What Are Smart Contracts?
Smart contracts run on blockchain technology and process all transactions in a contract. They are used to facilitate the exchange of money, information, data, etc. They do not need intermediaries due to the decentralized nature of the blockchain network and that makes them different from traditional systems.
Smart contracts can be executed automatically to the terms of agreements. In short, smart contracts can be defined as a digital code that is a set of pre-determined agreements and conditions to which the parties to the contract have agreed to.
What Are the Use Cases for Smart Contracts?
Smart Contracts can be used for Trade Finance and with that, there will be a lot of merits and savings in the field. Using this technology, the interface is removed and Smart Contracts are executed automatically. As a result, the additional costs, errors, and timing of these calculations are greatly reduced.
Financial Data Recording
Financial data is one of the most important and secure parts of any organization. Using smart contracts, it is recorded in a transparent and accurate manner. It also provides important tools for bookkeeping and reduces auditing costs and reporting. Therefore, smart contracts reduce accounting costs the possibility of infiltration of accounting records.
It can also be used in the Digital Identification. Digital Identity includes personal data, digital data, etc. Smart contracts make it possible to obtain information about individuals without revealing their true identities in transactions and it can help protect people’s identities. And these decentralized digital identities save a lot in security processes.
Another feature of smart contracts is their use in health records, which can increase speed and security. Using Blockchain technology, these records can be encrypted to allow only authorized people to have access to these records using a private keys. As a result of using smart contracts, the health records of patients can be well managed and protected. Also, all hospital receipts of patients can be stored in the blockchain and automatically shared with insurance companies.
The efficiency of smart contracts in mortgages and loans stems from the fact that it connects the parties to complete the transaction. And it ensures that the process is done in a frictionless way. Smart contracts also help provide visibility to all involved parties.
Smart contracts create a voting system without manipulation. Perhaps one of the problems in people’s minds is always manipulating the voting system. But thanks to smart contracts, this problem can be solved. These Votes are ledger-protected and it is very unlikely that they will be decrypted or changed. Also, with this feature, there is no need to waste time, long authentication, and long queues, and all voting steps are done in several online steps.
Smart contracts can be best used in peer-to-peer transactions. In fact, in this type of contract, users agree on the terms of transactions and until these agreed conditions are met, the contracts will remain active and will not be fulfilled. So it only applies when the agreed terms are fulfilled. This is one of the best conditions for transferring money, digital currencies, launching ICOs, selling goods, etc. In general, the existence of smart contracts in peer-to-peer transactions creates safe and transparent conditions for transactions.
In addition to the above sections, smart contracts can be useful in other cases. These cases include:
- Asset ownership
- supply chain
- Government voting system
- Clinical trials
- Medical research
- Product development
Benefits of Smart Contracts
Smart Contracts have many benefits such as:
- Safety: The encryption of Smart contracts greatly reduces the possibility of infiltrating these contracts.
- Backup: Given that smart contracts are executed on a blockchain platform, in blockchain, all documents are stored multiple times. So if this information is lost, it is possible to recover the original version.
- Speed: Smart contracts and performing automated and predetermined processes will definitely save you time and speed up the process.
- Accuracy: With smart contracts, you no longer have to worry about errors that occur when filling out forms manually.
This implies that smart contracts are suitable for organizations, institutions, exchanges, etc. These are just some of the benefits of Smart Contracts and we will definitely see the use of Smart Contracts in more areas.