Smart contracts: what is that and where can you use it?
What is a smart contract?
Smart Contract is a computer protocol designed to verify or execute the terms of a contract in digital form. The phrase “Smart Contract” was first coined in 1994 by Nick Weak, an American cryptographer and computer scientist.
Smart contracts help people use their assets safely in an open, conflict-free ecosystem based on blockchain. Smart contracts are created and deployed at the top of the blockchain. In other words, these are automated digital versions of traditional real contracts.
Smart contracts have been actively distributed around the world and are gaining momentum every day. In many ways, this alignment is due to a number of advantages that smart digital contracts provide. They allow you to optimize and speed up many routine processes and reduce (or completely eliminate) the participation of the intermediary party, which significantly reduces the associated costs.
Also, the use of smart contract technology makes it possible to eliminate errors that were possible due to the human factor. Therefore, in recent years, smart contracts have been used in various fields of activity, in addition to cryptocurrencies. Let’s talk about those fields.
Smart contracts in the healthcare
A huge amount of diverse information is used in medicine, which can be lost, mixed up or used for other purposes: medical records of patients, results of examinations and tests, prescribing medications, and much more.
All these data are used to treat people suffering from diseases with varying degrees of severity, because any mistakes can cost a human life. Such a huge amount of information is difficult for ordinary people to structure and process.
Blockchain technology with the integration of smart contracts allows you to create a single information base with the ability to fully automate the processes of transferring and approving materials, including confidential ones.
Smart contracts in the field of lending
There are a huge number of operations related to the processes of issuing and repaying credit funds. The use of blockchain technologies based on smart contracts allows you to register algorithms in the network code. Thus, the payment history, the security system and fraud detection, automatic lending, etc. are greatly facilitated.
In addition, the technology of smart contracts in the field of lending provides optimization of control over the movement of assets with the ability to constantly monitor and identify the status of property that is left as collateral when applying for a mortgage.
All these factors, taken together, can significantly simplify the banking sector and reduce the associated overhead costs.
An example of blockchain integration with smart contract technology in the banking sector is the Spanish bank BBVA (Banco Bilbao Vizcaya Argentaria).
Smart contracts in electoral processes
Analysts from Horizon State expressed their opinion that the integration of blockchain technologies based on smart contracts will be able to ensure maximum objectivity of elections and impartially evaluate the votes of voters. This is a rather acute issue that often arises during elections with their voting mechanisms.
The use of smart contracts based on decentralized registries will be able to solve many problems during electoral processes. They cannot be changed, violated or neglected by the algorithm in their favor. Therefore, people will have more confidence in transparency and the need to participate in elections.
Smart contracts in the media sphere
People who produce their content in the field of art and intellectual property (music, painting, video shooting, photography, poetry, films, etc.) should receive a decent reward for their work, which, in turn, should have copyright.
The use of blockchain technologies with the integration of smart contracts can automate most of the routine processes in the media space. They will allow the correct crediting of payment funds, the distribution of profit shares between the author and the production company. This will greatly speed up the processes and make them less costly.
Already, many organizations are actively working to correct the existing shortcomings of smart contract technology. Analysts say that in the near future the technology will be able to get a full legal justification, which will significantly strengthen people’s credibility.
In the coming years, smart contracts will be able to replace most of the document management operations in the financial sector. Many of the world’s leading banks are experimenting with blockchain technologies and transferring their routine actions to them.
The time is not far off when smart contracts will be used at the state level to optimize reporting processes, documentation, etc.
