5 Real-life Use Cases to Explain Smart Contracts
Smart contracts will benefit everyone from creatives to bankers
General Overview: Smart Contracts
We’ve heard a lot about smart contracts in blockchain technology enabling the traceability of data through cryptography. They work as programs executed by their creators and can facilitate multiple transactions while being a form of agreement between parties.
With a 3% failure rate, smart contracts represent the future of digital transactions. Since they’re recorded on the blockchain and are self-executed, there’s no need for a third-party to be involved. By relying on trust, transparency, and accuracy, smart contracts have the potential to disrupt many industries and help businesses rethink the way they operate.
Can smart contracts be applied tomorrow to solve some of the world’s biggest industries’ issues related to the automation of processes, transaction cost reduction, data integrity, and privacy? Let’s examine five real examples of smart contract applications to understand how they can benefit users and profoundly alter the largest industries in the world.
1. The Music Industry and Inmusik
The music industry is known for its exponential growth driven by the global streaming services that currently make up over 40% of global revenues.
However, the music business faces several issues:
· Centralization of revenues that fail to reach content creators’ hands
· Copyright holders revenues and royalties payments
· Lack of transparency over ownership of content
The new streaming platform Inmusik can solve these problems with its SOUND Tokens that decentralize revenues and allocate payouts to the community in a fairer way. The smart contracts available in the Inmusik blockchain enabled to, first of all, validate the ownership of a song through a tagging system that is transparent. As a result, any party involved in the creation of the track gets allocated a right portion of the fees coming from royalties.
Thanks to Inmusik smart contracts, the trend that “for every $1,000 of music sold, the average musician gets a paltry $23.40” may change dramatically.
2. Digital Artworks and Ascribe
Another industry that lacks transparency and fails to secure ownership to copyright holders is the digital art industry. With the emergence of the blockchain art market, digital artists are likely to find answers to these issues.
According to Artnome, there are four areas where blockchain and smart contracts could help digital artists:
· Boosting digital art sales through digital scarcity
· Democratizing digital art investment
· Improving digital art provenance and trace ownership
· Creating a more ethical way to pay digital artists
With Ascribe, smart contracts enable users to secure “authorship” or attribution of a digital work of art, meaning artists are protected against fraud. On top of that, as a digital work of art circulates across various platforms on the web, artists can keep track of where their art is published, claiming the right publication fees.
With a 6% expected growth in jobs for digital artists, there are opportunities for novice and experimental artists to blossom thanks smart contracts.
3. The Diamond Business with Tracr
The diamond industry can take advantage of blockchain smart contracts to improve the diamond supply chain. Recently, the world famous diamond company DeBeers introduced a blockchain-based project named Tracr, which aims to improve the logistics for diamond production.
Some of the issues faced by the diamond industry are:
· Monitoring the production processes and traceability of diamonds
· Lack of visibility across the supply chain
· Uncertainties over the authenticity of assets
· Privacy concerns with regards to production supply secrecy
· Huge compliance costs due to complex, manual, and inconsistent processes
Tracr relies on a KYC procedure to facilitate transactions while enabling privacy controls to respect sensitive data. Tracr also provides digital fingertip that allows anyone to track diamond production efficiently.
4. Banking with UBS and the Smart Bonds Project
The banking and insurance industries can be deeply changed through blockchain and smart contracts issuances. In the banking industry, smart contracts may help in the following areas:
· Facilitate KYC (Know Your Customer) procedures
· Saving on infrastructure costs for securities
· Providing an alternative to traditional mortgages and bonds
· Reducing insurance costs
As far as bonds are concerned, the Swiss Bank UBS has discussed the inception of a blockchain-based program named Smart Bonds to create a self-paying instrument. The idea is to provide risk-free and available payment streams for the unbanked people of the world. Such micro-contracts could help in the payment of everyday goods or services over the Internet and revolutionize the world of micro-finance.
5. The Healthcare Industry with Applicature
In the healthcare industry, there are frequently issues with patient privacy and data conservation. As most healthcare institutions continue to rely on old processes that involve various middlemen and a lot of bureaucracy, relying on a technology that could remove these hurdles is necessary. Here is where smart contracts could help:
· Safety and privacy on patient’s records
· Reduction of high transaction costs
· Improving compliances and protocols
By providing a safe network of data accessible to all actors in the healthcare business from practitioners to patients, the blockchain application called Applicature fosters data integrity while giving patients an access to a secure, transparent record of their health data.
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