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What Are Smart Contracts and How Can They Enhance Your Company’s Security?
Smart contracts are making some significant upgrades to existing supply chains and digital business transactions happening worldwide. They allow you to conduct secure and accurate transactions of any kind from bill payments, sale agreements, data transfers, and more across the globe. They have proven quite helpful in enhancing your company’s security, preventing fraudulent transactions and errors in your business transactions.
Here is a brief rundown of smart contracts and how they can help your business.
What Is A Smart Contract?
Smart contracts are special programs written to meet your business’s specific requirements and help implement business logic over a decentralized network. They can be implemented with the help of distributed ledgers or blockchain technology, with the latter being the most popular technology on which most smart contracts are built upon.
Blockchain-based smart contracts allow you to implement any business transaction in a secure and decentralized manner. They are immutable, meaning once a smart contract has been executed, the data cannot be changed or tampered with. It can automatically authorize a transaction based on specific events and help speed up the business process.
Smart contracts are not by default legally binding, but you can take extra measures to link them to legal processes.
As there are no third parties involved, smart contracts offer a safe and secure way to perform digital asset transfer and payment transactions without fear of fraud.
It is challenging to hack or change the data contained in a smart contract as Blockchain implementations have advanced encryption. To access a single record, hackers would have to go through an entire Blockchain.
Smart Contract Advantages
- Flexible application. Smart contracts enable flexibility of storing any data, thus providing scope for executing a wide range of diverse business logic.
- Payment automation. Smart contracts can serve as a platform for automated business transactions like automatic bill payments. For instance, the music industry can use smart contracts for automatic royalty payments to the artist every time someone streams their music.
- Security. Advanced encryption of Blockchain and distributed ledge technology ensures the security of transactions.
- Speed. Smart contracting reduces manual workload and the time consumed in a slow paper deed process, thus reducing time and cost investments associated with a business transaction. The processing speed is very high with smart contract implementations.
- Autonomy. Smart contracts allow you to conduct business transactions anonymously as well without having to worry about reliability. All information can be verified via Blockchain ledgers or the type of ledger used by the smart contract ensuring reliable data at all times.
How to Start with Smart Contracts for Your Company
While smart contract technology is still nascent, multiple firms around the world are emerging with a focus on this promising technology. Many of them advance the technology implementation in specific industries like logistics, manufacturing, or agriculture, often bundling the Blockchain-based technology with the Internet of Things (IoT). The future of smart contracts is bright with possible applications in all kinds of business spaces from crowdfunding, banking, voting systems, healthcare, IoT transactions to artistic endeavors.
The first step towards implementing smart contracts in your small or medium-sized business is to ensure your business IT environment is up-to-speed. For instance, cloud-based IT infrastructure is much better suited to hosting smart contracts in the future as opposed to siloed on-site infrastructure. Get in touch with the leading East Coast Managed Service Provider to map out your IT roadmap—book your first 30-minute free consultation.