Technology and the internet are affecting all aspects of our lives every day. Smartphones, smart cars, smart devices, and appliances are introduced frequently to ease life for humans. One of the most recent and beneficial technologies developed based on blockchain technology is the smart contract. Smart agreements have become popular quickly, considering their high security. This blog post discusses all you need to know about smart contracts.
What is a Smart Contract
Smart contracts are digital contracts run on a blockchain platform that manage, execute, and verify agreements digitally and safely. Like all agreements, they include rules and penalties for parties signing the contract. However, since there are no middlemen managing the transactions, it is completely safe. There are three components in each smart agreement:
Signatures: The parties signing the contract with digital signatures
Contractual terms: Rules and Penalties defined in the contract
The subject of the Contract: The main subject of the agreement
Use Of Smart Contracts
As mentioned earlier, in smart agreements, all transactions are managed and executed through blockchain technology, making it very safe. One of the most crucial uses of smart contracts is securely managing financial agreements and payment transactions.
So, it is a great option for financial transactions that many people enjoy. However, it has some non-financial uses, including:
1. Government Voting System
Using smart contracts in the voting system is beneficial in a couple of ways. First, it makes manipulation almost impossible. Since the votes are transmitted using blockchain technology, it is practically impossible to decode them.
Next, using smart contracts for voting helps to make voting online, that results in more participants. Participants will not have to wait in long queues for identity verification and voting; instead, they will use their computers at their place.
2. Health Care
Using smart contracts to record patients’ health care history benefits both doctors and patients. Patients will ensure that their health information is recorded safely and that only people with special codes can access them. Moreover, doctors can conduct vast research using patients’ health data discreetly.
3. Supply Chain Management
Traditional supply chain management is laborious since it uses paper forms, and the paperwork has to go on round trips to get approvals and signatures. However, smart contracts help the supply chain process eliminate the laborious paperwork and easily do it on digital platforms. In supply chain, smart contracts are particularly useful for releasing payment, recording ledger entries, and flagging a need for manual intervention. For example, a party could use a smart contract as a means to automatically release payment upon the satisfaction of a condition. In a nutshell, Smart contracts not only omit the risks of fraud in contracts related to the supply chain, but also help safely manage the inventory and payment transactions.
4. Domain Trading
Nowadays, most businesses are working online through different platforms. Websites invest money, time, and effort to be one of the top on the internet. One of the essential aspects affecting a business’s success on the internet is its website’s domain name. Therefore, various domain trading platforms and domain auctions provide companies services to help them get their desired domain names. However, in this competitive market, facing fraud is probable.
So, smart agreements are a great option to prevent fraud and have safe domain name trading. Smart contracts secure all agreements using blockchain, so domain buyers and sellers never face any problems. For instance, Domchain is one trading platform that uses smart contracts and secures contract and payment transactions with blockchain technology. In fact, Domchain registers both parties’ activities in blockchain in order to make sure all sides are safe.
5. Insurance
All over the world, insurance industry is linked to different fraud actions. However, combining smart contracts with the Internet of Things (IoT) can help the insurance industry prevent financial fraud. For example, smart contracts can ease the process in auto insurance by including all policies, managing and verifying all the documentation such as driver’s license, and verifying the accidents with the IoT. It also provides a secure recording space where all insurance-related data can be saved securely.
Final Thoughts
Modern technologies are easing our lives every day. Blockchain is one of the most important technologies that help people to do digital actions securely. Smart contracts are one of the new technologies that secure contracts through a blockchain platform.
Although Smart contracts are vastly used in financial transactions, they can help a number of non-financial sectors, too. Voting systems, health care systems, insurance companies, domain trading platforms, and supply chain management systems are among the most critical industries that can use smart contracts to avoid fraud and increase privacy.
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