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Benefits of Smart contracts

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The global economy is a changing and innovative paradigm that is evolving with technology. Around four years ago, the term 'programmable economy' was first coined to refer to a phenomenon driven by disruptive technologies, including smart contracts, blockchain technology and distributed ledgers. Although the concept was first used by the research company Gartner, it soon began to be used by companies around the world.

In the midst of 2020, we can say that these technological advances have changed the way companies negotiate with their suppliers, relate to their customers and sell their products and services. The ways in which commercial contracts are executed and fulfilled are changing, and in this post we are going to tell you how and why.

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5 benefits of using smart contracts

Many talk about smart contracts as the technology that will replace lawyers, but is it true that these advances have such power? One of the great advantages of blockchain, or blockchain, is its decentralised system. It is faster, cheaper and more secure than any traditional system that requires the presence of third parties or intermediaries.

Some professionals compare it to a vending machine: "Normally, you go to a lawyer or notary, pay them and wait to receive the document. With smart contracts, you simply leave a Bitcoin in a vending machine (ledger) and your collateral, driver's licence, or whatever, is deposited in your account", as the Blockgeeks portal points out.

All that this technology can bring to businesses can be summed up in the following points:

  1. Trust: It is virtually impossible for anyone to lose a document, as they will be encrypted in a shared ledger.
  2. Security: Thanks to cryptography, documents will be kept 100% secure and free from adoption by hackers.
  3. Autonomy: The person making the agreement does not need to rely on third parties to verify or confirm it.
  4. Backup: The distributed nature of the blockchain keeps any document secure and indelible, making it very difficult to lose.
  5. Accuracy: By working with smart contracts, not only will the processing of your deals be much faster and cheaper, but any errors will also be avoided.

Thanks to these benefits, many banks and governments are beginning to analyse all their possibilities with smart contracts and to include them among their tools. It is not a matter of replacing lawyers with technology, but of complementing them and taking advantage of the best of each one.

These professionals will eliminate from their tasks the writing of traditional contracts to start producing smart contract templates, for example, and they will be able to dedicate most of their time to more productive tasks and leave the more routine part to technology.

How and where to use smart contracts

This is the big question we are all asking ourselves. So far, we have mentioned their presence in law firms as an alternative for legal traffic and traditional contracting. Smart contracts constitute an ideal means of making agreements, business or transactions. This is how it is estimated that they will start to be used in our society:

  • Public administration; to guarantee the security of the voting system and protect votes by the ledger. Thanks to smart contracts they could increase participation in the electoral system, especially considering the technological and participative nature of the new generations of Millennials and Centennials.
  • Management; the blackchain eliminates any error or possible manipulation in documents, communication, accuracy or transparency in a company's business operations. This technology can easily streamline the entire process of operations, from approval to the resolution of any problem.
  • Automotive; to avoid any kind of manipulation in the manufacturing of vehicles, to ensure that it complies with all the necessary processes, and even for insurance companies to be able to charge rates according to the conditions under which the cars are driven.
  • Health; in order to ensure the veracity of our patients' medical records, to make medical care much faster, safer and more efficient, and to give access to specific individuals. In addition, the advantages of smart contracts can also be transferred to the production of medicines and surgery receipts.

In fact, there are many other possibilities for applying smart contracts, which we will gradually tell you about. Their automatic nature guarantees speed and cost reduction in transactions, and that makes them a fundamental tool for many businesses. Are you ready to guarantee the specific results you are looking for? And to avoid any confusion?

Bitcoin, Ethereum or Litecoin are some of the blockchains where smart contracts are being processed, but there are many other possibilities. If you want to know more about these technologies, remember that you can contact us and solve all your doubts.

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