Over the years, the majority of us have come across the term “Smart Contracts.” However, we never got around to knowing what it means. In reality, smart contracts have been using cases for revolutionizing the world around us. Often referred to as a byproduct of the blockchain revolution, smart contracts are primarily responsible for giving birth to the concept of decentralization. In addition, organizations worldwide have now started using smart contracts to solve many problems across numerous industries.
Nowadays, smart contracts are primarily associated with cryptocurrencies. Given the tremendous rise in cryptocurrencies and blockchain technology, we must possess every knowledge about the same. Although people have a fair idea about crypto and blockchain technology, they remain uninformed about smart contracts. If you, too, are unaware of smart contacts, then this article is for you.
In this article, we will walk you through what smart contracts are. Also, we will share five real world examples of smart contracts for better understanding.
What are Smart Contracts?
As we mentioned above, smart contract is a term primarily associated with cryptocurrency and blockchain technology. In the simple words of Nick Szabo, smart contracts are a distributed ledger used for storing contracts. The primary difference between smart contracts and other contracts is that smart contracts are entirely digital.
A smart contract is a small computer program stored inside a blockchain. This program is configured to run only when the prerequisites are met. In the real world, these smart contracts automate the execution of any agreement. These smart contract applications then make all the participants be certain of the possible outcome.
One of the key advantages is that they automate a workflow, set the following action in motion when the prerequisites are met, and eliminate the involvement of a third person whatsoever.
Benefits of Smart Contracts
Some of the key benefits of smart contracts are:
- Automation of Workflow
- Elimination of any Third Party
- No Time loss
- Speed, Efficiency, and Accuracy
- Absolute transparency
- Encryption and Security
- Complete Autonomy and Savings
Top 5 Real World Examples of Smart Contracts
If you have gone through the above sections, you’ll see that smart contracts offer plenty of benefits. This is precisely why organizations worldwide have started using smart contracts to solve many problems across numerous industries. Here are some of the real-world examples of smart contracts.
One of the key benefits of smart contracts applications is that they create an environment that is less susceptible to manipulation. For example, if a potential voter votes using the application of a smart contract, those votes will automatically be ledger-protected. This makes the voting extremely difficult to decode.
Since smart contracts help you automate a workflow, governments take full advantage of the Ethereum case to manage their operations. One of the best examples of smart contracts being used by the government is for the potential transfer of property documents with great efficiency and absolute transparency.
Yet another great example of smart contracts is the Insurance sector. Since insurance is prone to regular disputes, it has become the most useful smart contract use case. Given its way of working, Insurance Software Development companies have now started using smart contracts to settle an insurance agreement as soon as possible.
For an insurance provider, a smart contract is an easy way to facilitate the terms of an insurance policy. The smart contract keeps track of every aspect of the insurance policy. Also, it will continue to keep the policy in effect as long as the client meets the prerequisites.
The smart contract use cases are primarily linked with the Finance sector. Every large and small-scale organization needs to pay extreme importance to the company’s financial data. However, storing all the data on heaps of paper can be risky since the paper can either be damaged or misplaced, or stolen.
To tackle this, the financial sector uses smart contracts, which help them record efficient, accurate, and transparent financial data. Finally, it also reduces accounting costs and better interoperability among legacy and distributed ledger networks.
4. Supply Chain Management
Supply chain management is probably one of the best smart contract use cases. Using smart contracts helps the supply chain like DHL to manifold extensively. For example, collaborating supply chain management with smart contracts can help an organization keep track of all the items within its supply chain.
In addition, these ethereum use cases largely reduce the hassle of verification by replacing it with enhanced tracing. These can be great smart contract use cases that can keep your company from frauds and thefts.
5. Clinical Trials
Yet another real world example of smart contracts is clinical trials. Integrating clinical trials with smart contracts is known to help with cross-institutional visibility. Thanks to the automation of operations, you can easily automate and share data within institutions. Similarly, you can also opt to restrict access to certain individuals.
With smart contracts, these clinical trials can be conducted securely and with the utmost confidentiality. Blockchain can help you track all the events occurring during a clinical with greater efficiency and utmost precision. Similarly, The smart contract can also ensure the validity of a clinical trial by checking the sponsor’s identity and whether the trial has a National Clinical Trial (NCT) identifier number which means the authority has approved the study.
Blockchain technology and cryptocurrency are two of the most widely used terms in the 21st century. As the years pass, these two things are bound to hold the most importance in society. Since the world is slowly moving towards having a completely digital approach, it is your job to keep in touch with everything related to it.
Smart contracts are a thing of the future. These contracts guarantee the utmost efficiency, transparency, and security by saving you from the hassle of going through heaps of documents.