Blockchain is a distributed ledger technology with unique features, and since inception, it has been applied to different industries. It is interesting to know that the technology keeps getting better by the day, as more use cases for it are discovered. One use case of blockchain that is permeating the business world is ‘Smart Contracts development’, and it is amazing how both innovations are able to function with each other while providing topnotch solutions to the systems where they are applied.
Business is something humans have been involved in since time immemorial and as long as we have been doing business, we have had to reach agreements and deals. It invariably means there have been contracts too. Basically, a contract refers to any binding agreement that takes place between two or more participants, and furthermore, contracts have laws that bind them. According to history, Rome saw the first development of smart contracts, and over time contracts have evolved to what they have become today.
Today, contracts have become an integral part of modern trade and business in every part of the world. However, modern business contracts can be complicated, and they usually need the input of consultants and lawyers to create them, hence, they attract costs.
Contracts and the Future
10 years after, blockchain has become much better than what it was when it was introduced, and by default, it is a good tool for recording data of importance and value. There are different use cases for the technology, including death and birth certificates, financial accounts, deeds of ownership, insurance claims, medical procedures, etc. At first, blockchain was just created to function as the underlying technology to power Bitcoin. However, blockchain developers discovered there was potential in blockchain, as it could do more than just be the driver for cryptocurrencies.
At the moment, blockchain is causing disruptions in different industries, because it comes with solutions to deal with the challenges plaguing centralized systems, and it is also the perfect platform for smart contracts, hence, the future of contracts looks like it will be smart contracts, because everything is going ‘smarter’.
Smart contracts can be referred to as automated contracts that self-enforce and self-execute contracts. Such contract gets its governance from definite terms and conditions that have been laid out in the smart contract.
Whenever these contracts get propagated, the virtual agreements are designed to facilitate monetary exchange, as well as the exchange of shares, content, value, or property. Because smart contracts have self-executing features, it makes it a good tool to use in different industries where data is relied upon to facilitate transactions.
Merits for Your Business
It will interest you to know that smart contracts come with various benefits, as opposed to the traditional methods of setting up and executing contracts, and with further improvement of the technology by smart contract development services, perhaps more merits will get discovered. However, here are some merits when you apply blockchain smart contracts to your business:
A lot of business models are centralized, and that has been a major cause of the problems plaguing centralization. With the decentralization of the system, the power is taken from the now non-existent central authority, and distributed to members of the network, and thus it eliminates the need for unnecessary interference by middlemen.
It is important to note that the blockchain technology brings transparency to any business model, and thus, the terms and conditions needed to facilitate the smart contracts, can be seen and accessed by the participants involved in the contract. Hence, disputing them is impossible the moment the contract gets established.
It is so easy for people to get involved in fraudulent activities when using the traditional system and that is due to the fact that there is access to the records. The blockchain smart contract is immutable, because no one can alter or manipulate any record that is sent to the blockchain network.
Blockchain for smart contracts has different priorities, and one of them is to ensure that the terms and conditions get recorded as explicitly as possible. This requirement is important because there could be omissions that could also be as a result of human errors, and such errors can affect the transaction in a bad way. Eliminating human error and automating the process is a good way to reduce the risk of errors.
For a traditional contract to be executed, the business would need to get lawyers and other middlemen involved, and that attracts extra costs. However, with smart contracts, because it is automated, it eliminates the need for lawyers to create the contract.
One disadvantage about the traditional contract system is the fact that a lot of paperwork is involved, and intermediaries who delay the process of getting the contract prepared. Smart contracts are computer programs, hence, they process the contracts faster, and furthermore, there are no middlemen to slow the process down. It is imperative to know that smart contracts execute the process in minutes, what traditional contracts take hours and days to process.
One of the default features of blockchain smart contracts is the fact that they come with high level cryptography, and thus it makes for improved security of the process and the participants involved in the agreement. Furthermore, it ensures that the participants do not default on their roles.
Businesses are beginning to see the need to upgrade their systems and be compliant with emerging technologies, and it is interesting to see some of them have begun to adopt these emerging technologies and is making good of them. Smart contract development is important for different businesses, because it brings the features mentioned above, and more. Combining blockchain for smart contracts will do your business a lot of good, as you do not have to bother about a lot of things, as you would have if you had opted for the traditional way of handling contracts.