If you are a crypto trader then you have surely come across the phrase smart contract during your adventure. In today’s article, we will explore the uses of smart contracts, focusing on the real world. So, here we go!
What are smart contracts?
If we’re going to talk about real world applications of smart contracts, we should first learn what they even are. A smart contract is a program stored on a blockchain that runs when predefined conditions are met. In short, it is simply a set of code and data. Developers deploy smart contracts to the network to perform specific functions. Many platforms have their own smart contracts that provide users with various automated and unusual services.
The world’s largest smart contract platform is currently Ethereum. This is the reason why it is chosen by most developers. Apart from Ethereum, there are other projects that support this technology. These include Nem, Stellar, Waves, Polkadot, Solana, EOS, Polygon, Tezos, Algorand, Cardano and Cosmos
moreSponsoredSince the launch of the Ethereum (ETH) blockchain, the use of smart contracts has achieved parabolic growth. Developers continue to find new applications, so it is likely to grow even more.
In 2019, the global smart contracts market was worth around $107 million. According to some reports
, it is likely to grow up to 300% in the next 5 years. How will this become possible? Because smart contracts are gaining adoption in various industries, and companies around the world are starting to implement this technology for various applications.
Currently, smart contracts are already being used in sectors such as data management, supply chain management, healthcare, insurance, government, real estate, escrow services, and automotive, among others.
Every company requires its employees to keep
records of their communications, messages, and transactions. For example, those who work in the procurement department must keep records of orders, and those who work in the human resources department must keep records of interviews, employee health records, and so on. Generally, employees keep these records on paper or manually enter data into computers and store them in the cloud or on company servers.
To share information between different departments or companies, employees have to upload documents online or provide them manually. Once submitted, sometimes companies have to endure long wait times for approvals and other internal or external issues. Blockchain technology offers a solution in the form of a public ledger. This is where smart contracts come to the rescue.
Developers can program smart contracts to streamline the process of recording data. With their help, everything is done automatically. A smart contract also enables transparent data storage. The automated data collection process eliminates the need for manual or email document exchange, which saves time. In addition, the transparency of data storage saves auditing costs. The data is readable and immutable, so it is virtually impossible for it to be altered due to fraud or error.
Supply chain management
Supply chain management is the management of the flow of goods. It involves the exchange and recording of data and physical products. Like data management, supply chain management also faces the problem of the paperwork system that many companies still use. Documents pass through many hands and this increases the risk of loss and manipulation.
Implementing blockchain technology and smart contracts can reduce these risks. This is because data transparency reduces the potential for fraud. Moreover, smart contracts can use sensor data to track the location of goods and record information about them during delivery. What does this mean? That, for example, if an item is lost or stolen during transport, smart contracts will be able to locate it. In addition, smart contracts can automate payments and routine tasks such as scheduling deliveries and checking inventory. This saves a pile of time and human resources. An example of a company that uses blockchain technology and smart contracts to manage its supply chain is De Beers.
De Beers is a multinational company in the diamond industry. To streamline delivery and logistics, it uses its blockchain platform called Tracr. De Beers uses smart contracts to monitor the diamond production process and track the transit of diamonds from mines to retail outlets. The downside to this system is that it still relies on manual data entry into the system. Why? Because along the way, the nonwhich diamonds can be polished and checked manually.
Smart contracts in the insurance industry
Another industry that is making great use of smart contracts is the insurance industry. According to the predictions of a report, the blockchain market in insurance will reach $1.4 billion by 2023. When a person applies for insurance, the most important element to look at is the formal contract between the insurance company and the insured person. This is because this contract contains all the terms and details about the type of insurance.
These terms and conditions can be encoded into a smart contract and then implemented on the blockchain network. The smart contract will require relevant data during the setup process. All this in order to make the right decisions. For car insurance, for example, this could be driver records, and for medical insurance, it could be health records. Then, when an event happens that triggers the insurance policy, smart will automatically process payments to the insured. Insurance companies that have already implemented blockchain technology and smart contracts include Lemonade and Fizzy.
