23 June 2022
Before we look at how smart contract integration can be achieved, in a range of business processes, let's just clarify what a smart contract is. A smart contract is a small piece of program code that is stored on a blockchain that defines what will happen and when. Like any contract between 2 people, it defines the parameters of the agreement and who the agreement is with. But the smart bit about it is that, after its execution, it is always running, and will carry out its instructions automatically when the conditions of the contract are met. Typically, a smart contract will replace a process that was previously done by humans. This means that it can revolutionize industries by eliminating human intervention, speeding up processes, and reducing costs.
They are based on simple Boolean functions like, if this reaches this value at this time, then do this. They may have many conditions, but when the predefined conditions are met the program triggers the action, which could be sending a notification or sending a payment, or updating a record on the blockchain, this would produce a permanent record of the contract execution.
Although each smart contract is initially coded by a developer, it is increasingly common for the data for each contract to be entered using a web interface or form, making it possible for anyone to use one, therefore smart contract integration can be implemented in any business.
Smart contact integration has already been implemented into almost every sector of the economy from energy, transport, healthcare, life sciences, government, and the financial services sector. Each has its own unique processes that can and have been disrupted by smart contacts. So let us look at 2 specific examples.
Even today the transport and supply chain industries still use a surprising amount of paper documentation. Mountains of paper documents are duplicated, signed, copied, transported, and filled. Some cargoes like chemicals have large amounts of paper safety certifications and documentation of what to do if they are spilled. Not only that, but complex financial processes are also manually processed to authenticate, hold, and transfer payments for each shipment to safeguard the buyer and seller. This is a perfect application for smart contract integration because all the paperwork can be replaced by electronic data that is pertinently recorded on the blockchain and tied to the transaction. The smart contracts can be programmed to verify all the information is correct before moving to the next stage, and even the payment for the shipment can be held by the blockchain and paid automatically when the shipment arrives.
In the case of artists like musicians, filmmakers, and even writers, have all had a hard time in the digital age controlling copies of their work, and who and where it is used. In the case of music, for example, it would be ideal if a buyer could play it as many times as they like but royalty is paid every time it is broadcast by a radio station or played in public, this has traditionally been done by requiring broadcaster keeping manual lists of what they paly under threat of a fine. But what if there was another way? What if the recording itself could make a royalty payment when it is broadcast? This is now possible with smart contracts so that even micro payments can be sent directly back to the owner of the recording in cryptocurrency. It is also possible to make a Movie that self-destructs after a certain number of plays or after a certain amount of time. This is a digital way of renting a movie for the weekend like we used to do on videotape. These are just a few examples of what is possible, but the limit is only our imaginations.
When considering smart contact integration into your business, you should analyze every point where data is collected and processed and consider how each of these aspects could impact it. In many cases, processes can be completely automated, and due to the trusted nature of smart contracts, the process of security checking the parties involved may no longer be necessary.
By removing manual data processing and human intervention, transactions are almost instant even if they are across borders and time zones. Using smart contracts removes the need for error checking and corrections that are inevitably introduced by human intervention.
Because processes are automatically executing code with no human intervention, participants can trust the outcome even if they are dealing with an unknown party at the other end of the transaction.
Smart contracts are automated and so need no human interventions, this has huge labor savings and all the associated infrastructure that is required to support a labor force to manually process data. They also function 24/7 so your business can now operate continuously and across international borders.
Typically, transactions on a blockchain are encrypted which makes them hard to hack, not only that but each record is also joined to the one before and after in the blockchain so a hacker can’t change the data without breaking the whole chain.
These are the key factors that should be studied when considering smart contract integration into your business. However, it is necessary to have full and deep knowledge of what effects smart contract integration can have and what it is capable of before trying to plan changes to your business. So, it is recommended that you use a professional organization to do this investigation for you.
If you are ready to consider smart contract integration into your business, get in contact with NextHash and we can provide you with a free consultation to identify some of the possible ways that your business could use smart contracts. Of course, this would only be an initial high-level investigation. Before going ahead and doing any development we would need to spend more time really understanding your processes in full and working with you to ensure that the results will live up to your expectations. Contact us today and we will be happy to help.