What are Smart Contracts and How Can They Be Used for Business?

Smart contracts offer a way for people to exchange money, property, or anything else of value without relying on a third party. This is because smart contracts are able to automatically verify and enforce the terms of an agreement by using computer code that cannot be changed or edited. This blog post discusses smart contracts and their practical use in today’s society. It also talks about how lawyers and real estate agents can utilize smart contracts in their business, as well as providing examples of smart contracts that have been used so far. First off, let’s start by going over the basics of smart contracts and how they work.

How do Smart Contracts Work?

A smart contract is a computer program stored on the blockchain, that runs when a set of predetermined conditions are met. They allow people to exchange money, property, or anything of value without relying on a third party. These smart contracts can also automate your business and reduce the amount of human work needed. In order to do this, smart contracts need the following elements:

  • A third party or escrow to hold funds
  • Rules on how money moves from one person to another
  • An automated system that executes those rules without any outside influence

According to computer scientist and legal scholar Nick Szabo in 1997, the best way to explain smart contracts is by using a vending machine. When the correct inputs are made, a certain output is guaranteed.

Using a Vending Machine

money + item selection = item dispensed

The vending machine checks whether you’ve inputted the correct amount of money in relation to the value of the item you selected. If those conditions are met it dispenses your item to you.

There’s something extremely important to take from all of this. The vending machine removes the need for a third-party vendor. This is how smart contracts operate at their core.

Image Credits: Stephan Valentin

 

Benefits of Smart Contracts

Some of the benefits of smart contracts include:

  • Reducing the possibility of fraud since everything is on record with no opportunity for tampering or interference.
  • Smart contract code is transparent and immutable
  • Reducing the amount of human work needed to run a business
  • A smart contract can automatically verify and enforce the terms of an agreement by using computer code that cannot be changed or edited.

Examples of Smart Contracts:

Real Estate

Smart contracts can be used in the real estate industry to record, transfer, and verify land titles. They can help homeowners and real estate agents securely buy and sell properties using Ethereum smart contract technology.

Another use of smart contracts in real estate is to transfer rental properties. This smart contract is able to pay the landlord and deposit money into an account as well as sign agreements without needing a third party. These are just some examples of smart contracts being used in the real estate industry, but smart contracts can also be applied to anything that requires secure transactions between two parties.

Airbnb used blockchain technology for its services. Uber also uses smart contracts with drivers who sign up through the application service provider company, rather than working directly with customers. The following example shows how AirBnB works using smart contract technology when two users agree upon renting out one room in a via the website platform.

Lawyers

A use case of smart contracts for lawyers is to automatically collect payment from a client as soon as they win an arbitration, instead of waiting for them to send the money.

As this shows, smart contracts are a practical way to automate and secure transactions in today’s society. They can help with everything from business deals, all the way down to your wedding plans!

 

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Automotive Industry

What is the Blockchain?

The blockchain is a public ledger of all Bitcoin transactions that have ever been executed. It is constantly growing as “completed” blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order through cryptography, ensuring they remain beyond the power of manipulators