Question

How smart contracts improve existing workflow?

Answer 1

Smart Contracts :

Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. They render transactions traceable, transparent, and irreversible.

While blockchain technology has come to be thought of primarily as the foundation for bitcoin?, it has evolved far beyond underpinning the virtual currency.

The following are the benefits that improve the existing workflow of Smart contract:

1. Insurance: Due to a lack of automated administration, it can take months for an insurance claim to be processed and paid. This is as problematic for insurance companies as it is for their customers, leading to admin costs, gluts, and inefficiency. Smart contracts can simplify and streamline the process by automatically triggering a claim when certain events occur.

2.Supply Chain Management: Supply chain management involves the flow of goods from raw material to finished product. Smart contracts can record ownership rights as items move through the supply chain, confirming who is responsible for the product at any given time. This has become far easier using Internet of Things sensors, which track goods from producers to warehouses, from warehouses to manufacturers, and from manufacturers to suppliers. The finished product can be verified at each stage of the delivery process until it reaches the customer. If an item is delayed or lost, the smart contract can be consulted to find out exactly where it should be. If any stakeholder fails to meet the terms of the contract, for instance if a supplier did not send a shipment on time, it would be clear for every party to see. Making supply chains more transparent via smart contracts is helping to smooth out the movement of goods and restore trust in trade.

3.Mortgage Loans: The mortgage process is far from simple. The terms of a mortgage agreement, for example, are based on an assessment of the mortgagee’s income, outgoings, credit score and other circumstances. The need to carry out these checks, often through third parties, can make the process lengthy and complicated for both the lender and the mortgagee. Cut out the middle men, however, and parties could deal directly with each other (as well as access all the relevant details in one location).

4.Employment Contracts: The relationship between an employee and their employer can be tempestuous, especially if either party fails to meet expectations. By entering into a smart contract, an employee would know exactly what was expected of them, as would the employer. Recording interactions in this way could help to improve fairness in wages or conditions, as any changes to contracts would be recorded. This openness could greatly improve the relationship between employers and their employees. Smart contracts could additionally be used to facilitate wage payments, according to the agreed amount and within a specific time period. Smart contracts could also help to regulate the use of temporary labour, which involves an employer, an agency and a worker. The worker joins the agency and is then hired by an employer. Unfortunately, a lack of transparency has meant that agencies can alter the contract’s terms after workers have already started the job. This could mean shortening or lengthening the contract, changing wage rates or other worker’s rights. It can be difficult for the authorities to detect these changes, but not if a smart contract system is applied.

5.Protecting the Copyrighted Content:Every time that a piece of content is used for commercial purposes, for example a song, the owner of the rights to that song receives a royalty fee in theory. Of course, there are multiple parties involved in creating a song, and it can be hard to work out who owns these rights and who is therefore entitled to payment, plus existing systems do not work well. This has led to confusion over entitlement, no doubt giving some contributors more than they are due to the detriment of others while some receive nothing at all. Smart contracts can ensure that royalties go to the intended recipients by recording ownership rights in a decentralised blockchain system. This could theoretically be applied to any piece of content with a team of contributors.

Smart contracts have many benefits for a wide range of industries, reducing unnecessary costs and time expenditure while enhancing transparency. In theory, they are more efficient and trustworthy than traditional contract law, and are also thought to offer better security as all actions are recorded and verified.