Have you heard already of smart contracts? If you run a business and are curious about the new automation and privacy solutions that arise every few years, you have probably heard of smart contracts. These programs are stored on a blockchain to run when previously determined conditions have been met.
Smart contracts are usually used to automate the execution process of an agreement to ensure that all parties can know the outcome of it without involving any intermediary or spending too much time on it. Also, smart contracts can automate workflows by triggering the following action once conditions have been met.
How Do They Work?
The best way to explain the way that smart contracts work is by following simple commands such as ‘if’, ‘when’, ‘then’, and similar statements that have been written into a code on a blockchain connected to it. Once these actions have been triggered, a network of computers will execute them only if the already set conditions have been met and verified.
These actions could be anything, from releasing funds to certain parties and registering your new vehicle to sending notifications and issuing a ticket. Once the transaction is completed, the blockchain will be updated. In other words, it’s impossible to change the trades, and only those who have been granted access will be able to see the results of it.
When talking about smart contracts, there can be an indefinite number of stipulations to ensure all parties in the agreement are satisfied with the transaction. To set up the terms of the deal, parties will need to determine the way transaction and their data will be represented on the blockchain, but also agree on the simple statements mentioned above (‘if’, ‘when’, ‘then’, etc.). Another thing that will need to be factored in is to consider all possible exceptions to the agreement, and lastly, define a framework for resolving disputes.
Once all of that is done, the smart contract will be programmed by a developer, but you will be able to find numerous templates from organizations that are already using blockchain for businesses.
Blockchain For Businesses
When a predetermined condition is met, the contract will be executed immediately. After all, smart contracts are digital and automated, so you will not have to spend time and resources on paperwork and reconciling errors that often occur from manually filling. One of the most significant benefits intelligent contracts and similar blockchain solutions have for businesses is that there are no third parties involved. Due to encrypted records of transactions being shared across participants, there will be no need to think about whether the information has been altered for any reason possible.
Another vital benefit is security. As many organizations depend heavily on the privacy and security of their sensitive data, with transaction records encrypted, it’s almost impossible to hack them. With blockchain technology, each document is connected to a particular block, so hackers would need to figure out the entire chain to change just one record.
And of course, there’s the money factor as well. Businesses are constantly looking for ways to save money, and smart contracts are one of them. With no need for intermediaries and seeking errors, organizations are saving time and money each time they create an agreement via smart contracts.
If you’re curious to implement smart contracts in your business and enjoy the many benefits it has, you should consider seeking a smart contract audit. This will not only give you a good idea about the required budget but will also help you understand how this type of solution would work in an organization like yours. Once you’re satisfied with what you’ve been provided, you can start working on your own smart contract implementation.