Smart Contracts Explained And The Exciting Potential Future Uses Of Them

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Interesting guest post by the team at Jincor, who are looking to deliver simple smart contracts and cryptocurrency transactions for any business. 

Imagine that you’re an artist who’s just released his or her first album on the Internet for the whole world to enjoy. Because you don’t want to be a starving artist, you demand a small royalty for each commercial use of your intellectual property. But how do you keep track of who has accessed your album and used your songs for commercial purposes, and how do you bill those people?

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Right now, there’s no convenient solution available. Soon, artists around the world could use a solution based on smart contracts for copyright management, and that’s just the very tip of the massive iceberg of what this potentially game-changing technology can do for any business relations that involve people.

Definition of Smart Contracts

The Investopedia defines smart contracts as self-executing contracts with the terms of the agreement between buyer and seller directly written into lines of code. Modern smart contracts run on various decentralized, blockchain-based smart contract platforms, such as Ethereum.

A blockchain is a digital, distributed, cryptographically-secured, and continuously growing list of records, called blocks. A blockchain can efficiently record transactions between two parties verifiably and permanently, ensuring immutability through decentralized consensus.

Thanks to these properties of the blockchain technology, smart contracts allow for trusted transactions and agreements to take place among different, anonymous parties without a central authority, legal system, or external enforcement mechanism. And you can check this article for more benefits of using it.

“Technology leaders envision many applications for blockchain-based smart contracts, from validating loan eligibility to executing transfer pricing agreements between subsidiaries,” write John Ream, Yang Chu, and David Schatsky for Deloitte Insights. They add “We have identified a range of applications — ranging from smart health records to pay-as-you-go insurance — that companies are piloting right now.”



Brief History of Smart Contracts

The first person to propose smart contracts was Nick Szabo, a computer scientist, legal scholar, and cryptographer known for his research in digital contracts and digital currency. In 1996, Szabo released a white paper titled “Smart Contracts: Building Blocks for Digital Markets.”

“New institutions, and new ways to formalize the relationships that make up these institutions, are now made possible by the digital revolution. I call these new contracts ‘smart’, because they are far more functional than their inanimate paper-based ancestors,” stated Szabo in the white paper. “The basic idea of smart contracts is that many kinds of contractual clauses (such as liens, bonding, delineation of property rights, etc.) can be embedded in the hardware and software we deal with, in such a way as to make breach of contract expensive (if desired, sometimes prohibitively so) for the breacher.”

Smart contracts were rediscovered only recently thanks to the cryptocurrency boom that kicked off after an unknown programmer, under the name Satoshi Nakamoto, released the first decentralized digital currency, Bitcoin, in 2009. These days, smart contracts are associated primarily with the Ethereum blockchain platform, which was bootstrapped during August 2014 by supporters from all around the world. But the industry is evolving quickly, and for now, there are dozens of other blockchains with the possibility of building smart contracts.

Future of Smart Contracts

Smart contracts have a broad range of use cases across virtually all industries. Any industry that heavily relies on independent intermediaries to create links between people to bring about an agreement could be streamlined and made more efficient using smart contracts.

Record Keeping

Smart contracts can be used by private companies and public organizations alike to store and share records in a way that’s inherently immune to data breaches and individual misconduct.

Insurance

Insurance companies can use smart contracts to perform error checking, routing, and payout calculations based on the type of claim and underlying policy, which would be specified in computer code directly in a smart contract.

Health Data Access

Smart contracts can provide access to medical health records upon multi-signature approvals between patients and providers, giving researchers easier access to the data they need to discover cures for diseases and potentially rewarding patients for their participation with micropayments.

Voting

Smart contracts have a tremendous potential to change the way we vote. They could be used to validate voter criteria, log votes to a blockchain so they can’t be manipulated, and define specific actions as a result of the election outcome.

Supply Chain Management

When ordering supplies or dispatching goods to customers, smart contracts can provide an automated payment mechanism that ensures that the supplier only gets paid when a shipped order reaches the customer complete and on time. And if you wonder about more benefits of using smart contracts for small business you should check this article.

Conclusion

In many ways, smart contracts are shaping up to be the most important application of the blockchain technology. Gartner estimates that by 2022, ratified unbundled (that is, defined impact) smart contracts will be in use by more than 25% of global organizations.

New real-world applications of smart contracts are emerging nearly every day, and some of the biggest names across industries have invested hundreds of millions of dollars to develop smart contract-based projects. As it was stated in the Harvard Business Review, blockchain technology has the potential to become the backbone for recording all transactions and will create new economic value by dramatically lowering the cost of transactions.

Modern businesses (including the small ones) can benefit from smart contracts in many different ways, and we are only beginning to understand just how game-changing the technology is. While industry leaders are already aware of the benefits, which smart contracts may bring to their businesses (full transparency, saving costs and time, raising trust in a business environment, and many others), most of them prefer to stay aside, due to associated risks and lack of technical expertise. However, the solution is almost there. Private blockchain that has been being built by Jincor team will allow any business to unleash the power of smart contracts for small business owners from any industry easily with no legal, technical or operational complications in a cost-efficient manner. If you want to learn more about the product browse for additional details here or chat with the team and ask any questions about it in our telegram channel.

If you want to learn more about the product browse for additional details here or chat with the team and ask any questions about it in our telegram channel.

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