Lemonade is a company that offers insurance for renters and homeowners. It charges a flat fee on the monthly payment and puts that money towards future claims. If a tenant makes a claim, the company’s smart contracts will immediately try to verify it. Once the smart contract confirms the loss, the tenant will receive payment within seconds.
On the other hand, Fizzy, a subsidiary of AX deals with flight delay insurance. The company provides a flight delay insurance tool that uses blockchain technology to verify whether a flight went as planned or not. Once the tool confirms that a flight has been delayed by more than two hours, the smart contract automatically compensates passengers.
In the healthcare sector, smart contracts also save time and costs. This is because they make it possible to do away with paper-based systems and poorly secured servers that store data. Thanks to blockchain, patients’ health data can be stored in a secure manner. In turn, smart contracts allow documents to be sent between institutions and departments in a private manner. Only knowledgeable people, such as doctors, have a private key that gives them access to patients’ private information. Companies that have implemented blockchain technology and smart contracts in the healthcare sector include Encrypgen and Robomed.
Encrypgen is a platform for sharing, storing, buying and selling genetic information. It uses smart contracts to transfer patient DNA data to researchers for clinical trials. The company protects the privacy of its users by removing sensitive information from DNA before selling it in a stocenized form.
<a href=”https://robomedco.com/”>Robomed is a company that collects patient information using chatbots and diagnostic tools. It then shares it with the patient’s medical team. The company uses smart contracts to monitor patient conditions and automatically pays clinics.
Smart contracts in government
According to a 2019 report from the Organization for Economic Cooperation and Development (OECD), only 45% of citizens in OECD countries trust their government. This low trust rate is due to the lack of openness and efficiency of some government institutions. Blockchain technology removes this distrust by implementing the core ideas of decentralization, transparency, and security. Today, many authorities have already implemented or are in the process of implementing smart contracts to automate operations. All of this can help increase efficiency, reduce costs, and decrease corruption.
One example is a smart contract prototype that can provide automated e-government services called eGOV-DAO. This smart contract monitors, analyzes and automatically manages some government operations. It also maintains audit records for transparency in legal proceedings. When fully implemented, smart contract can solve the inefficiencies of traditional systems that require a lot of human effort and interaction between institutions.
Smart contracts can also streamline the process of transferring property ownership. Blockchain-based pilot projects have already been implemented in various countries such as Sweden, Russia and Ghana for this very purpose.
Since blockchain allows for the creation of non-exchangeable tokens(NFTs) as proof of ownership, buyers and sellers of real estate can transact with complete confidence. Smart contracts allow verification of the identity of the respective parties, automatic payment for the property, and registration of the property in the name of the new owner.
Escrow refers to a legal agreement in which a third party holds a certain amount of funds on behalf of two other parties in the process of completing a transaction. This process helps prevent fraud and reduces risk on both sides of the transaction. Escrow is most commonly used by the real estate industry and freelance websites.
Suppose a freelancer accepts an assignment from a company to design its website. When the freelancer sends the work and the company submits it verify, smart contract automates the payment in a secure manner without the need for a third party. Additionally, the payment is tamper-proof and irreversible, preventing fraud.
Smart contracts can also be implemented in the automotive industry to simplify many aspects of driving and owning a vehicle. They can automate the process of making payments for vehicle-related services such as maintenance, highway tolls and insurance. For example, smart contracts can allow insurance to be paid based on consumption instead of fixed premiums. For autonomous vehicles, smart contracts can even analyze sensor data and determine the cause of accidents and pinpoint the culprit. Additionally, buying and selling vehicles can work just like real estate. This is because a smart contract can automate the payment and registration of the vehicle on behalf of the new owner.
Since the launch of the Ethereum blockchain, the adoption of smart contracts has skyrocketed. Smart contracts are simple autonomous programs that many companies have started using to replace traditional and time-consuming systems. These programs have found applications in areas such as data management, supply chain management, healthcare, and insurance. Moreover, this technology is also being implemented in the automotive industry, government, property management, and escrow processes. The main advantages of smart contracts are transparency, speed and security. They help save time and money for both consumers and businesses.
All information contained on our website is published in good faith and for general information purposes only. Any action taken by the reader in relation to the information on our website is entirely at the reader’s own risk.