The Benefits of Smart Contracts

Automation is probably the best word defining our economic future, with emerging technologies such as artificial intelligence, internet-of-things, autonomous robotics and virtual reality leading the way into a new era. So far, despite the hype around them, these technologies mainly evolved separately, although the need for a larger umbrella bringing them all together was obvious if the world was to make a significant leap forward.

So what can blockchain can bring to the table? What are the benefits of Smart Contracts?

Things are rapidly changing thanks to blockchain technology and its most promising application – the Smart Contracts. Automation means a vast amount of devices and interconnections and therefore needs a secure infrastructure that enables all these technologies to converge. And we believe that blockchain, which is probably the most secure piece of technology ever built, is best positioned to manage the vast amount of data, and also verify and automate the transactions between these devices through Smart Contracts.

At the first site, the benefits of Smart Contracts are obvious:

• blockchain is a secure technology and therefore the Smart Contracts can be a more secure place than the traditional contract law;
• blockchain has the advantage to cut out the middleman, which enables Smart Contracts to eliminate a series of costs associated with contracting and to improve efficiency and liquidity.

But these are only the most obvious benefits of Smart Contracts, and going deeper into the matter many other advantages arise.

Key properties of Smart Contracts

The key properties of Smart Contracts are autonomy, decentralization and auto-sufficiency. This means that after a Smart Contracts is launched, the deal initiator does not have to participate any more in the process. But it is very important to provide quality input when initiating Smart Contracts, because although they are able to collect money, realize transactions and distribute resources by themselves, they are by no mean magical instruments that understand what the user expects from them.

In other words, Smart Contracts need fine tuning at the beginning, but afterwards they do their job without any intervention. If you manage to achieve this fine tuning, the benefits are incommensurable when compared to traditional contracts. Whether traditional contracts between companies are notoriously difficult to set up and cost involved parties valuable time and money due to complex legal matters open to interpretation and disagreements, the Smart Contracts only create a set of rules that govern an entire exchange system between two parties, which are automatically executed without intervention.

A key issue in the business world and a common reason behind the success or the failure of a deal is trust. One of the main benefits of Smart Contracts is that they eliminate any concern in this regard, because you wouldn’t need to trust the other party you would only need to trust the Smart Contract itself. Instead of keeping a list of transactions and manually checking whether the terms of the contract have been fulfilled by the other party, a Smart Contract would get rid of the lengthy verification process and take care of things automatically. And making the market a more transparent place is clearly a great benefit for all parties involved.

But Smart Contracts are useful not only for established businesses aiming to maximize the market opportunities and fuel growth, but also offer great benefits for start-ups. Smart Contracts can be a useful foundation for a start-up’s business model, as well as a way to accept payments and access financing. Some start-ups even used Smart Contracts to set up their entire system of operations given that, as we mentioned before, smart contracts can be integrated with the internet-of-things and artificial intelligence technologies in order to create a single platform and deliver better services to customers, as well as a more efficient workflow within the organization.

More and more business leaders – from finance sector to shipping industry – become aware of the benefits of Smart Contracts: full transparency, saving costs and time, raising trust in the business environment – to name only a few of them. This visionary business leaders already embarked on a journey that will help them and their projects to stay ahead their competition.

Businesses can benefit from Smart Contracts in so many different ways, and we are only at the beginning. As things will progress we will discover more and more insights about how game-changing this technology really is. Smart Contract technology might be only in an early stage of development, but you don’t have to wait it to mature before jumping in, because it might be too late.

The sooner you decide to work with Smart Contracts, the better. Only to figure out how quickly this technology spreads note that Gartner research and advisory company estimates that by 2022 smart contracts will be in use by more than 25% of global organizations.

That’s a lot of business to be made!