Benefits of Smart Contracts

Benefits of Smart Contracts

A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible.

Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism.

Benefits

  • Speed, efficiency and accuracy

  • Trust and transparency

  • Security

  • Savings

Speed, efficiency and accuracy

Once a condition is met, the contract is executed immediately. Because smart contracts are digital and automated, there’s no paperwork to process and no time spent reconciling errors that often result from manually filling in documents.

Trust and transparency

Because there’s no third party involved, and because encrypted records of transactions are shared across participants, there’s no need to question whether information has been altered for personal benefit.

Security

Blockchain transaction records are encrypted, which makes them very hard to hack. Moreover, because each record is connected to the previous and subsequent records on a distributed ledger, hackers would have to alter the entire chain to change a single record.

Savings

Smart contracts remove the need for intermediaries to handle transactions and, by extension, their associated time delays and fees.

Applications of smart contracts

Smart contracts can be used across industries to streamline and automate doing business down the street or around the world.
  • Reimagine dispute resolution

  • Build a resilient supply chain

  • Bring trust to trade finance

  • Reinvent bank letters of guarantee

Reimagine dispute resolution

Discrepancies in financial settlements are costly, taking weeks or months to research and resolve. Smart contracts that codify agreed-upon business rules automate processes such as identifying discrepancies, reconciling documents, settling transactions, and resolving disputes.

Build a resilient supply chain

IBM Blockchain supply chain solutions use smart contracts to streamline the flow of goods by automatically triggering next steps when conditions are met, such as shipping, delivery, and acceptable IoT data about conditions during handling. Participants can act earlier to prevent disruptions should an unexpected event occur.

Bring trust to trade finance

Smart contracts are an essential component of we.trade, the trade finance network convened by IBM Blockchain that is creating an ecosystem of trust for global trade. Standardized rules and simplified trading options encoded in smart contracts decrease risk and help participants find new opportunities.

Reinvent bank letters of guarantee

Using blockchain and smart contracts, a consortium of banks digitized and transformed the bank guarantee process for both financial and performance guarantees. The new platform, Lygon, enables applicants, issuers and beneficiaries to obtain legally binding guarantees in one day.

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Benefits of Smart Contracts

Posted by staff on June 13, 2021

Blockchain Insights & Tutorials


Benefits of Smart Contracts

Benefits of Smart Contracts

A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible.

Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism.

Benefits

  • Speed, efficiency and accuracy

  • Trust and transparency

  • Security

  • Savings

Speed, efficiency and accuracy

Once a condition is met, the contract is executed immediately. Because smart contracts are digital and automated, there’s no paperwork to process and no time spent reconciling errors that often result from manually filling in documents.

Trust and transparency

Because there’s no third party involved, and because encrypted records of transactions are shared across participants, there’s no need to question whether information has been altered for personal benefit.

Security

Blockchain transaction records are encrypted, which makes them very hard to hack. Moreover, because each record is connected to the previous and subsequent records on a distributed ledger, hackers would have to alter the entire chain to change a single record.

Savings

Smart contracts remove the need for intermediaries to handle transactions and, by extension, their associated time delays and fees.

Applications of smart contracts

Smart contracts can be used across industries to streamline and automate doing business down the street or around the world.
  • Reimagine dispute resolution

  • Build a resilient supply chain

  • Bring trust to trade finance

  • Reinvent bank letters of guarantee

Reimagine dispute resolution

Discrepancies in financial settlements are costly, taking weeks or months to research and resolve. Smart contracts that codify agreed-upon business rules automate processes such as identifying discrepancies, reconciling documents, settling transactions, and resolving disputes.

Build a resilient supply chain

IBM Blockchain supply chain solutions use smart contracts to streamline the flow of goods by automatically triggering next steps when conditions are met, such as shipping, delivery, and acceptable IoT data about conditions during handling. Participants can act earlier to prevent disruptions should an unexpected event occur.

Bring trust to trade finance

Smart contracts are an essential component of we.trade, the trade finance network convened by IBM Blockchain that is creating an ecosystem of trust for global trade. Standardized rules and simplified trading options encoded in smart contracts decrease risk and help participants find new opportunities.

Reinvent bank letters of guarantee

Using blockchain and smart contracts, a consortium of banks digitized and transformed the bank guarantee process for both financial and performance guarantees. The new platform, Lygon, enables applicants, issuers and beneficiaries to obtain legally binding guarantees in one day.

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