Smart contracts are digital protocols designed to implement and administer the agreed-upon conditions of a digital agreement. Once the set terms of the contract are met, the outcome is executed automatically. It is a prime example of decentralized automation, and it proves just how useful blockchain technology can be to all businesses.
The need for businesses to implement automated and secure contracts is on the rise and with the ever-developing Bitcoin SV blockchain technology, all industries can apply this into their business functions. Smart contracts are likened to a vending machine, wherein users can input a certain amount of money or terms, and, in exchange, automatically receive or implement the terms or an item within the contract.
Smart contracts work in a way that allows mediators or intermediaries to be eliminated from the transaction, as the processes necessary in the transaction are carried out by the software. This innovation means that users need only to fulfill their respective conditions stated in the contract for the transaction to be accomplished.
What are the benefits of smart contracts?
Smart contracts are autonomous
One of the smart contracts’ most prominent features is that it is entirely autonomous. Autonomy means that intermediaries or middlemen are cut from the equation as they are now surplus to requirements. Smart contracts allow for the involved parties to directly negotiate and complete the transaction independently by fulfilling their side of the agreed conditions. By eliminating the need for intermediaries, users are allowed to reduce costs while improving processing time.
Smart contracts can execute Bitcoin transactions almost instantly, as compared to traditional transactions, wherein it can take days and even weeks to finalize the same transaction. Smart contracts eradicate the need for administrators, lawyers, brokers, and banks.
Smart contracts are secure
Another benefit of smart contracts is that confidentiality can be ensured in transactions. Smart contracts make use of revolutionary data encryption methods that provide the highest level of protection for any data or information involved in the transaction. Its ledgers are also unalterable, meaning data or information cannot be changed, and thus, smart contracts can be used as valid proofs of transactions or ownership.
Store your data and information on the blockchain
Smart contracts are also capable of storing data and information from transactions, ensuring no data is lost. Smart contracts also make records of transactions. As all conditions are stated precisely, the smart contract will only carry out the transaction once these are followed absolutely.
These are stored in the smart contract’s ledger, where they cannot be tampered with, ensuring both parties do not experience any data loss-related problems. Smart contracts are also unlikely to make errors when executing transactions
Smart contracts have the potential to benefit multiple industries becoming part of their everyday processes and operations. Industries such as government, healthcare, and real estate, among others, could make use of the revolutionary advancements brought by smart contracts.
Although there are still some risks involved with smart contracts such as governance, regulatory and legal risks, it cannot be denied that these smart contracts would be able to benefit many enterprises.
Learn more about how smart contracts on the Bitcoin SV (BSV) blockchain can ignite your business at the upcoming CoinGeek Conference in London, taking place at Old Billingsgate on February 20-21, 2020.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
