A smart contract is an electronic protocol written with the help of computer code. Its purpose is to transfer the information and to provide the security for the performance of the contractual terms.
Smart contract operation is based on the blockchain technology. The technology is made up as a decentralized ledger made of multiple nods connected into a unified network. The blockchain lets users conduct transactions, transmit information and assets without banks or any other intermediaries.
Smart contracts are programs created on the basis of the computer logic that are being transmitted in the form of a code. That is why parties to the deal can be sure that all the contractual terms will be met and neither party will be able to change the conditions or to interpret them in its favor. The code is the main law of the smart contracts.
The very existence of the smart contracts proves that the blockchain technology goes far beyond the widely spread opinion that the technology is limited to the cryptocurrency sphere.
Brightest Sides of Using Smart Contracts:
- Accuracy. Smart contracts are characterized by the highest level of accuracy in comparison with the traditional forms of contracts. They let avoid mistakes while entering the data; such mistakes often take place if we are speaking about manual completing of the forms.
- Speed. People spend an enormous amount of time to collect and to process all the needed documents. The application once programmed does all this job on an automated basis.
- Security. Use of smart contracts presupposes the use of cryptographic instruments and internet pages encryption that provides a high level of security. A hacker will need such incredible skills, ingenuity and so much luck to hack the code that it is hardly possible to imagine such a scenario.
- Credibility. All the data is stored in an encrypted form in the single ledger. Such a way of storing the data excludes loss of any information as well as a violation of their credibility.
- Backup. The system also excludes any loss of the function recorded in the smart contract as blockchain is being copied many times.
- Self-sufficiency and economizing. With the use of smart contracts, there is no need to apply to a broker or a lawyer. Such absence of intermediaries let a party save money and avoid interfering of the third parties.
Industries to Apply the Smart Technology:
- Trade. Almost all the types of commodity and money relations can be realized in the form of smart contracts – from automobile sales to real estate. The advantage of the smart contracts here is its very nature that lets people who do not trust each other make terms and conditions impossible to change.
- Logistics & Supplies. These spheres often suffer from bureaucracy when numerous documents have to be confirmed by numerous authorities. ‘Thanks’ to such a long way fraudsters get the opportunity to make money while honest companies bear losses. Blockchain lets avoid such problems as each participant of the chain gets access to the secure electronic system that controls work execution and all the payments.
- Health care. The idea to store medical files in the cloud environment has crystallized in the human mind for a long time and the blockchain technology can make it true. The field of the blockchain application in the medical sphere actually has no limits. Smart contracts can automatically process lab results and make a decision on the need to direct a patient to a doctor on their basis. They can even make appointments to the relevant specialist. With the help of oracles realized as personal identifiers the smart contracts will be able to analyze the patient’s health condition in real time as well as to suggest to the patient different solutions on how he or she can optimize his or her health condition.
- Cryptocurrency. We could not but mention cryptocurrency as they go hand in hand with the blockchain technology. The blockchain platforms were first made to conduct cryptocurrency transactions. Cryptocurrency transactions have got such a great potential thanks to all the features of the smart contracts and the Blockchain technology we have listed above. Security and transparency of the operations are the main of them.
The finest minds are working hard on the technology development. The smart contracts platforms have become more autonomous, accurate and transparent. The protection technologies have been developing no less rapidly. The benefits of managing a business in the digital environment with the use of smart contracts certainly have no limits. Implementation of the smart contracts into almost all the spheres of production and service provision is the issue of time. We can certainly say that smart contracts are going to become the basis for the future global economy and a part of the ordinary life of each customer.