The blockchain is made up of a series of blocks of data that detail every aspect of a transaction. These blocks of data are then placed in a chain or series. Other members of the blockchain community can then go in and verify the details of the transaction because each block is transparent. A smart contract works automatically with little human intervention. Every contract contains code that spells out the specific conditions of the agreement, so two parties can complete a transaction on their own without costly third-parties. This also gets rid of some of the busy work involved in drafting contracts because the system in autonomous, and, since the system is decentralized and verified by a series of nodes, there’s no chance of fraud or system failure.
Smart contracts are being used in all kinds of industries. Take a look at some real-world examples to see a smart contract in action.
1. Supply Chain and Product Tracking
If you’re a distributor, you can use smart contracts to sell and distribute your products all over the world. The code behind the smart contract can track the location of your products, so you can trace them as they change hands throughout the supply chain. Every aspect of the supply chain can be replaced by a smart contract, making the entire system more efficient. From the shelf in your warehouse to the freighter sailing overseas to the storefront, smart contracts automatically release products to the right person once all the conditions of the contract have been met, creating a hands-off approach to supply chain management and product tracking.
2. Insurance Policies and Payments
An insurance policy is an agreement between the insurance company and the consumer. If you’re an insurance provider, you can use smart contracts to facilitate the terms of the policy. Every aspect of the policy will be recorded in the smart contract. The policy holder will review the terms and agree to the contract. As long as the policy holder continues to meet the terms, such as paying their monthly premiums, the smart contract will keep the policy in effect. If something goes wrong and the policy owner needs to cash in on their insurance policy, the contract will automatically release the insurance payment once the policy holder provides necessary documentation that outlines the damage to their home or car. This speeds up the insurance payment process and keeps the entire system automated and efficient. Policy holders and insurance companies no longer have to create mountains of paperwork every time someone needs to collect an insurance payment.
3. Stock Trading
Just like a product changing hands on the supply chain, you can use smart contracts to track the movement of a stock or bond as it moves from one owner to the next. Stocks can change hands at lightening speed, especially if the financial markets are in flux. But with smart contracts, traders can buy and sell more quickly because every transaction is automatically verified and recorded on the blockchain. This lowers the cost per transaction, creating a more fluid marketplace.
4. Intellectual Property Rights
If you’re an artist or a producer, you can protect your work and intellectual property using smart contracts. The details of your work, including the content itself, will be inaccessible unless someone completes the requirements of the smart contract. If you make a song and someone wants to use it, they will have to abide by the rules of the smart contract by paying royalties, entering information about the project, including how they plan to use the song. If the terms of the smart contract are met, the song will be released to the person. This helps artists and produces collect money from their work without expensive legal fees.
There are many ways to use smart contracts. These are just pieces of code that are used to verify and conduct different kinds of transactions, so they can be applied to a wide range of industries and use cases.
Interested in making the most of smart contract technology? Contact the blockchain developers at Ionixx Technologies for a range of services, including blockchain consulting, ICO development, and DApp development.