In a world where smartphones and even smart cars are becoming the norm, we desire everything to be “smart” with more artificial intelligence to offload the burden of doing complex tasks. Manual contracts in businesses or manufacturing, for example, hinder productivity, efficiency, and trust, thus increasing the cost of business operations. In the age of computers, it is time for automation to take away the pain of dealing with intermediaries and middlemen. Doing so makes the entire system more reliable and trustworthy for all parties.
This is where blockchain technology comes in. One of the key features of blockchain technology is that it decentralizes data storage and transaction records, helping eliminate the need for middlemen. While middle intermediaries take extra time and resources from all parties involved, smart contracts based on blockchain technology are pre-programmed commands that automatically execute transactions if pre-agreed conditions have been met. By definition, a smart contract is a computer protocol which enforces a contract by digitally facilitating, verifying and enforcing it. With the help of this emerging technology, smart contracts can now replace any intermediaries with the bonus of being more efficient and reliable. Anyone who is familiar with the basics of computer programming knows that computer programs work under strict condition-based sequences. Smart contracts on the blockchain operate on similar principles. There can be no question about a transaction taking place if even one of the conditions on either end has not been met. As a result, businesses or customers do not have to worry about the possibility of fraud or counterfeiting. No one has to pay or transfer the product beforehand and worry about the other party not keeping up their end of the deal. The blockchain receives both ends of the transaction, and stores them in the distributed ledger before disbursing to all parties at the same time. If any one of the parties does not fulfill the requirements of the smart contract—such as failing to send the money or ship the product, for example—the funds are automatically returned to the other party. These automated agreements are out of reach from any central authority, making any exploitation difficult. The decentralization of the ledger makes it impossible for any party or individual to tamper with any records.
Transparency is one of the most promising aspects of blockchain and smart contracts are a key part of the overall dynamic of this ground-breaking technology. No one prefers a middleman with too much power in any business transaction—it only attracts a number of potential problems. Apart from the possibility of fraud from the middleman itself, the parties involved can also behave in an untrustworthy way. Therefore, manufacturing will be much more efficient and hassle-free using smart contracts. Any possibility of fraud or counterfeiting can be minimized by the use of a more secure and transparent blockchain technology. Manufacturing industries can add layers of additional protection to transactions using blockchain technology both for themselves and their partners. For example, a transaction cannot take place if the conditions are not met. Additionally, no one has authority over the distributed ledgers.These blockchain ledgers are decentralized and thus reduce fraud and counterfeiting risk. Smart contracts behave as an automated system of rules that oversee all business-to-business and machine-to-machine transactions. Smart contracts have the potential to herald the future of all-encompassing digital transactions.