With this new year, Illinois became the latest state to recognize Smart Contracts and other blockchain-based records as legal evidences in courts – Source
Illinois has been added in the list of states that recognize Smart Contracts as legal instruments. According to the bill passed by Rep. Keith Wheeler counted on January 1st, 2020, showed a strong favor of Smart Contracts in case of fraud in businesses or to claim enforceability.
Industries acclimatization with Smart Contracts has grown around Blockchain technology. Business leaders have started exploring Smart Contracts to discover newer business possibilities.
Let’s revisit the time when Smart Contracts were incepted.
Panoramic View of Smart Contracts
Nick Szabo – a computer Scientist, Cryptographer in the early 90’s proposed the idea of Smart Contracts. His idea showcased utilizing a decentralized ledger in the form of programable codes to store information in a centralized chain of sources.
A good and suggestive analogy to understand Smart Contracts is a vending machine. When you put money into a vending machine and select your drink , you don’t have to worry; if you have inserted the right amount, it simply gives you the drink automatically, and if not, you need to know what is that parameter that wasn’t met. Similarly, Smart Contracts automatically executes digital agreements only when certain conditions are met.
Undoubtedly, Smart Contracts functions on the core principles of Blockchain.
- Autonomous: No mediators are involved, transacts on its own
- Decentralization: Publicly stored decentralized tamperproof distributed ledger
- Irrevocable: Incorporation of blockchain provides robust architecture
Let us now understand how Smart Contracts functions?
Smart Contracts are computer codes stored in a blockchain platform using Ethernet or Hyperledger structure. It can either be a text based traditional contract or could be execution of certain provisions. The parameters and the input in smart contract needs to be specific which means if party A wants to transfer money to party B then there are ‘if’ and ‘if not else’ statements to be executed. Suppose if you want Y step to be executed, it will only happen if X occurs and thus if the codes aren’t met, the steps aren’t triggered.
Each block of Smart contract is executed across multiple nodes of blockchain ensuring security, permanence and immutability. Smart set of codes are operated under set rules and the below image is a quick demonstration of how ideally Smart Contracts function between two parties.
Application of Smart Contracts across Industries
Smart Contracts in Insurance
The adoption of Smart Contracts in the insurance sector could positively impact different internal processes.
For instance, the client faced uncertain crop damages due to unpredicted events, weather, resource or knowledge limitations, and poverty. This caused extreme financial distress and insurers also underwent financial losses due to small insurance contracts leading to high overheads and low profit.
Cygnet Infotech proposed a Blockchain-enabled solution to overcome the limitation of traditional insurance processes. The solution benefitted the company with low cost decentralized system, mutual risk sharing and effective technical consultation.
Smart Contracts in Entertainment
Contracts are pervasive elements in culture of entertainment whether it concerns authors, producers, publishers or distributors. The absence of legal contract increases the probability of frauds against the rightful owners.
Blockchain team at Cygnet Infotech delivered a state-of-the-art blockchain solution with integrated Smart Contracts for the world’s largest podcast hosting, distribution and monetization platform in North America.
Smart Contracts in Supply Chain Business
Supply chain industry operates in smaller fragments, demanding thorough visibility across all operations. Transparency in sales data, inventory levels, order and shipment information can help companies eliminate uncertainty, risk of buyer/seller or distributor contracts or production processes.
Cygnet Infotech empowered one of the elite Supply Chain clients by offering a decentralized system for trustless transactions between buyers and sellers. With our solution, the client managed to overcome the loss of trust, consistency and authentication, and regain all the potential loss of revenue.
The global Smart Contracts market is expected to skyrocket and reach approximately 300USD Million by the end of 2023 with 32% CAGR during forecasted period 2017-2023. Source
Undoubtedly, the adoption of Smart Contracts is not limited to single sector/scenario. Industries such as Manufacturing, Healthcare, Education, Finance, Insurance, Entertainment and others can exploit its potential across different domains with its business winning aspects like trust, security and transparency.
Arm yourself with Blockchain-enabled solutions to automate your business processes for hassle-free transactions, eliminating security gaps or contractual concerns. Get in touch with our Blockchain solution experts at +1-609-245-0971 or firstname.lastname@example.org.