Beginner’s Guide for Smart Contracts
Arguably one of best features about the blockchain is that it is a decentralized system that exists exclusively between all authorized parties. This feature eliminates the necessity to pay intermediaries for each transaction.
It also saves participants time, money and potential headaches. Blockchains aren’t perfect, but they are more secure, faster and cheaper than what is currently in place. A lot of banks and governments are turning to look into the use of smart contracts to improve their business operations.
Nick Szabo first discovered smart contracts in 1994. He is a legal scholar and cryptographer. He realized that the decentralized ledger could facilitate the use of smart contracts. The contracts could be converted into computer code, stored and then replicated on the system. They would then be under supervision by a network of computers that ran the blockchain.
This technology would also provide a ledger that could track the transfer of money or validation for a product or service. Smart contracts enable you to exchange money, shares, property or anything else of value in a transparent, without the interference of a third party.
Here are 7 Benefits of Smart Contracts
1.) Accuracy – Automated contracts are not only faster than manual data entry but also avoid the errors that inevitably come from manually filling out lots of paperwork.
2.) Trust – Your contract is encrypted on a universal ledger. The smart contract is always going to be available for audit. There is no way anyone can lose it or claim they never received it.
3.) Safety – Cryptography keeps documents secure. It would take an abnormally smart hacker to crack the code and infiltrate the blockchain since every file is encrypted.
4.) Backup – Imagine if you lost something significant. On the blockchain, your documents are duplicated and made available to everyone on the blockchain at the time of the initial transaction.
5.) Speed – You’d ordinarily 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 tasks. So this will save a considerable amount of time for complicated business transactions.
6.) Savings – Smart contracts save you money since they don’t require the presence of an intermediary. You usually would have to pay a lawyer, broker, banker or even notary to execute any transaction legally.
7.) Autonomy – You’re the one agreeing to a contract, and there’s no need to rely on a broker, lawyer or other third parties to confirm your transaction. This new of doing business also eliminates the danger of manipulation by a third party, since the contract execution is managed automatically by the blockchain.
With the recent improvements and developments in smart contracts, there is no denying this technology will disrupt a lot of different industries. These seven benefits of smart contracts are key reasons why this technology will become an integral part in how we complete business transactions in a myriad of industries. Some of the most obvious sectors smart contracts will change after disrupting the financial industry will most likely be the medical field with patient records, real estate transactions, and government documents.
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