A Beginner’s Guide for Smart Contracts
One of most exceptional characteristics of blockchain technology is that it is a decentralized system that exists only within all authorized parties. This feature eliminates the need to pay intermediaries for each individual financial transaction.
It also conserves participants time, money and eliminates potential headaches. Blockchains aren’t infallible, but they are more secure, quicker and more affordable than the systems currently in place. A lot of banks and governments are adapting and looking into the possible use of smart contracts to advance their business and government operations.
Nick Szabo first created smart contracts in 1994. He is a legal scholar and cryptographer. He recognized that a decentralized ledger could facilitate the use of smart contracts. The contracts could be transformed into computer code, stored and then replicated on the system. They would then be under surveillance by a network of computers that ran the blockchain technology.
This blockchain technology would also implement a ledger that could track the transfer of money or validation for a product or service. Smart contracts enable users to exchange money, shares, property or anything else of value in a transparent environment, without the interference of a third party.
Here are 5 Benefits of Smart Contracts
1.) Accuracy – Automated contracts are not only quicker than manual data entry, but they also circumvent the errors that inevitably come from manually filling out lots of paperwork.
2.) Trust – Your smart contract is encrypted on a universal ledger. The smart contract is continually going to be open for an audit. There is no way anyone can lose it or claim they never got it.
3.) Safety – Cryptography keeps records secure. It would take an abnormally smart hacker to break the code and infiltrate the blockchain since every file on it is encrypted.
4.) Backup – Imagine if you misplaced something important. On the blockchain, your documents are duplicated and made available to everyone on the blockchain at the moment of the initial transaction.
5.) Speed – You’d usually have to spend a bunch of time and go through a lot of paperwork to process documents manually. Smart contracts use software code to automate these mundane tasks. This automation will save users a significant amount of time that has traditionally been required for complicated business transactions.
With the current advancements and developments with smart contracts, there is no denying this technology will disrupt a myriad of industries. These five key benefits of smart contracts are the reasons why this technology will become an integral part of how we complete business transactions in many different industries.
Some of the most apparent sectors smart contracts will change after disrupting the financial industry will most likely be the medical field with patient records. The real estate industry with real estate transaction and property ownership records. The fine art industry with the purchase, sale, and acquisition of original fine art pieces. Finally, it will eventually disrupt international governments with official government documents and how they are stored.
We’ll be sharing more posts like these on smart contracts as we launch https://www.formosa.financial/, an institutional grade custodial service for high net worth traders, businesses and their complex needs. Feel free to tweet.