include property and business agreements.
Case an point, if the owner of a motor vehicle defaults when it comes to paying for their loan, then their digital kets would be cancelled, denying them access to the vehicle.
Some measures have since been taken into consideration with Szabo's previous suggestions, such as the use of multiple signature protocols, which ensures that a contract would only be valid after each of the respective parties have signed it digitally, offering them some scope of protection under it.
Smart Contracts: The Advantages
As previously discussed, utilizing smart contracts reduces the usual costs of carrying out transactions, slashing the bureaucracy involved in conducting and completing contracts, as they are direct between parties, and transaction times, and can cut transactions down to microseconds instead of hours. Users can expect:
- Autonomy – Users can develop their own unique contracts without any need for an overly expensive, inefficient middleman, such as a broker, lawyer or agent. This prevents any chance that a third party can manipulate a contract to their own benefit.
- Credibility – Since these same contracts have been entrenched in the system, no-one can use the excuse that it was destroyed or lost when it comes to any dispute over obligations.
- Backup – There is very little chance that any of these document can be lost, especially considering they are backed up extensively on blockchain and are completely immutable.
- Security – Blockchain technology is incredibly secure. You highly decrease your chances of getting hacked.
- Speed – Users can expect to save a considerable amount of time when putting blockchain technology to use, since they are completely objective and automatic. This is in stark contrast to manual transactions which require a great deal of time in order to prepare the documents manually.
- Savings – Users can also save a significant amount of money by eliminating the use of a middleman altogether. For example, there are cases where you might have to get a notary to be a witness of a transaction.
- Accuracy – Eliminate errors that usually occur during manual processes by using smart contracts.
Some Examples in Industries
Smart contracts can also be used in a number of different industries.
Smart contract technology can lead to a safer, immutable and more secure electoral system through voting software. This will give voters and candidates an extended peace of mind, knowing full well that the results are completely untouched and untampered with.
This is because any and all votes castes would be ledger protected, making it almost impossible to hack into the system and manually change them. In addition, smart technology would make it far easier for anyone to participate in the voting process. One of the reasons why people tend to avoid voting is because it requires them to line up for, what can sometimes be hours, to fill out forms, give proof of identity, and then vote.
But with smart contract technology, voters can join in the voting process online. This will ensure that a lot of people take advantage of this technology to vote.
The single ledger source which smart technology uses has since improved its credibility. This source can also help improve the level of communication and efficiency in organizations, considering it makes processes much more transparent, accurate and allows for a greater scope of automation.
In most organizations, there's a significant amount of back and forth associated with them. And there's a great deal of waiting around for approvals for both internal and external issues to be solved. But with the application of smart technology, this would be a thing of the past.
It also helps to reduce chances of errors thereby, minimizing chances of problems like your organization being sued.
In this area of industry, things are . going to become increasingly more automated. Compared to just 15 years ago, there are smartphones, smart cars and even smarter glasses. This area is where smart contracts can really come into their own.
With regards to smart cars, smart contracts can help to uncover who may be in the wrong in a car accident. This can help insurers charge different rates based on various factors that they are able to establish around how the car is being driven with the help of the smart contracts.
For the average homeowner, smart contracts can be used to cut out a good number of middlemen. Smart contracts can help when it comes to advertising your own property, ensuring that bills have been paid, that rent has been resolved, and much more.
Through this system, users can pay with fiat or cryptocurrencies like bitcoin and then encode specific contracts into the ledger. By doing so, everyone that would want / need to see it, can, ensuring as well that once manual methods of completing transactions can be done automatically.
This process can be used by brokers, moneylenders, real estate agents and anyone else who’s in the real estate industry.
Private client information can also be supported by smart contract systems, allowing this same sensitive data to be stored on blockchain, kept secure thanks to a private key. By . doing this, it means that that information is only accessible to specific people that are . given permission to view it.
It's through this same system that reserach in the medical industry can be streamlined, ensuring that sharing of medical information works in accordance with national and local laws. Receipts could be delivered to insurers through blockchain and the ledger used for general healthcare management, such as in the dispensing of test results, medication and managing healthcare supplies.