Transacting with a Smart Contract over blockchain
During the traditional days of business there always was a third party that stands between two parties for executing a transaction and enforcing the rules of an agreement. The third party can be a banking institution, a government establishment or any other intermediary, the huge reliance on a intermediaries puts the consumers at risk because they can’t guarantee payments or implementation of contracts always
With the advent of blockchain, it allowed businesses to build decentralised models to conduct transactions and make agreements. Once such decentralised model is smart contract, although smart contract’s have become hyped in the recent past they were first proposed around 20 years back by Nick Szabo, a computer scientist and cryptographer.
A smart contract is a piece of software that stores rules for negotiating the terms of an agreement, automatically verifies fulfilment, and then executes the agreed terms thereby it removes the dependancy on third parties when performing business transactions
Crowdfunding can be considered as one of the best use cases for smart contract, during an ICO we program a smart contract to receive funds until a certain goal is reached and within a particular deadline. If the goal was achieved, then all the funds raised are transferred to the project team else the investors would automatically get their money back. Since a smart contract is stored on blockchain where all the data is stored in a distributed manner, no one can tamper with it
Main key advantages of a smart contract include that they are immutable and distributed, the outcome of a smart contract is always validated by everyone else in the network just like a blockchain transaction and therefore it would be impossible for an attacker or a fraud to take control of the raised funds
Summing that up, smart contracts are a great model for conducting transactions between businesses without an intermediary over a blockchain, if you would like to know more about how smart contracts can be used for managing transactions over a supply chain, please do visit us at: https://arfreyr.com and have a look at our white-paper. We have some great new concepts which we believe will revolutionise the entire supply chain right from order picking to delivery!