- The world has started to promote decentralization and automation nowadays. Official agreements (Contracts) are an integral part of our lives when it comes to buying a car or starting a new job. The conventional contracts are known for their complexities and sheer volumes. As well as it has high administrative costs, dependence on central authorities. These contracts are sometimes full of shambles because of a lot of paperwork involved. These days, all operations are becoming digitized and we want reliable digital business agreements. Blockchain smart contracts can power the contracts of tomorrow.
A Brief Description of Blockchain Smart contract
A smart contract is a software that stores rules or contractual clauses via blockchain. These contracts automatically verify and execute the terms. It eliminates the need for relying upon third-party systems to allow visibility and access to all the relevant parties. Smart contracts are faster than the ordinary contracts since they are quickly passed through all the approval. It also reduces the risk of maintaining the documents.
Why are Smart contracts popular?
1. They are fast and give real-time updates: It increases the speed of business processes as no manual work is there.
2. Accurate: These contracts are less prone to manual errors. Because of the absence of hand-filled form.
3. Lower costs: As human intervention is less here and it has fewer intermediaries too. That’s the reason they are cheaper.
4. Decentralized: As the data in the decentralized registry, it cannot be lost and is less prone to cyber attacks.
Blockchain smart contracts: Use cases
1. Smart Contracts and Supply Chain
Blockchain Smart contracts are capable of recording ownership rights as items move through the supply chain, confirming who is responsible for the product at any given time. Tracking goods from producers to warehouses is easier through the Internet of Things sensors, from warehouses to manufacturers, and from manufacturers to suppliers. At each stage of the delivery process, finished products are verified until they arrive at the customer end. In case an item is delayed or lost, the smart contract can be used to find the exact location of a product. On the off chance that any partner neglects to meet the terms of the contract, for example, if a provider has not sent a shipment on time, then each group can see this clearly.
2. Smart contracts and Insurance
The claims process consumes a lot of time, which is a typical problem with insurance policies. This work covers many manual tasks and requires a lot of human action. As a result, additional costs are there. Using smart contracts, these insurance policies can be automated. This will result in lower costs, less human intervention and smooth and fast insurance process. In addition, smart contracts will reduce the risk of fraudulent claims too.
3. Smart contracts and Mortgage loans
The terms of a Mortgage depend on an assessment of the mortgagee’s wage, outgoings, financial assessment and different conditions. Third parties carry out these checks. However, it can make the process lengthy and complicated for both the lender and the mortgagee. Smart contracts wipe out the need of a middleman, however, both parties could deal directly with each other.
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