When most people hear about blockchain, they immediately think of cryptocurrency — and with good reason. Blockchain is essentially a list of records, called blocks, which are linked and secured using cryptography. This technology acts as a secure and open ledger that records transactions, and is the basis for cryptocurrency such as Bitcoin.
However, the application of blockchain technology goes well beyond cryptocurrency. Smart contracts, in particular, are increasingly being seen as the future for record-keeping and transactions across a range of industries.
Smart contracts are self-executing contracts that have the terms and conditions of the agreement written into lines of code. The code exists across a distributed, decentralized blockchain network, cutting out the need for third parties to administer the contract.
By relying on the accuracy, security and trust of blockchain, smart contracts have the potential to disrupt traditional industries.
The Future of Contracts
Worldwide, companies are exploring ways to use blockchain to track items through supply chains. De Beers, for example, recently announced plans to launch the first industry-wide blockchain to track gems each time they change hands to verify authenticity and ensure they are not from conflict zones.
The self-executing nature of smart contracts make them ideal for use in industries where accurate data is essential. This includes banking, real estate and healthcare.
Accurate Transactions in Banking
Financial services is an obvious place to start for the application of smart contracts. The use of smart contracts in commercial transactions could speed up and simplify processes, ensure the accurate transfer of information and enforce the obligations of all parties.
Since the terms are fully visible to all parties and smart contracts are designed to execute exactly as they are set up, room for error in financial transactions is greatly reduced.
Many major banks are already piloting blockchain projects in the hopes of simplifying cross border payments, increasing transparency and enhancing online identity management. It stands to reason that we will see the adoption of smart contract technology in the foreseeable future.
Transparent Deals in Real Estate
From sales to rentals, real estate is an industry built on terms and conditions. The application of smart contract technology could enable buyers and seller to clearly name their terms based on predetermined conditions, eliminating surprises and dodgy deals.
For instance, the buyer and seller could spell out contingencies in the smart contract, such as a price reduction if the building inspection reveals problems with the property’s foundation. Such transparency could transform property transactions such as purchase/sale, financing, leasing and management.
Secure Data in Healthcare
The exchange of data is essential to create an efficient healthcare system that improves patient outcomes. The problem is that many healthcare providers are falling behind in digital transformation efforts.
Smart contracts could offer health care providers of the future the ability to more easily transmit and analyze data while ensuring patient confidentiality through the highest level of data encryption available.
The Impact on Industries
The potential benefits of smart contracts are huge. Smart contracts offer a greatly increased level of accuracy, transparency and security. The self-executing nature of smart contracts have already sparked interest in industries where transactions need to take place without fraud, censorship or third-party interference.
Platforms such as Ethereum offer the ability for developers to create smart contracts on a custom-built, global blockchain. As more companies investigate ways to take advantage of this technology, expect smart contract developments to go well beyond cryptocurrency in the near future.
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