“Blockchain technology and smart contracts are creating opportunities that will provide an immeasurable impact on our financial systems.” – Andrei Poliakov, CEO Coinberry Limited
Smart contracts are computer programs or transaction protocols that are intended to automatically execute, control, or document legally relevant events and actions according to the terms of an agreement.
The objective of smart contracts is to reduce the intermediaries, resulting in reduced risks of fraud, less operational costs, lesser risks of exceptions, etc.
Smart Contracts are more of a “set of promises, specified in digital form, including protocols within which the parties perform on these promises”, as termed by the proposer Nick Szabo.
Smart contracts were first proposed in the late 80s’ but are now booming with their impact in blockchain technology.
Smart Contract Salient Features
- Autonomous – Smart contracts work on their own as a predefined set of rules and so are available to service 24/7 all year round.
- Accurate – Smart contracts are always accurate as they are well defined and well tested and there is no human interaction involved during the operation thus reducing the 15% human error risk too.
- Fast – Smart contracts are really fast, compared to classical processing techniques. They process tasks automatically with software and the internet, saving a lot of time. They will complete the whole processing within the blink of your eyes. There will be no manual processing.
- Interruption free – Smart contracts process so fast that the user needs not to wait for the process to complete and proceed. They provide results in the blink of an eye.
- Trustless – since smart contracts remove the intermediate people, they make the system more trustworthy. Implying fewer interactors builds more trust.
- Cost reduction – Smart contracts reduce operational costs as they reduce the number of people required to do a certain job as these are all automated.
Smart contracts are proving a positive impact on the way we perform routine jobs. Some of which are:
- Record Storing – Smart contracts can record data according to the digital standards and encryption. Not only that but they can also release, renew, or moderate it as per the need. Not only store data but can automatically remove unusable data as per set rules.
- Voting systems – We have doubts about rigging in polling for the elected governments as there are manual systems that can easily benefit one and damage the other. Some digital solutions are there but are not usable at large scales. Smart contracts come with a ledger-protected voting system that provides a better standard of encryption and computing that is not possible to hack entirely, assuring the best results.
- IoT Networks – Smart contract blockchain combined with the Internet of Things networks, makes it more efficient and stronger. They make a perfect blend of hardware and software, making them more user friendly for our daily lives.
- Supply Chain Management – Supply chains running via smart contracts are more manageable, traceable, and easy to use as the data is error free and there is no chance of it being tempered.