Ever since humans started to do business with one another, contracts have been a strategic tool used to protect the interests of both parties. Most of the contracts that companies use are long and detailed, are based on complicated language, and require lawyers and consultants to decipher them. However, in recent years, a disruptive technology has emerged, which is changing the way one can use contracts. In the blockchain world, smart contracts have become a revolutionary concept that has significant implications for many sectors. However, they are mostly known for their application in the cryptocurrency realm, where they enable the creation of dApps and the automation of intricate transactions.
The concept of smart contracts may seem abstract, but it has a tangible and considerable impact -in fact, the market is expected to reach a notable value of 1,515.4 million by 2032. Simply put, smart contracts represent a decentralized computer program that runs on the blockchain and executes agreements automatically based on pre-established conditions, thus giving participants peace of mind regarding the outcome without the involvement of intermediaries. So, when learning how to buy ethereum, you may find out that this crypto asset is more valuable than you may believe.
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What are the benefits of smart contracts?
Autonomy
Traditionally, transactions involve a lot of paperwork to seal the deal, requiring a lot of time and human resources. Fortunately, smart contracts change this narrative, as they are based on predefined rules, thus eliminating the involvement of third parties such as financial institutions, agents, or brokers. This gives the parties independence and autonomy while also offering advantages like process speed and cost reduction.
Accuracy
If an agreement’s terms are met, the smart contract executes automatically, reducing human errors nearly to zero. In other words, smart contracts ensure a high level of accuracy, which isn’t possible for manual transactions.
Speed and efficiency
Since smart contracts execute automatically, complex transactions can happen immediately without needing traditional paperwork. Moreover, processing delays are no longer a concern, making smart contracts highly efficient and reliable, saving businesses valuable hours.
Security and transparency
One aspect that makes smart contracts stand out is their security feature. Since they are encrypted and, therefore, immutable, as they run on the blockchain, smart contracts have limited potential for fraud. In the blockchain, computing nodes have the role of processing, verifying and maintaining information in agreement with each other, eliminating the risk of losing or altering records. Moreover, smart contracts offer a high degree of transparency to each party involved in smart contracts, ensuring that they have real-time and continuous access to transaction records.
Top use cases of smart contracts
Ethereum smart contracts aren’t limited to FinTech – they have permeated many sectors, including healthcare, real estate, and human resource management, to name just a few. In what follows, we will explore how smart contracts are used in different industries to highlight their importance further.
Supply chain management
In the supply chain management sector, smart contracts ensure the secure tracking of goods throughout all stages, from production to delivery, guaranteeing the authenticity of the products and helping combat counterfeiting. Moreover, smart contracts offer an immutable record of transactions, building trust among participants and contributing to more streamlined global supply chains.
Intellectual property protection
When considering smart contract use cases, it’s impossible to ignore the transformative potential they bring to Intellectual Property management. They help create an immutable record of IP rights on the digital ledger. They provide creators with an indisputable registry, encoding their works with a blockchain timestamp that serves as undeniable proof of ownership.
Smart contracts can be a great legal ally in case of IP infringement due to the tamper-proof nature of blockchain records, which enable the verification of original ownership. Another application of smart contracts in IP protection is their ability to facilitate P2P transactions, thus eliminating the reliance on intermediaries, ultimately providing creators with a bigger portion of their rightful royalty earnings and creating a more equitable IP ecosystem.
Retail and eCommerce
Smart contracts have a valuable application in the retail and eCommerce sector, making transactions faster, more transparent and more affordable. Moreover, they automate purchase transactions, which allows the efficient management of payment, delivery, and refunds while also guaranteeing utmost transparency throughout the process.
Smart contracts can be personalized for loyalty programs as well, helping track customer behavior, and offering them loyalty points or discounts automatically, thus enhancing customer satisfaction. All these aspects show the incredible potential of smart contracts in transforming retail operations.
Healthcare
The healthcare industry can benefit tremendously from incorporating smart contracts, as they can help streamline patient data management by ensuring prompt and secure access for authorized healthcare providers. Moreover, smart contracts can automate medical billing processes, which tend to be quite complex, thus helping prevent fraud and reduce errors.
Smart contracts also have excellent application in the pharmaceutical sector, ensuring the integrity of the supply chain by tracking medications all the way until they are delivered to the patients, mitigating the risk of counterfeit drugs.
Insurance
In the insurance industry, automated smart contracts guarantee timely payouts to policyholders by expediting claim settlements, which ultimately reduces disputes between parties and brings resolution to disagreements. Therefore, the claims process becomes more user-friendly and efficient.
Furthermore, smart contracts evaluate claims according to predefined parameters, which provides a robust mechanism to combat fraudulent activities. But that’s not all: this great technology based on the blockchain also facilitates micro-insurance solutions, offering coverage for populations underserved by conventional insurance models.
Human resource management
Smart contracts also offer tremendous benefits to the HR sector, as they automate and boost various processes. For instance, they can enhance payroll processing through timely and accurate salary disbursement according to predefined conditions and simplify benefits administration through the automatic enrollment of employees, helping track their eligibility and manage their claims.
Smart contracts also play a role in the recruitment process itself, encoding the terms of employment offers and ensuring seamless and transparent job offers and acceptance processes.
The bottom line
With their numerous applications and incredible benefits, smart contracts are undoubtedly a technology worth paying attention to. The future of smart contracts envisions transactions that are more equitable and transparent, changing business interactions and increasing trust while also guaranteeing streamlined processes.