Here at Crowdholding, we will be launching our new smart contract very soon, which brings up the topic for any newbies wanting to get into the world of crypto “what is a Smart Contract?”.
The term and ideology of “smart contracts” was first conceived by computer scientist and cryptographer Nick Szabo back in 1993. He introduced the concept of how users could input data or a value, and receive a finite item from a machine, such as a snack of soft drink.
The issue was that back in 1993, the technology wasn’t there to allow smart contracts to thrive until the explosion of blockchain technology. This is because blockchains are a decentralized system that exists between all permitted parties and no need to have middlemen that can slow down a system and cause conflicts, instead you have smart contracts.
A smart contract in basic terms enforces terms of agreement with a cryptographic code (rather than a standard contract that has to be browsed through to find the correct terms).The simplistic way to describe the difference is to compare it to vending machine (a smart contract) against a shop assistant (standard contract).
Although smart contracts are still in their infancy, there are a lot of industries that could implement them in their current procedures.
A potential future use for smart contracts could be in world of insurance. Smart contracts are extremely useful in the cases when a process takes a significant amount of time, which is a typical problem with insurance policies. The work involves many manual operations and requires a lot of human action and time to validate. For a customer, the longer it takes, the more stress / additional costs. With a smart contract, it could have measurable parameters such as flood levels, earthquake magnitude or a variety of different variants. When there’s an insured event, the input conditions of a smart contract will be changed accordingly. As a result, the claims process will be triggered immediately, and the financial payout can be delivered to a customer without any delays. The need of human-driven intervention is reduced which would reduce costs and allow the insurance holder to start to rebuild.
The added beauty of smart contracts as well is you can have multiple and they can collaborate between each other to make the correct decision, eliminating human error, corruption and also having set standards that everyone agrees to.
The world of smart contracts has not breached into industries that govern our society, but we are seeing more and more investment into blockchain technologies and this will continue into the future.
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