5 Real-Life Applications of Smart Contracts
Few innovations in the blockchain world have been as revolutionary as smart contracts. A type of self-executing agreement where the terms between buyer and seller are directly written into the code itself, these mechanisms unalterable, almost impossible to hack, and helps guarantee that both sides to an agreement aren’t ripped off.
Smart contracts also allow for more complex transactions to be carried out between two anonymous parties without the need for a central authority, enforcement system, or legal guidance. Essentially, this means that smart contracts can be programmed to enable a wide variety of actions.
In contrast to the idea that blockchain technology is just an abstract field of data, smart contracts have allowed an entire world of new applications designed to solve many real-world problems.
Po.et for example allows journalists and content creators to control and manage their digital rights. This means they maintain the ability to offer up their content on an open marketplace for a fee, or enter into agreements with clients and be paid as work is completed. No escrow service, lawyers or agencies required.
As you can imagine, there are many industries that can benefit from this kind of technology. Here are just a few:
- Intellectual property
- The legal industry (contracts, negotiations etc…)
- Shipping and logistics
- Real estate
Financial services and insurance
One of the key challenges facing the insurance industry on a constant basis is fraud. For insurance companies to combat this, there needs to be an administrative team that looks into claims and ensure their validity. Disputes end up in court.
Smart contracts curb the impact of this ongoing challenge because both the insurer and insuree can lock into an agreement without the use of notaries, lawyers and other intermediaries. This cost saving opportunity would ultimately be passed down to the end consumer. While this doesn’t inherently prevent fraud, it can help prevent arguments in court. However, a blockchain acting as a public ledger and system of record combined with the benefits of a smart contract makes it much more difficult to slide under the radar.
Another area smart contracts can be applied to is the mortgage industry. Blockchain technology can allow for buyers and sellers to be automatically connected together in a frictionless, hassle-free process. Picture a smart contract governing all terms and conditions – bypassing the need for lawyers, realtors, and other professionals. This saves both time and money for both sides of the transaction while also reducing any potential errors or costs that could otherwise come from doing things manually.
Supply chain transparency
Tracking packages as they move around the world is an arduous task – smart contracts can simplify it.
From when a product leaves the factory floor to when it arrives on store shelves, this technology can make the entire process more transparent, clearly showing where exactly every package is along with where in the supply chain potential errors take place.
In the case of a contaminated shipment, for example, management will be able to see exactly where each individual product came from and isolate the contaminated goods without throwing away an entire shipment. Not only does this help organizations save costs, but it keeps buyers safer (and in a much more convenient way, if you don’t have to return a perfectly fine item just because there was an issue with another item in the shipment).
As researchers in the medical field conduct clinical trials and research potential cures to diseases such as cancer, effectively sharing data amongst the various institutions freely and openly is something smart contracts can facilitate. Data can be freely exchanged without compromising the privacy and data security of the patients and subjects involved.
A smart contract outlining various if-then scenarios works well in this particular use case. For example “if research firm A agrees to pay X dollar amount for certain data, then release relevant information.
Digital identity and records management
Although in today’s world, large tech companies get away with mining our data and personal information, in the future this could change drastically thanks to smart contracts. Individuals own and control their own digital identity, including passwords, data, digital assets, records, and other details.
This would be much different than our current situation, where often dozens of different institutions, organizations, and parties all have their own individual copies of our personal information – an obvious security risk. Instead, all these details can be consolidated and owned by an individual who chooses whom to share this information with smart contracts.
This is often called the “internet of value” – the idea that each person, using blockchain technology, will own their data and can choose which organizations get access to it (and who has to pay for it).
Building a digital future on the blockchain
All of the above are only some of the many potential real-world applications smart contracts can bring to the table. If there’s one thing for sure, it’s that almost every aspect of our digital lives, as well as our business systems, will be changed thanks to these innovations.
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