For decades contracts have been written, sighed and all
parties involved felt safe until one side breaks its pledge and third parties
are involved to analyze and issue penalties to the defaulters.
Likewise other contract go through well
and both parties go home a happy lot.
As IT forks we were obviously created to think out of the box. Firstly
our hand writing sucks and we need something that works fast with less
complications and this gave birth to smart contracts.
Smart contracts
Basically these are contracts in a digital format meaning
that its machines/bots are responsible for the approval, maintain and
concluding of the contracts. Sadly enough this technology has been around since
1994 (how old were you?). A dude called Nick Szabo had this idea and till
recently is when some of us are grasping the concept
Now I would like to bring blockchain technology in this. By no
if you have been reading most of my post you have a grasp of what blockchain is
and its benefits. (If not Click Here).
Smart contracts reside in the blockchain ecosystem. Let’s work
with a scenario. If a client issues you a contract o fix his/her servers, you
get paid once all the work is fully completed. With smart contracts the client
does not have to check if the job is complete basically the money is wired to
you once your job is complete.
Steps
First a contract is dratted on blockchain but it’s in code form. The
individuals are anonymous but the contract is in the public ledger. Once this
is in order jumps to the second phase.
A trigger is initiated e.g. finish date/expiration date
which trigger a payment option where funds are transferred to the contractor. This
only happens after codes has passed all necessary steps laid in the contract
terms.
These processes are very easy and third parties who are
always involved are now kicked out thus making the cost of contracts cheap and
easy to execute.
Also something else to note these payment can be in crypto
currency making it better to carry out business all over the world with anyone of
whatever nationality or language.
With more and more business being done online this is
something that will have to come into implementation. What will be needed is
more coders to write these contract.
Advantages
Anonymity - Contractor’s information is kept private as much
as the contract is public. Middle men like lawyers are kicked out as you are
the one to draft the contract as you wish.
Safety - All of this information is encrypted and in no way
will either party tamper or clam to loss the contract
Time – A lot of time is saved as this work is carried out by software
and the junks of paperwork and waiting approvals is no longer involved
Savings – Cutting out the middle men end up
saving both parties lots of revenue.
Accurate – with smart contact accurate is at 99% as all this
work is machine based. Compared to human who are prone to mistakes.
Backups - There is no loss of contract or malicious deletion
of information due to the fact that all this info is decentralized.