Expediting Contracts—Blockchain Use Case for Smart Contracts

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Contracts govern nearly every part of our lives, much of which we may not know about, or are scarcely aware of. Every time you take a ticket for a parking space in a local parking garage, you’ve just accepted the terms of the parking contract. When you go to a movie and pay for and accept a movie ticket you are also accepting the movie house terms of the contract.

In contract law, if you are handed a ticket or another document with terms, and you retain the ticket – you are bound by those terms—regardless of whether you’ve read the terms or not. (Wikipedia)

Buying a home requires a number of agreements or contracts. Leasing or renting an apartment is also dependent on contracts.  Thus, in our modern overly litigious world, we are inundated with contracts every day.

When it comes to business time is often very critical. However, working with traditional contracts can be cumbersome and may slow the process of moving a business forward and can add lengthy delays and costs. Traditional contracts take time, can be expensive, and often require personal contact to get wet signatures.

Smart Contracts

With blockchain technology—all these hurdles can be mitigated or altogether removed with the use of smart contracts. Here’s a side-by-side comparison.

Image Source: DevTeam.space

Smart Contract Technology Defined

Blockchain uses distributed ledger technology—which is decentralized. As such, middlemen are removed. (Blockchain Technologies) According to Aran Davies, a smart contract using blockchain technology has the ability to facilitate, execute, and enforce the performance of an agreement.

They can facilitate the exchange of property, information, money, or anything for which one wants to make an agreement.  Smart contracts are automated, and can act as substitute for legal contracts. Using computer language and algorithms, the terms of the smart contract are recorded as a set of instructions.  (Aran Davies)

Smart contracts are becoming one of the pillars for blockchain use case in industry.

Use Case Examples

DevTeam.Space provides insight into use case applications. The following provide a few examples.

Record Property. Smart contracts have can be used to record property ownership, simplifying the county recording process and removing the need to employ third party agents.

Home Mortgages. It can be used to obtain mortgages; and, allow the seller and buyer of a home to digitally agree to the sale before processing a payment. Once this is completed the blockchain ledger updates the contract to reflect the new property ownership details.

Insurance Industry. Smart contracts are also beneficial to the insurance industry.  They can be used to support policy agreements, and to improve the claims process.  The digital based smart contract reduces the need for manual intervention, increases efficiencies, and along the way reduces costs associated with policy management and claims processing.

Peer-to-Peer Transactions. While most peer-to-peer transactions involve money, with a smart contract it doesn’t always have to be the case. They can be used for an entire array of transactions agreed to by any two or more individuals.  Smart contracts have been used to launch ICO‘s, or for selling goods online. They have also been used by businesses to secure development team services and other outsourced work.
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Source:  DevTeam.Space

Smart Contract Platforms

Not all blockchain platforms support smart contracts. While there are many that do, there are a couple of platforms that have risen to the top. Michiel Mulders writing for Hackernoon , identified 23 platforms that support smart contracts and the coding language  it supports, such as Ivy Lang, C++, Solidty, Javascript, and others.

Mulders says that Ethereum “is a gold standard in the world of smart contracts and has the biggest capitalization among other platforms.”  According to Krypto Graphe , five smart contract platforms have risen to the top.

Ethereum. Number one on the list is Ethereum. This is by far the one that has surfaced as the go to platform. It is a blockchain platform based on an open software system. It is capable of giving developers the ability to build and deploy a decentralized application. Ethereum allows users to “run different programs on its Virtual Machine (EVM), irrespective of the language.” With Ethereum, one can decentralize any service that is now a centralized service. These include many intermediary services such as bank loans, regulatory compliance, voting systems, title registries, and more.

NEM. Next on the list is NEM, a blockchain based, decentralized peer to peer network launched in 2015. With NEM third parties can build applications such as crowdfunding tokens and cryptocurrencies. It includes both private and public blockchains.  NEM’s next-gen blockchain has many benefits that include “multi-signature accounts, mosaics, privacy, messaging,” and more. Another benefit that may be important to some companies include scaling and the ability for nearly every member of the NEM community to suggest updates and developments—making NEM an attractive smart contract platform.

NEO. NEO is a popular platform in China and throughout Asia for smart contracts. Like Ethereum, NEO can be used for financial dealings, it can also be used as for more complex transactions. Unlike Ethereum, among other tools, “NEO makes it easier for developers to write languages that are already known so NEO’s smart contracts are a lot easier to write.”

Cardano. The fourth smart contract on the list is Cardano—considered an “Ethereum killer.”  Like Ethereum, Cardano includes a cryptocurrency, ADA, making it possible to execute smart contracts. Cardano differs from Ethereum and other blockchain smart contracts in a number of ways. To start, it claims to “be the first blockchain project built on peer-reviewed research.” Cardano plans to issue debit cards, and users will be able to fund the card from their online wallet. The debit card can be used to shop almost anywhere.

Hyperledger—Finally, there is Hyperledger. Hyperledger is a project framework, and not software. It is administered at the Linux foundation. Blockchain projects are submitted to the Linux foundation. Once approved—it goes into incubation in the Hyperledger project, many of which include smart contract projects.
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Source: Krypto Graphe

Conclusion

Blockchain has many use case examples. Perhaps none are as critical as smart contracts. Agreements and contracts are the life-blood of business transactions. Without them, misunderstandings and confusion can never be cleared up and settled.

The smart contract use case for blockchain shows promise well beyond cryptocurrency for industry with the potential to make contract enforcements easy, efficient, and less costl

Samuel H. is an author, writer and speaker with over twenty years in the educational technology sector.

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