SMART CONTRACTS BLOCKCHAIN TECHNOLOGY
Smart contracts have been in the picture for some time now. They are making the establishment of contractual relationships among mutually unknown parties easy and safe. With Blockchain as their underlying technology, smart contracts are changing the way we do business.
The concept of smart contracts dates back to 1997. Vending machines, introduced that year, are the simplest version of this concept. These machines release an item only after it has been selected and the correct value has been paid. With the introduction and expansion of Blockchain technology in recent times, companies are now coming up with Blockchain enabled smart contracts. These contracts automatically implement the terms and conditions between engaging parties.
BLOCKCHAIN ENABLED SMART CONTRACTS
Smart contracts are nothing but computer programs that facilitate, verify, and enforce the performance of a contract. These contracts often emulate the logic of contractual clauses. At their core, like any other computer program, these contracts work on if-then statements. The difference, however, lies in their interaction with real world assets.
EXAMPLE OF A BLOCKCHAIN ENABLED SMART CONTRACT
Blockchain enabled smart contracts not only maintain a healthy financial transaction system but also automatically implement multiparty agreements.
An example of Blockchain enabled smart contracts could be this really cool application developed by a German start up. The application unlocks the door automatically if the renter has paid her deposit, shows up at the right date, and produces proof of identity. Once the facts are verified on the Blockchain, the door opens.
Another example is that of an application that allows vehicles to sell small amounts of electricity depending on their battery needs, when stopped in traffic. Such a contract is executed in microseconds.
And that’s not it! Such examples can be extended to a multitude of Internet of Things transactions with the help of Blockchain enabled smart contracts.
APPLICATIONS OF BLOCKCHAIN ENABLED SMART CONTRACTS
Blockchain enabled smart contracts find application in a myriad of fields, such as finance, life-sciences and healthcare, telecom, media, energy, as well as the public sector. Listed here, are a few such applications.
- Coupon payments
- Insurance Claim Processing
- Tracking patients and creating generous rewards for achieving a milestone
- Return the remaining amount once a vehicle has been fueled
- Validate a voter’s information
- M2M communication that allows devices to make transactions automatically based on a certain criterion
- Entering into a rent or sale agreement
BENEFITS OF BLOCKCHAIN ENABLED SMART CONTRACTS?
For a wide range of potential applications, Blockchain-based smart contracts could offer a number of benefits:
- Less prone to errors.
- Elimitation of middlemen.
- Reduce cost.
Since they are lines of code, they are faster as compared to tasks that require manual means for accomplishment.
- They are automated and hence less prone to errors.
- They are decentralized, which enables a client’s information to remain private. It reduces the risk of manipulation and errors as well.
- Eliminates the middleman, thus increasing trust between the parties doing business with each other.
- Reduces the cost, as there is minimal human intervention.
Blockchain enabled smart contracts have altered different aspects of doing business to a significant magnitude. They have been able to generate trust, which is exciting for many industries in this highly globalized world – everyone wants to do business with almost anyone and everyone. Therefore, more businesses should invest time and resources to see if these auto-executing smart contracts can be of some use to them.