There is no doubt that blockchain has changed the economy as a whole. With its immutability, transparency, anonymity, decentralization, and security, technology has transformed the way of business.
Blockchain is even more popular today due to no middleman involvement. In the form of smart contracts, especially ethereum smart contracts, the technology reduces the chance of process conflicts, saves time, and makes the process cheaper, faster, and more efficient.
But what are Smart Contracts? Why do people use them more than other blockchain apps? Let’s find out in this article.
Also Read: Launch Smart Contract Insurance Decentralized Applications
What Are Smart Contracts? – A Guide to Smart Contracts
One of the three main parts of Blockchain technology is smart contracts.
Smart contracts let you trade anything of value in an ecosystem based on blockchain that is open and free of problems.
Smart contracts are self-executing contracts that are set up to check if the terms of an agreement have been met or not met and then take action based on that.
When discussing smart contracts, you should know which platform is winning the race to be the best smart contract platform: EOS or Ethereum.
Now that we know what “smart contracts” mean let’s learn more about how this blockchain idea works.
What’s the Point of a Smart Contract?
Let’s see an example of how smart contracts work in a blockchain setting.
Let’s say that a person named “Albert” wants to sell his car to “Rachel” for cash. Through a smart contract on the Ethereum blockchain, they make a deal that says:
“ONCE Rachel pays $25,000 to Albert, SHE WILL OWN THE CAR,” said Albert.
Because this smart contract agreement is on the blockchain, it can’t be changed. This means that Rachel doesn’t have to worry that Albert will suddenly ask for more money. Also, she doesn’t have to pay an extra fee to a third party, like a bank, a lawyer, or a car broker, to show that she paid.
This means she won’t have to pay an extra commission or wait for the agreement to be processed because of something outside her control. When a specific condition is met, the smart contracts run automatically.
Now that we’ve talked about how smart contracts work let’s talk about what we promised you: the benefits of smart contracts and what they can’t do.
Also Read: How To Deploy Smart Contract On Polygon
Benefits of Smart Contracts
The fact that smart contracts built on blockchain are decentralized is their main benefit. There is no need for a third party to be involved. This means that independence is kept.
The idea behind smart contracts is that all the terms and conditions must be written down.
3. Being Honest
One of the best things about smart contracts is that they reduce disagreements to almost nothing.
All parties can see and read the TnCs of a smart contract, making it impossible for a dispute. Also, because a smart contract is clear and has no “between the lines” clauses, there is no chance of a conflict.
4. Very Fast
Since these contracts are based on software codes, they can be used to make transactions much faster than real-world contracts, which require hours of work to write up.
5. Data Storage
Every time a transaction takes place, smart contracts record essential details. This means that your details written into the contract are stored permanently for future use.
Again, Smart Contracts have a lot of built-in features, such as Transparency, Security, and Autonomy, with no chance of bias, manipulation, or mistake. This makes the ecosystem more trustworthy.
7. Cost Savings
By automating most tasks and getting rid of third-party intermediaries, smart contracts also lower the costs of putting them into place.
8. Robust Backup
Since smart contracts copy all transactions, it is easier for parties to have a backup of all transactions even if the data storage device fails.
Now that we’ve discussed this let’s move on to the next part of this guide, which is about how smart contracts can be used.
Also Read: How Smart Contracts Are Impacting The Modern Business
Uses of Smart Contracts In Different Indstries
1. Financial Services
When talking about how smart contracts are used in the financial industry, it helps change the way traditional services work in many ways:
Trade Clearing: Trade clearing lets you manage the approval process between the counterparties and transfer funds once the trade settlement amounts have been calculated.
Insurance Claim: Do routing, error checking, and the approval workflow. If everything is in order, it sends payment to the user after the payout is calculated based on the type of claim and the policy.
Micro-Insurance: Estimates and transfers the micropayments based on usage data from IoT-enabled devices.
Transparent Auditing: Transparent auditing uses essential tools for bookkeeping, stops people from sneaking into accounting records, and lets stakeholders take part in openly making decisions.
Micro-Lending: It lets you check the value of the essential collateral and store it safely in a database, so each transaction is quick, consistent, and transparent.
2. Medical Care
Smart contracts are also changing the way healthcare is done in many ways. Here are just a few:
EMR: Once the multi-signature approval is set up between the providers and patients, the EMR will let the health record be moved or accessed.
Medical Research: Researchers can access users’ health information by giving them small payments for taking part.
Track Health: Health-related events can be tracked through the different IoT devices that the patients use, and when they reach a milestone, they can be given a reward.
Health Insurance: It makes the current system more efficient by automatically adding patient information to policy forms and eliminating third-party middlemen. It also stops hackers from getting into the database.
Also Read: Grow your blockchain business faster With DeFi Protocol
Media Smart contracts powered by blockchain have different features that allow anyone to enjoy the following benefits:
- Copyright owners have the freedom to license media in any way they want.
- Transactional tasks that used to be done by hand are now done automatically.
- Processing that is faster, more accurate, and less expensive
4. Voting and the Government
On the blockchain, public data can be stored, and with the help of Smart Contract, the information can be sent to the people who ask for it, keeping the data owner in the loop.
By joining the blockchain ecosystem, the voter criteria can be checked, and certain actions can be taken.
5. Chain of Stores
With the rise of smart contracts in the supply chain, it is also now possible to do things like –
Payment Transfer: It lets people move the payment once more than one person has approved the letter of credit.
Product Provenance: This is used to pay the port after a change of custody for the bills of lading. Also, it makes it possible for products in the supply chain to have a “chain of custody,” in which the person in charge can record proof.
Different types of smart contracts are also changing the IoT ecosystem. As part of the Blockchain of Things system, they help sensors and other connected devices create their nodes in the blockchain database. This lets them track orders in real-time and ensure that the product is correct from when it is shipped to when it is delivered.
Smart contracts are becoming the norm in many business areas because they offer many benefits and can be used in many ways. It encourages new and old companies to hire a reputable Defi smart contract development company and join the future of smart contracts. The one whose market is expected to be worth close to $300 million by 2023.
Either you find a way around Smart Contract’s flaws by assuming that the idea will revolutionize your business, or you take the proper steps to make your Smart Contract, whether based on Ethereum or some other platform, impossible to hack.
According to this article, the right thing to do is to hire a team of Defi development company who are familiar with the idea, know how to do parallel programming, and know what kinds of bugs can happen when writing Smart Contract Code.
You can only get a contract that is ready to be complicated if you pay for a team of Smart Contract experts.