What is Smart Contract in Blockchain Technology?
Smart contracts and Blockchain technology are reshaping the world industries and how we do business. Today, you can buy a car, transfer money, and breeze through the complication of buying a property all because of Blockchain and smart contract technology.
Smart contracts and Blockchain enable contracts and agreements to be binding without the intervention of a third-party, whether trusted or not. Smart Contract has helped many businesses cut costs, improves customer satisfaction, and reduces undue risk, brand businesses, and service providers. As this technology promises to improve the process, what are some of its benefits and application of this technology?
So while the market has become easier and safe, what is the smart contract and how does Blockchain technology boost it?
Blockchain is decentralized, distributed public ledger systems that digitally records and link together each transaction in a chronological order to enable the market or individual to keep tabs on the transactions without any third-party. Each record is encrypted and cannot be changed or altered encouraging transparency and openness among the various networks. The most common cryptocurrency is Bitcoin and Ethereum.
Benefits of Blockchain
It is libertarian hence no intermediaries
It is a decentralized peer to the peer transaction mechanism
It cannot be falsified boosting trust and honesty during every transaction
Although it is a public ledger system, it can be limited by the market or individual
It protects and keeps the individual identity anonymous
Smart Contract Overview
Smart contracts are sets of order or codes in digitalized forms, including protocols with which most parties must come to an agreement before it can be executed on the Blockchain. Using Smart Contract on Blockchain allows for any digital system to carry out a transaction or contract between networks on a decentralized database without any intermediary. Smart contracts work like this, the parties involved reach an agreement, the agreement is reduced to binary then coded, hashtag, and submitted the Blockchain. The Blockchain executes the order according to the agreement reached by the parties.
It is that simple.
Smart Contracts was started by Nick Szabo for formalizing and securing agreements across public networks. Szabo believed that cryptographic protocol could enable computer software to come up with contractual clauses that will make performance obligations easier and safer when predefined conditions are met.
Smart contracts consist of transactions stored, replicated, and updated in distributed Blockchain. The integration of Blockchain with smart contracts eliminates third party middlemen and eases transaction stress, especially in areas of accounting, auditing, banking, and trading.
Benefits of Smart Contract
Time-saving and cost-effective - transactions across state lines, countries, and between merchant has always been a problem and setback for many businesses. With Smart contract Blockchain businesses eliminate third-parties and save money to move or remove money. Furthermore, this technology enables quick validation and agreement without any problem anywhere in the world.
Transparency - using smart contracts enables quick transactions across trusted lines. As agreements are encrypted, and records cannot be altered, changed, or blocked, increasing confidence across party lines.
Speed and Precision – smart contracts are automated across digital pathways. This cuts back time filling forms or completing huge paperwork before you can process transactions across any channel. Furthermore, all codes are exact and precise without errors, unlike traditional methods.
Security – smart contract and Blockchain technology encryption is top-notch and not easy to hack. This makes it the most secure transaction platform. It secured transactions and keeps records that can be referred to at a later date. It also enabled credible transactions without middlemen.
Application of Smart Contract Blockchain Technology
A smart contract is a medium for a conflict-free transaction. With Blockchain technology, this process is safer, faster, and eliminates middlemen. It is for this reason that it works in different sectors of the economy.
Today government establishment across the world, even in developed countries, still depends on obstinate technology to process with piles of paperwork before a process is complete. Implementing Smart contract Blockchain technology will open room for less work, secure systems, and less computer power or power wastage. Secondly, a smart contract will enable an accurate process without the need for too many hands.
Smart Contracts in the healthcare industry will enable proper management of patient records. Blockchain technology and smart contract are a cost-effective and professionally secure way of saving, sharing, and protecting personal information. It is also a way for easy storing, accessing, and authorization of records effortlessly. Besides healthcare applications, Smart contracts can be used in medical research facilities to store but also accept grants and monitor spending.
Banking and Finance
Although the decentralized system that Blockchain offers makes it the best method of transacting without stress. However, due to Blockchain technology scalability, it is hard to incorporate it into banks and financial institutions. Smart contracts, on the other hand, are helping financial house track, monitor, and enforce banking rules and policies. It has also helped banks save billions, and small institutes will save more using this technology.
Blockchain shared ledger system provides a trusted source for most offices. It also reduces inefficiency in communication and mistakes among staff. A smart contract in blockchain technology allows for accuracy, automation, and transparency in business increasing customer satisfaction and shaving time off regular operation time. Furthermore, it streamlines office duties and cuts out discrepancies associated with processing and settling payments.
Smart Contract and Blockchain technology can be used in all situations – from complex to simple processes. These can range from applications listed above or as simple as transferring money to a loved one across the globe. This seemingly complex system also plays into real estate, property ownership, and rights to intellectual property, access, control sharing, and recording of sensitive data without fear.
Just like Blockchain technology disrupted industries across the world, in combination with Smart Contracts, the potential and extent are beyond imagination.
With smart contracts and Blockchain technology, every task will be easier and digital signature identified, confirmed, stored, and recorded on any system.
Now that you understand better the benefits of smart contract and Blockchain technology, you can start implanting the process in your business and daily life.
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