A smart contract can work individually, but it can also be implemented along with other smart contracts. They can function interdependently as well. Successful completion of one smart contract can trigger another one and the process keeps going. If implemented properly, entire businesses and organizations can run successfully on smart contracts. This has already begun in various cryptocurrency systems wherein the laws are pre-defined. This allows the network to function independently.
What Are the Benefits of Smart Contracts?
The benefits of smart contracts are very similar to that of a blockchain.
- Speed: Smart contracts are digital and automated. It saves time as compared to manual documentation and the scope of errors is also less.
- Trust: They operate on pre-determined rules which are encrypted and shared among all the participants. This reduces any probabilities of malpractices and tampering.
- Security: Blockchain transactions work on the principles of cryptocurrency and they are encrypted. This makes it exceedingly difficult to hack into the network.
- Savings: Smart contracts eliminate the need for intermediaries as the transactions are transparent and do not require any third-party interference.
What Are Smart Contracts Used For?
Due to the ease of its functioning, smart contracts are used for all kinds of transactions across various industries, including:
- Insurance companies: Smart contracts can be used for simpler insurance processes like underwriting and payouts. With smart contracts in insurance, no third-party involvement is required, it speeds up the claim processing, and it also lowers the administrative costs.
- Health systems: Data is recorded and transferred safely. This makes it secure and does not allow access from third parties.
- Governments: Smart contracts can make voting systems completely secure and eliminate the possibilities of fraud.
- ICOs: An ICO is a crowdfunding system that uses blockchain technology. You can create a smart contract and a token for it to generate funds.
Smart contracts have enormous potential to capture global markets. It saves a lot of time and money, reduces frauds and delays, and is extremely reliable.
As smart contracts are an application of blockchain, learning about blockchain will provide you with the knowledge you need to succeed in your industry, whether you’re just starting out or looking to upgrade your company’s business model. EC-Council’s blockchain training program teaches you the ins and outs of smart contracts, with an overall focus on practical blockchain knowledge and the skills required to make you job-ready, all packaged within a flexible learning module that caters to your needs.
Source : https://blog.eccouncil.org/what-is-a-smart-contract-in-blockchain/