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Using Smart Contracts to Promote Business
By: Anurag Varshney on August 8, 2019
Blockchain is a system that works in such a way that it brings decentralisation to decision making.
How Smart Contracts Work on Blockchain.
As the world is moving forward, digital technology is not lagging. The technology is part of the major things driving the world that we live in. As we prepare for the fourth industrial revolution, we are already noticing amazing and emerging technologies that will shape the world. This includes Artificial Intelligence, Robotics, Blockchain Technology, Internet of Things, and 3D Printing among other things.
Blockchain is a system that works in such a way that it brings decentralisation to decision making. Smart contracts operate on blockchain technology. Smart contracts can be used for several purposes in business. Some of these business use cases are digital identity management and keeping of records. While discussing how smart contracts can be used for these two purposes, we will first discuss the current challenges being faced, how that is solved by smart contracts and the considerations that should be made.
What is Smart Contract?
Smart contracts are just like normal traditional contracts. The only difference is that smart contracts are digital and there are no intermediaries. Smart contracts can be defined as some form protocols that verify, enforce and oversee negotiations and the performances of contracts. These protocols thus ensure that no third parties are present during the processing of such transactions and ensure the credibility of transactions. Such transactions are irreversible, and the trail of the records can be tracked due to the record-keeping abilities of the smart contracts. Smart contracts ensure that transactions conducted within the confines of the WWW are secure and that the costs are lower than what is found in traditional contracts.
Business Use Cases of Smart Contract
We will discuss different use cases of smart contract that can be developed and used in business.
Digital Identity Management
Smart contracts can be used in managing digital identity. It enables individuals to control and own their own digital identity including data, digital assets and reputation. With this, individuals and businesses can choose what personal data they wish to disclose to counterparties. It also allows enterprises to know their customers.
Simply put, the smart contract will provide “a self-sovereign digital identity that is enabled by smart contracts will provide user-centred, seamless internet for business and individuals.”
Current Challenges
- The current Know Your Customer (KYC) processes are time-consuming and expensive while lacking quality.
- Since individuals rely on third parties, there is limited control over potential leakage of data.
- High liability to protect user data leads to a single-point-of-failure and can result in it being a target for hackers
Smart Contract Benefits
- Individuals own and control their data. For example, they can securely disclose their data to any counterparty as they wish.
- There will no need for counterparties to hold sensitive data for verification of transactions. This will certainly reduce liability and facilitate a Know Your Customer (KYC) process that is frictionless.
- Increased interoperability, resiliency and compliance.
Smart Contract Considerations
- Technical integration with attestation providers
- Fosters an acceptance of attestation that is digitally provided within a legal framework thereby establishing trust in smart contracts’ security
- Formation of standards and protocols to deliver inter-operability by parties involved.
Smart Contracts for Records: Digitalizing Uniform Commercial Code Filing
Smart contracts can help in the digitalisation of Uniform Commercial Code (UCC) filing, and automate their release and renewal processes. This is illustrated in figures 1.1 and 1.2. In addition to this, smart contracts can atomically make the lender’s security interest perfect at the period of a loan creation.
Current Challenges
- Using paper-based filing for many finance documents with the government and other institutions
- Expired archival data stored in government warehouses and incurring unnecessary additional costs.
- Error-prone, manual process for releasing/renewing Uniform Commercial Code (UCC) filings leads to latency.
Smart Contract Benefits
- Automated processes which include calling by lenders for additional collateral as well as tracking of the loan versus the collateral value
- Reduction in legal bills through auto-release and auto-renewal of digitized UCC filings
- Archived data automatically becomes unsearchable after it reaches its expiry date
Smart Contract Considerations
- With a smart contract, data can be stored on a distributed ledger without compromising data privacy or slowing performance.
- Clarification should be made regarding whether courts will consider a document as legally destroyed if such document is merely cryptographically unsearchable instead of it being removed from the ledger.
As a consumer who desires security and smooth purchases, Blockchain technologies are highly recommended for you. If you ever need help with getting the right Blockchain practices or choosing the best Blockchain training in Noida, NeuVays is your go-to brand. You are sure to get the best Blockchain training and guide available. You can look up their website on http://india.neuvays.com/.
(Anurag Varshney, 2019)