This article covers the benefits the blockchain application development can bring to your business. We’ll pay particular attention to the smart contracts, the technology which is based on blockchain and allows us to improve the methods and the way we work with the contracts.
Smart Contracts Main Features
Smart contracts are based on the blockchain technology which is also used for implementing the Bitcoin network as well as the other cryptocurrencies such as Ether. Ether is quite important in our case since it’s the most popular cryptocurrency associated with smart contracts. It’s provided by Ethereum, an open-source, public platform featuring smart contracts. It allows you to write your own smart contracts, publish a whitepaper, and get Ether as a payment from investors who are interested in your project. If you want to concentrate only on business and don’t have enough time and resources to write smart contracts on your own, you can rely on a custom software development company that provides such kind of services.
Smart contracts consist of some tasks that will be assigned and rules that determine the way stakeholders should act in a particular situation and what needs to be done to meet the contract requirements. The stipulation of payments is based on the fulfillment of select, quantifiable objectives. One of the main advantages of smart contracts is their self-executing nature. After the terms of the agreement between the parties are set, you can be absolutely sure that they will be automatically implemented when certain conditions are met. The terms are executed according to preset logic by a blockchain network consisting of computers that use special protocols to agree upon the sequence of actions. Since you can get rid of any third parties, the problems of counterparty trust can be solved much easier. Smart contracts are most useful in the case you want to determine quantitative measures such as temperature, weight, time, and so on.
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How to Use Blockchain Technology in Business
Shipping freight can be a good example of using smart contracts. If your business is related to the delivery of crates with perishable products over long distances you may be interested in the possibility to confirm as many different pieces of actual data as possible using the blockchain technology. For example, smart contracts allow to control weight, a number of crates, temperature, moisture, dates of loading and sending the crates, etc. This data can be gathered by the IoT-devices that allow you to track the changes of measurable data in the real-time mode. In the case of non-compliance with the contract, there will be no need for your direct participation since smart contracts can automatically send the forfeit to the unscrupulous contractor. The smart contract may have as many inputs as required. You can control fees attached to tolls or any other variable. If some predetermined conditions are not met, a smart contract can simply stop execution and suspend payments without any delays associated with costly litigation.
Smart contracts allow simplifying your digital identity management. You can store and control all the data related to your reputation and digital assets within the blockchain network and decide what portions of such data will be disclosed to a counterparty. Such functionality provides enterprises with the opportunity to know their customers and vice versa.
Smart contracts can be used by financial organizations to improve the data recording process and make it more accurate and transparent. The blockchain technology allows for consistent financial data across organizations and reduces auditing costs. Through the improvement of data integrity, smart contracts allow increasing market stability.
Dozens of post-trade operations usually made manually by each counterparty for verifying trades can postpone the completion of transactions. Smart contracts allow avoiding these duplicative processes by utilizing a combination of contract conditions that run automatically and help to optimize post-trade processing of over-the-counter derivatives.
If there’s a room for automation in business, you can be sure that smart contracts will fill this niche sooner or later. For example, the parties involved in mortgage can be automatically connected with each other by a smart contract. Blockchain can guarantee a low error-prone, safe, and frictionless connection process. Thanks to the automation, the payments and release of lien will be processed instantly after the loan is paid.
Benefits of Using Smart Contracts
We can list many benefits of implementing and using smart contracts, including an increase in verifiability of business data-driven information and their outcomes or knock-on effects.
Due to the decentralized execution approach, blockchain-based smart contracts allow eliminating the human factor. Since execution is not controlled by an individual party, there are fewer risks of manipulation or fraud. Moreover, as smart contracts are automated with the use of the computer code, there’s no need for any manual means to accomplish them. It allows us to speed up the working processes which become less prone to human error. Since the number of the intermediaries ranges from zero to several, smart contracts allow significantly reduce reliance on third-parties that should provide trust between the parties to the contract. Another consequence of less human intervention is cost reduction.
In addition to making changes to existing types of business, smart contracts help to create completely new business models. Using smart contracts, you can provide automated access to storage units, vehicles, or any other thing that has a physical lock on it. A customer can use its smartphone to make a payment and unlock a house that he wants to rent, for example. Auto insurance can reach a qualitatively new level as well. If a vehicle is equipped with an IoT-device, it can allow executing claims shortly after an accident on the basis of the recorded driver reports, vehicle, and accident report history.
The next time when you think about how your company can benefit from eliminating the number of intermediaries involved in day-by-day deals, do not hesitate to take a step further in your thoughts. Considering the development of technologies nowadays, it’s quite possible that there’s an opportunity to realize what you could only dream of yesterday. If you’re in doubt whether the smart contracts can improve your business, ask yourself a simple question: “Do I use contracts regularly?” If the answer is “Yes,” then you definitely should try them in practice. Smart contracts reduce the likelihood of manipulation and fraud, reduce delays associated with litigation, help get rid of auditing costs, and so on. The blockchain application development services provided by software development companies will allow you to plunge into the world of smart contacts as soon as possible.