Smart contracts are a result of the evolution of blockchain technology. Let us first understand what smart contracts are and throw some light on the smart contract use cases. Smart contracts are referred to as paperless digital code providing a set of promises on some predefined conditions that have been agreed to by both parties. To state in simpler terms, it can be said that the parties can set a condition that has the ability to start an action or a series of actions at the time when the conditions are met.
Smart contracts have a wide array of applications that help automate all tasks or the entire network like the decentralized autonomous organizations making use of a set of smart contracts. The ones who are still skeptical about using smart contracts should have an idea about the benefits offered and start using the same.
- One of the largest benefits offered by smart contracts is automation. This, in turn, makes it free from any kind of interruption and no third party can alter the agreement as well as decision.
- Security is readily enhanced in the case of smart contracts where the entire process works in a secure manner.
- Smart contracts are free from all sorts of interruption and hence operate smoothly.
- The entire system is trustless and hence there is no requirement of trusting other parties for carrying out any transactions.
- Smart contracts are able to make the transactions extremely cost-effective in nature because of the removal of intermediaries from the process.
- The autonomous smart contracts are executed with a greater speed as compared to the traditional approach.
- Finally, smart contracts are highly accurate and free from any kind of errors.
Use Cases of Smart Contracts
Now, we have a clear idea about the potential smart contracts and what benefits they have on offer. So, it is time now to understand the ten best smart contract use cases.
One of the top smart contract use cases is providing a digital identity to assets that are individualized. It contains data, reputation, and digital assets. The digital identity when rightly used is able to bring about new opportunities to the person. In addition to this, the digital identity offered by smart contracts plays a vital role in protecting the identity of the asset from their counterparts.
Loans, Mortgage, and Financial Service
Smart contracts play a crucial role in bringing about a significant improvement in financial services. Smart contracts help the easy connection between the parties to make sure that the entire process is completed in a hassle-free manner. Moreover, the use of smart contracts also makes the process free from all sorts of errors. Another major benefit of using smart contracts in financial services is clarity and enhanced visibility to all the parties involved.
The mortgage system is another use case of smart contracts. Smart contracts induce automation in the mortgage system to make it easier for both buyers as well as sellers. Now, when the system is automated, the entire process becomes less time-consuming and completely hassle-free which proves to be highly advantageous.
Insurance has been one of the important use cases of smart contracts. Disputes are a common affair in the insurance sector and to effectively settle the disputes along with making the claim settling process smooth, smart contracts have a crucial role to play. Smart contracts facilitate the insurance policy and ensure it has the proper documentation to make the process convenient for both the insurance buyer as well as the insurance provider.
Inter Border Payments
With the help of smart contracts, inter-border payments become easy and convenient, thereby facilitating international trade. Smart contracts have the ability to revolutionize trade finance by propelling international transfer of goods and initiation of trade payments with the use of only a letter of credit. Moreover, smart contracts enhance the liquidity of financial assets, thereby improving the financial efficiency of buyers, suppliers, and institutions.
Supply Chain Management
Another use case of smart contracts is the supply chain management industry. With the help of smart contracts, supply can be readily improved. It helps easy and convenient tracking of items within the supply chain with complete transparency as well as visibility to improve overall inventory tracking. It also helps reduce verification and provides enhanced tracing which in turn results in lesser fraudulent activities.
Clinical trials improve with smart contracts since they can provide better inter-institutional visibility. It also helps automate sharing of data between institutions and enables privacy-preserving computations.
Another major smart contract used case is in the Government. Smart contracts play a significant role in helping the government manage entire operations in an easy and automated manner. One of the major operations among those is recording land titles for easy property transfers. With the use of smart contracts, the entire process is quite transparent, and efficient.
Recording of Financial Data
Financial data is immensely important for every organization and the use of smart contracts is highly beneficial in this regard. Smart contracts provide the necessary way for recording data without compromising even a bit on accuracy and transparency. Therefore, financial data collection and recording are absolutely uniform across organizations resulting in decreased cost of auditing as well reporting.
Management of Assets
Smart contracts help manage assets in an efficient and effective manner. The entire process of asset management is quick because of the induced automation which is absent in the case of traditional practices. With the help of a smart contract, the process is fully transparent and hence does not give any of the users even a single chance to complain.
What Smart Contracts Have in Store for Us?
With the evolution and advancement of blockchain technology on a regular basis, the potential of smart contracts is bound to increase in the time to come. In addition to the smart contract use cases mentioned above, there are a number of other cases where smart contracts can be readily used and the number is all set to rise in the future.