When you hear about smart contracts what comes to your mind? Are you aware of the meaning that is underneath of the term? Or you’re just wondering what makes some contracts smart? Actually, it doesn’t matter whether you are familiar with this term. The important thing is that you do need those technologies to be implemented in our everyday’s life!
Here’s why. You won’t disagree that sometimes a simple age verification procedure at the start might prevent a series of further unfortunate events. How many times have you heard from the newsfeed about the incidents with drunk teenagers?
Every parent wants their children to be safe. Is there a guarantee that they won’t be served with drinks in a nightclub or allowed in a suspicious enterprise? Yes, actually there is!
The smart contact has every power to guarantee that face control will eliminate those who haven’t reach the full age yet. A simple chip card swipe to a reading device is enough. Plus no stranger will be able to see private information except for the general one like name and address. This way the identification system built on blockchain makes our lives safer.
Now let’s get to know this technology in details.
What are smart contracts?
Smart contracts are designed to make our life easier. They assume the exchange of money, property or anything of value in a transparent, trusted and middleman-free way.
Satoshi Nakamoto, the author of “smart contracts” term, compares them with the way a vending machine operates. You give money—the machine gives you product and change. As simple as that. No intermediaries.
It is applicable to any situation. Like getting any legal document, you would need to go to the responsible person, pay the fee, wait for a resolution, then there is additional time to actually get the document. With smart contracts, all you need is toss a bitcoin into a ledger and the document goes into your account. Like any traditional contract, it regulates the rules and fees around the agreement. More to mention, it automatically enforces the obligations.
How does smart contract work?
It’s worth mentioning that smart contracts can be encoded on any blockchain. In general, smart contacts are blocks of code that can execute certain functions with specific parameters and predefined criteria.
Put it simply, they are a kind of programs that work in an “if this happens then do that” way. It is very similar to the way a standard computer operates. A big public blockchain can serve as an operational system storing data and keeping them safe from any manipulations. In its turn, smart contact is an application designed especially for your needs. You can configure it the way it is convenient for you including notifications, actions to allow, actions to block, etc.
It can be equally used by businessmen and ordinary people without any privilege, personal influence or unnecessary actions. Everyone can easily exchange some value. Blockchain will play the role of a safeguard protecting all parties interests and excluding middlemen in a trade area.
Where it can be used and how it can improve life?
Smart contacts can save our time, function without middlemen, perform any contact and guarantee the data authenticity and security. Moreover, they can be used in any type of transaction, not just financial or juridical, like we could have thought.
Let’s see what exactly will change for everybody with smart contacted being used universally.
As previously mentioned, blockchain plays the role of an operating system and smart contracts are applications. This way they have only the access to the data they operate with. Everything else is secured by blockchain.
It means that blockchain stores all the info about a human. One smart contract will show the health data to doctors, the other one will only disclose the insurance information.
Imagine, no need to contact any institution for corresponding certificates. When buying some product, you will only have the necessary information about the seller and nothing more.
Loans and mortgages
If you have already faced with issues of obtaining mortgages or loans then you know for sure how complicated and time-consuming these procedures are. Everything is done manually—application, approval, signing. In the end, all the wasted time never guarantees a successful outcome.
Smart contacts can automate all the process—from approval to the actual payments. It will speed up all the procedures and protect the parties from fraud.
Just imagine, once a road accident happens it takes a few minutes to file a claim, get the answer and receive a payoff. Special sensors can help the car to decide by itself on the injuries depth and those records cannot be modified or disputed in any way as the smart contract will report this info directly to the blockchain. What, already waiting for it?
The ways a business can benefit from smart contracts are countless. A simple procedure of running payrolls can be delegated to smart contracts which exclude delays, saves time and money. Plus staff will always receive the fair wage on time.
Supply chain tracking
With smart contact, it is possible to track the product movement from the factory to the actual store shelf. Real-time visibility monitors the whole supply chain and if any issue occurs manager will be informed immediately.
Examples of smart contracts
You might think, the future described above is way too far. Well, just check the real examples of how smart contracts are already benefiting some industries!.
In 2017 Atlas Insurance in Malta and Axa in France has already tested smart contracts in the compensation procedure to the airline customers in case the flight is delayed.
It works this way: a customer sends $5 worth of cryptocurrency to the insurance company smart contract and indicates the flight number. The company sends $95 to the smart contract. So in general, the smart contract has $100.
If the flight is delayed then a customer will automatically receive all $100 from the smart contact. It saves time and a customer is guaranteed to receive the compensation if the flight is delayed.
The already functioning Encrypgen app uses smart contracts to record and safely transfer patient data excluding access to third parties. Patients fully control their health data and even can make a profit by giving this data to researchers in a controlled way.
FollowMyVote application uses blockchain and smart contracts to completely protect a voting system from fraud. Finally, we can be sure that each vote is written to the blockchain and can’t be modified. So once the voting is over, smart contact will define the correct winner of the vote.
Not that long ago people used golden coins to make payments, then banknotes replaced them. Now cryptocurrencies are getting more and more popularity. Along with money smart contracts allow us to store any stocks of any company on the blockchain.
It’s all is already tested on a practice by the American company Symbiont that offers crypto signatures of stocks. By the way, the Delaware State Administration supports it which makes crypto stocks legal.
Implementation of smart contracts in all spheres will magnificently improve the world we live in, making it a better and a safer place.
They reduce costs and human efforts, having all the possibility to replace traditional contracts. All transactions are protected from fraud and middlemen-free. The terms of a smart contract are written with the computer code, so it can’t be misinterpreted. It is possible to create your own smart contracts that suit your needs better.
Everyone will notice the improvements once smart contracts will start handling for us our everyday tasks, and give us a chance to spend minutes not weeks on it.
If you don’t have any experience in programming and want to rely on a team of professionals, you can pay attention to smart contract development services.