You can find smart contract examples in finance, entertainment, and real estate. They can be used to trigger rewards in gaming, execute transactions in real estate, and settle insurance claims. Smart contracts have the potential to eliminate paperwork and relieve stressed bureaucracies.
A smart contract is a program that executes automatically based on if-then logic. A real world example is a jukebox. If a person puts in a quarter and presses the code corresponding with a certain song, the machine will processs the transaction and play the requested song. Similarly on the blockchain, if an action is taken then the predetermined result is triggered.
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:
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.
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.
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.
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.
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.
Think about how e-signatures made it easier to process documents. What once required paper copies and a mail carrier was digitized and made nearly instant via computer and smartphone. The same revolution will happen to traditional contracts.
Smart contracts create a new way to do business between parties. Automated transactions or agreements triggered by an event will save companies significant money on legal fees and move processes forward faster.
How to make smart contracts work on behalf of creators is a fun challenge of the Web3 economy, as they’re sure to create new monetization opportunities. Companies that manage bands, games, and online creators will deploy blockchain technology to bring accountability to streaming and create stickiness with fans.
An artist may issue a piece of their work as a non-fungible token (NFTs) that can be sold on a secondary market. When new transactions occur, a smart contract can programmatically pay royalties back to the original creator ensuring they share in the increased value of their work.
With the emergence of blockchain technology, particularly Ethereum, smart contracts became more viable. They leverage blockchain's characteristics of immutability, decentralization, and cryptographic security to ensure transparent and secure execution of agreements without the need for intermediaries.
However, the integration of smart contracts into an enterprise ecosystem brings about challenges that organizations need to address:
There are a number of other examples of smart contracts, such as peer-to-peer transactions, product development, supply chain management, and stocktaking. Using blockchain platforms to write smart contracts that automatically enforce business logic is the future of automation—and the applications will save real time and money. In our article on how to build your own blockchain, you can learn more about how to get started with your application.
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.
Kaleido is your easy button for developing next era blockchain based business applications.