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Smart Contract Business Use Cases

The growing interest in technology can be largely attributed to the implementation of smart contracts on distributed ledgers, like blockchain. Until blockchain, autonomous contract execution wasn’t possible, because parties would often share separate databases. With smart contracts in place, the blockchain becomes more than an immutable record-keeping system, transforming into a full-fledged transaction platform. This allows multiple parties to automatically and securely execute the agreed terms and get rid of intermediaries. Smart contract use cases can be used to solve challenges in business, finance, government, etc.

What is Smart Contract?

A smart contract is a computer protocol that automatically enforces itself when certain conditions embedded in its code are met. It allows the performance of credible transactions without third parties. Smart contracts typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without an intermediary’s involvement.

How Smart Contract Works

Source: blockgeeks.com

Smart contracts work by executing the code on a blockchain. A network of computers executes the actions when predetermined conditions have been met and verified. These actions could include releasing funds to the appropriate parties, registering a vehicle, sending notifications, or issuing a ticket. The blockchain is then updated when the transaction is completed. That means the transaction cannot be changed, and only parties who have been granted permission to see the results can see them.

Benefits of Smart Contract

Trustless
The whole system is trustless. This means that there is no need to trust the parties to carry out a transaction. A transaction or a trade does not require trust as an integral part. Smart contracts run on a decentralized network, which makes the whole network trustless.

cost-effective
Smart contracts make transactions more cost-effective. This is done with the removal of intermediaries from the process. Doing so makes the transactions faster and also removes the associated cost.

Accurate and Error-Free
Smart contracts are error-free and accurate. Once a condition is met, the contract is executed immediately. Because smart contracts are digital and automated, there’s no paperwork to process and no time spent reconciling errors that often result from manually filling in documents.

Security
One amazing thing about smart contracts is security. Blockchain transaction records are encrypted, which makes them very hard to hack. The encryption also makes smart contracts work as intended. As smart contracts run on networks with immutable data, the data generated by them cannot be changed or altered in any way. This way, all information is kept secure.

Business Use Cases for Smart Contracts


Automation of business processes

The decentralized nature of the blockchain contracts means no outside party is required in the process. There’s no need to rely on a broker, lawyer, or another intermediary to confirm. Incidentally, this also eliminates the danger of manipulation by a third party, since execution is managed automatically by the network.

Supply chain automation

Supply chain automation is a great blockchain smart contract use case. By using smart contracts, the supply chain can be improved manifold. For example, it can be used to track items within the supply chain with full visibility and transparency. A business can use smart-contract-powered supply chains and improve its inventory tracking to a granular level.


Property and money transfers

Trade finance can also be revolutionized with the help of smart contracts. There is no doubt that it can help in international goods transfer and trade payment initiations with the use of a Letter of Credit.

Clearly, using smart contracts will improve the liquidity of the financial assets, in return, improving the suppliers, buyers, and institutions’ financial efficiencies.

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Source: 101blockchains.com
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M.I Kani
M.I Kani

Mahmoud is a web3 developer and security researcher. His expertise includes blockchain and cybersecurity. The topics he writes about include blockchain, metaverse, web3, cyber threats, and security defenses, as well as research and innovation in information security.

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