The concept of smart contracts originated in 1994 when computer scientist Nick Szabo discussed how contracts could be embedded into computer codes. The emergence of blockchain technology, and especially the launch of Ethereum, has made this an even more viable possibility. It ensures security and transparency of all records.
The efficiency of sharing and accessing smart contracts is what makes them so appealing among stakeholders. Smart contracts can automate, calculate and arrange payments, and then automatically carry out their terms and conditions. When obligations are met, the contract can be executed instantly, saving time, removing intermediaries, and allowing for multi-party consensus-based validation.
Smart contracts have the potential to transform many industries, and that transformation is already underway in industries as varied as Finance, Real Estate, Healthcare, Insurance, and even Elections. Here are just a few smart contract examples:
Reducing costly errors in trade finance
Smart contracts can reduce costly errors. The ability for these contracts to automate workflows and sharpen calculations helps in reducing work hours as well.
Santander InnoVentures reported on the benefits and opportunities that come with using blockchain in finance. Fundamental changes in the financial services industry’s infrastructure and processes will be made possible through smart contracts. They believe that distributed ledgers will become the preferred choice for managing volumes of transactions. These savings are expected to amount to $15–20 billion a year by 2022.
Tracking property details in real estate
Smart contracts in this industry are used to record property ownership of any structure. They optimize transaction speed and efficiency by reducing the need for lawyers or brokers. Sellers can take charge of the process.
Blockchain thought leader Rob Massey says that smart contracts allow for a more transparent and cheaper alternative to property title management. Title defects can get in the way of transfers which result in legal fees. However, smart contracts keep track of a property’s history, location, and all other important details that will be needed for title assessment. They help avoid fraud through encrypted codes which are tamper-proof and secure.
Protecting sensitive medical data in healthcare
More healthcare institutions are using blockchain to provide reliable automation and up-to-date security measures. Hospitals are primary targets of cyber criminals since they hold a wealth of sensitive information. Even big names in the sector like UCLA Health have been victims of data breaches, amounting to 4.5 million patient records compromised.
In this environment, ensuring the secure sharing of patient data across healthcare providers is critical to maintaining standards of care. Smart contracts allow patient data to be stored securely on a blockchain, where it can only be accessed with the patient's private key. In this way, patients can ensure that their medical providers always have access to the information they need, and that their information is secure.
Improving the convenience and integrity of elections
Blockchain voting systems could be the future of elections. By making voting safely and conveniently available through digital means, Blockchain voting systems could widen accessibility, encourage greater voter participation, and speed up the process of tallying and reporting votes. Smart contracts would be able to validate voters’ identities to prevent multiple casted votes, which is a frequent goal of election hackers.
Reducing claims fraud in the insurance industry
Millions of dollars are spent every year on processing claims in the insurance industry. Even more money is wasted due to fraudulent claims. Smart contracts strengthen claim processing through frequent error checks, helping administer policies from individuals or organizations. Shorter processing times will result in lower costs for consumers – including premium rates.
Lloyd’s of London confirms that insurance companies will also be able to fill in the gaps in coverage that come with the underwriting process, as they will be able to manage risks from corporate buyers much better.
There are a number of other examples of smart contracts, such as peer-to-peer transactions, supply chain management, product development, and stocktaking. There is still a lot of room for improvement and innovation, but the growing adoption of smart contracts continues to highlight the transparency, accountability, and efficiency that they were intended for.
For more examples of how smart contracts are being utilized by Kaleido customers, visit our Solutions page. Ready to build your own smart contract solutions? Learn more about Kaleido's smart contract management solutions, sign up for a free trial or reach out to the team for a free consultation.
Exclusively written for Kaleido.io
By Ross James