How can Smart Contracts change the world of business?
In one of our previous articles we discussed what a Smart Contract is. In this article we will focus on why and how Smart Contracts will disrupt the world of business.
Recently there has been a lot of discussions around smart contracts and their ability to hold up in a legal. In Florida, a law maker is pushing a bill that would create a legal foundation for the use of blockchain technology and Smart contracts in the Sunshine State.
So what are the benefits that are propelling the discussions about Smart Contracts?
Smart Contracts live on a shared database (A blockchain) where all parties have a copy –unlike today’s systems where every party stores their own records, usually in paper form. If anything in the physical world can represent a data point with attributes and rules, then it can be formulated into a smart contract.
With smart contracts, transactions occur the moment contract terms are fulfilled. Currently with written contracts, it can still potentially take months for an asset to be moved from one party to another after a contract is signed by all the individuals involved.
There is no long-winded verification process to make sure that everything is in order. Approvals are verified in real-time, based on conditions set in the contract, without human bottlenecking.
Where complex “agreements” need a second or third check, Smart Contracts move forward with efficiency and speed.
From a business standpoint, consolidating tasks and automating them can help streamline business operations and boost efficiency, allowing employees to concentrate on other tasks.
Businesses could also save on numerous costs. Smart contract platforms can take over functions usually done by intermediaries like banks, escrow services, and even legal services (in the future). A McKinsey report estimated that blockchain / smart contract technologies could save businesses at least $50 billion in B2B transactions by 2021.
Authority and safety
Smart contracts are stored on a blockchain that is duplicated into a series of copies stored across a network of separate machines. In other words, completely decentralized.
If one copy is altered or hacked, the majority eliminates the anomaly.
The processing power required to corrupt a blockchain ledger entry doesn’t exist today. In other words, trust and transparency is built into the system. Unlike any other system used before. Of course development will need to continue to keep a few steps ahead of threats.
What industries could it change?
There are a lot of different industries that look likely to benefit from smart contracts — meaning smart contract developers are in for a huge 2018. Some examples of industries that might benefit include:
- Real estate — The tech cuts out costly contract writing and also could save time as there would be no need to consistently check over the contract with numerous parties.
- Elections and Politics — Smart contracts could mean unriggable elections. The ledger is stored on the network and would require altering at all terminals — an impossible task — to manually change the voters decision. This idea might have seemed like a nonstarter in 2016, but with mounting evidence of Russia’s involvement in the US election, it’s something to consider.
- Healthcare — People personalised healthcare records could be secured on a digital ledger. This would be incredibly useful for insurance purposes / medical staff as it would make finding medical records quicker.
- Supply chain and logistics — This has been heralded as low hanging fruit for blockchain. Want to know where your bottle of wine actually came from? Smart contracts can do just that by producing a digital record of an items movement across the world.
- Entertainment Industry — Smart contracts can also help with the royalty payments issues in the entertainment industry. There’s a commonly known problem with determining who owns the rights to a particular song or any other works of art. A smart contract solution could help track all ownership rights. Any data change requires the approval of all parties on the network which ensures trust in ownership.
Here at Crowdholding, we truly believe that Smart Contracts are a revolutionary technology that has many applications, the only thing standing in the way is mass adoption of the new tech.