Over the last several months, blockchain has dominated conversations in the business world. While the talk has largely been on cryptocurrencies till now, the blockchain concept itself has several practical use cases for with massive implications for the global business ecosystem. One of them is the smart contract, a set of sequential codes which can verify the effective execution of digital, legally-binding contracts.
A smart contract can be programmed to execute specific actions once a set of pre-defined criteria are met, thus reducing complex legal procedures into much simpler coded instructions. Furthermore, some of the key advantages that smart contracts offer over conventional contractual systems, include:
- Eliminating the need for human intervention
- Transparent execution of contract terms
- Making contracts immutable
- Embedding trust, even in multiparty contracts
- Eliminating middlemen required to carry out legal formalities
- Digitizing processes, thus ensuring greater savings in operating costs in the long term
Usability in the business ecosphere
Businesses can adopt blockchain and smart contracts to automate financial transactions, record the exchange of goods and services, as well as transfer the ownership of assets. For instance, smart contracts can optimize real-estate transactions by compiling multiple documents and creating paper deeds and contracts, all the information pertaining to a property can be entered into a smart contract. The property buyer can purchase tokens and send them to a specified address on the blockchain. The funds will be stored on this address until all the pertinent steps mentioned in the smart contract are complete, following which a computer program will release the tokens to the seller.
As far as banking, or specific areas like trade finance are concerned, a permissioned blockchain driven by smart contracts can make for an extremely efficient solution. Such a system would include both banks and other financial service providers along with regulators, with each being given control over the nodes.
Additionally, breaches on IoT devices are becoming increasingly common due to manufacturers overlooking critical security requirements. However, blockchain can cryptographically secure these devices and their infrastructure by automating resource optimization. This ensures that the distributed ledger which shares data across the network is encrypted, while contractual terms can be embedded into IoT-powered enterprise systems to automate interactions with various stakeholders. In addition, the systems can be programmed to detect potential threat actors and prevent breaches.
Protecting digital assets and intellectual property with smart contracts
With digitization of content such as music and films, artist remuneration has become extremely tricky, while the growing impact of piracy in the last two decades has worsened the situation. In the conflict with record companies and large digital platforms, artistes often end up getting the raw end of the deal. Blockchain is increasingly enabling independent artistes and content creators to democratize access to their creations for the public, while receiving fair compensation for their efforts. Imogen Heap, a popular musical artist and two-time Grammy award winner was the first mainstream singer to put her music on a blockchain-driven platform. She also recently announced her upcoming blockchain-based project, Mycelia, which is envisioned as a platform for artists to manage their careers and ensure control over their creations. Such examples go to show that with blockchain, artistes can enjoy a great deal of creative freedom in creating and showcasing the kind of content they want to.
More and more content distribution platforms are emerging across the globe that are powered by blockchain and use smart contracts to protect the intellectual property rights of creators. For instance, MinersINC from India, is one such platform that aims to transform the local entertainment industry by bringing the creators closer to their consumers through a blockchain- powered and community-enabled platform called myNK. Besides this, such platforms also provide necessary assistance with respect to contract management with other stakeholders, while delivering on the promise of automated payouts based on pre-agreed terms and conditions.
With inherent trust, Blockchain can propel entire industries and economies to hitherto unseen levels of growth with a transparent, sustainable and trustworthy system of operations.. However, to utilize the full benefit of this innovative technology, businesses and regulators need to quickly recognize its potential and leverage it.
Authored by Nitin Narkhede, Founder and CEO, MinersINC.
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