Smart Contracts for the Masses
At its most simple definition, a smart contract is a self-executing contract between two parties. The transactions themselves are put onto the blockchain, slowing them to be completed without validation from a third party. Within the contract, the exact specifications of the agreement are set. Once these measures are fulfilled, the transaction automatically completes. This can streamline exchanges and transactions that incur high fees and extended delays through the use of a third party.
One metaphor to commonly represents what smart contracts are is a vending machine. In the machine, the contract is set up, exchanging money or cryptocurrency for something else. Once someone enters money and completes their end of the specifications of the contract, it automatically executes and is added to the blockchain. Vending machines and smart contracts both share the benefit of self-execution, making third parties unnecessary. In many cases, eliminating the third party cuts the time and cost of a transaction significantly.
What are Some Industries That Can Use Smart Contracts?
Real Estate
Today, buying and selling property is a very complex process centering around the real estate agent. Agents have to deal with many different parties to facilitate the exchange. By implementing smart contracts, real estate agents would largely be relieved from the long hours of paperwork. By introducing automated contracts, agents become much less involved with the facilitation of the contract itself. Rather, the agent becomes the overseer while the smart contracts take a majority of the influence over the transaction. Buyers and sellers would have contracts that automatically execute and will not have to go through a third party.
Notary Public
Since notarization deals with contracts and agreements, smart contract technology can be used to create and develop the required parts of a contract. A blockchain-based approach to notarization can track documents from the creation through the entire notary process. This will keep everything in one place as well as the specifications of the contract itself. Thus, these smart contracts would contain all data relevant to the documents and every single timestamp, allowing for full transparency and accuracy in records.
Insurance
Today, insurance companies still have long and complex claim processing evaluations. These claims involve many stakeholders and parties, making it difficult and time consuming to manage. Smart contracts will oversee this process and streamline it to avoid third parties. All records of a claim would be directly stored on the blockchain with easy access. This will keep everything in one place and ensure full transparency among all parties.
What are the Benefits of Smart Contracts?
Increased Transparency
Since smart contracts put transactions into the blockchain immediately, the specifications of the contract itself are transparent to both parties. This benefit will allow someone to track the entire process of the transaction from start to finish. This is especially beneficial to supply chain management, where managers can see the entire supply chain process through the transparency of the blockchain.
Immutability
Once transactions are put onto the blockchain, all parties have a copy of the records, allowing for full transparency. No single party can alter the records of the transaction, as it is stored on the blockchain. This will avoid fraud in all different industries and ensure the validity of a contract.
Accuracy
Since smart contracts keep all records of a transaction from start to finish, there is an increase in accuracy in the records. Every step of the way is recorded onto the blockchain, allowing for both parties to see the entire exchange process from start to finish. This will also ensure that all records are truthful, as the origin of them will be shown on the blockchain.
Efficiency
Perhaps the largest benefit of using smart contracts is the boosted efficiency. Processes such as mortgages take long hours and incur high fees. They go through numerous parties and stakeholders and thus are very inefficient. The self-execution of the smart contracts streamlines this process, reducing the fees and time of the exchange.
Conclusion
Block 11 a young and passionate blockchain startup looking to build the infrastructure of a revolutionized future with smart contracts and other blockchain technologies. We plan to develop advanced Ethereum and smart contract development that can change many industries across the industry. Block 11 and blockchain have tremendous room for growth, and we invite you to join the revolution!
Sources:
P, Dheeraj, et al. “How Blockchain and Smart Contracts Will Disrupt Insurance.” PropertyCasualty360, https://www.propertycasualty360.com/2020/01/24/how-blockchain-and-smart-contracts-will-disrupt-insurance/. Accessed 28 July 2020.
Shayanfekr, Allen. “Ethereum or Smart Contracts in Real Estate.” Sharestates, 12 Jan. 2018, https://www.sharestates.com/blog/2018/01/12/smart-contracts-in-real-estate/.
“What Are Smart Contracts? Guide For Beginners.” Cointelegraph, https://cointelegraph.com/ethereum-for-beginners/what-are-smart-contracts-guide-for-beginners. Accessed 28 July 2020.
