How Smart contracts are paving the way for businesses?

Posted March 1, 2023 iotric

Introduction

In today’s business world, traditional methods of executing contracts are often slow, inefficient, and prone to errors. These outdated methods can lead to a variety of problems, such as delayed payments, contract breaches, and disputes between parties. One of the most significant problems is the need for intermediaries to oversee and enforce contract agreements, leading to higher costs, longer processing times, and increased risk of fraud and errors. Furthermore, traditional contracts often lack transparency, making it difficult to track and verify the progress of a contract’s execution.

In addition, traditional contracts typically require manual verification and enforcement, leading to delays and increased costs. This can be especially problematic in situations where contracts involve multiple parties, complex conditions, or time-sensitive requirements.

To address these challenges, the implementation of smart contracts offers a potential solution. By using self-executing code and blockchain technology, smart contracts can automate the execution and enforcement of contract terms, eliminating the need for intermediaries, reducing costs, and increasing efficiency. Furthermore, smart contracts are transparent, immutable, and tamper-proof, ensuring that all parties have access to the same information and reducing the risk of fraud or error.

What is a smart contract?

Smart contracts, often referred to as condition-oriented programs that act as agreements between two parties, namely as seller and a buyer. They utilize a scripting language or framework, commonly known as solidity, which is particularly useful in Ethereum. Essentially, smart contracts are digital representations of physical agreements, stored securely within the blockchain as a computer program. These contracts automatically verify the fulfillment of the agreement and then execute the terms accordingly. This revolutionary technology can applied to a wide range of industries, including real estate, insurance, and banking, without the need for intermediaries.

What are the benefits of smart contracts?

Speed, accuracy and efficiency:

Smart contracts are automated and digitized, no manual work and techniques are included in this process and no time is spent in reconciliation errors that often result from manually filling in documents.

Trust and transparency:

In smart contracts no third party or no middle-men involved. And all the encrypted proceedings of transactions shared diagonally by all the participants of the organization. So, there is no chance of altering information for any personal benefits.

Security:

Smart contracts runs on blockchain. All the transactions recorded in blockchain are encrypted, where an unauthorized person is restricted to access the data.

Savings:

Smart contract eliminates the need of intermediaries in managing transactions, which reduces the external costs.

What are the benefits of using smart contracts in businesses?

Smart contracts adversely used in interacting and operating businesses globally. Significant feature of using smart contracts is the automation of enforcement and contract execution. Once the terms of agreement are met, the contract automatically gets executed. Smart contracts stored on a decentralized blockchain network which results in building trust and credibility between businesses. Also, help in abolishing the need of intermediaries and automating manual processes. However, smart contracts help businesses to move faster and to be more competitive.

Various use-cases of Smart contract:

Supply chain management:

Smart contract used in automations to track the movement of supplied goods in the supply chain, increasing transparency and abolishing manual processes.

Financial transactions:

Automation of financial transactions, such as the completion of a service or the delivery of a product and its release of payment held with the help of smart contracts.

Human resources:

Smart contract helps in automations of streamlining the paperwork, new employees, on boarding process and compliance process.

Legal contracts:

Smart contracts help in automation of the enforcement and execution of legal contracts, such as contracts for selling and purchasing goods and services.

Conclusion:

Smart contracts are a revolutionary technology and capable to transform business operations and manage the interaction between the business members. It offers a range of benefits, including security, transparency, cost saving, increased automation and efficiency which can help businesses to increase competitiveness and streamline processes. Smart contracts is actively contributing in many industries, including supply chain management, real estates and finance, etc. Adversely, it is in creation of new opportunities for innovation and growth.