Blockchain and smart contracts are so much more than market buzzwords. In less than 10 years, we have seen the novel technology reshape everything we know about contract lifecycle management. We are on the verge of seeing smart contracts become mainstream with applications in real business environments.
But what does this mean for businesses in this dynamic day and age? And how transformative exactly is this type of technology?
The evolution from an idea to successful application took approximately a decade since blockchain’s first mention in Satoshi Nakamoto’s Bitcoin: A Peer-to-Peer Electronic Cash System paper published in 2008. Over time, companies began incorporating blockchain and smart contracts into architected applications in their production technologies. As more and more organizations started cultivating blockchain environments, one opportunity for innovation stood out: smart contracts.
Put simply, smart contracts define and execute the theoretical and technical rules and policies, coded within the blockchain environment. They govern transactional agreements hosted on a blockchain network. Their simplicity and seamless integration saves time, creating a world of improved economic efficiencies, and reduces legal spend and internal cycle time, while ensuring absolute transparency and control.
As such, smart contracts are crucial enablers or disablers of the blockchain environment. Because smart contracts ensure the policies to execute an exchange of information are satisfied, they automate the execution and application of obligations to participants in the system.
Smart contracts have one major advantage over traditional contracts and that is the involvement of the blockchain. This technology allows anyone to program the codes that self-executes without the need for intermediate parties. Smart contracts’ potential extends far beyond the simple transfer of assets. Multiple smart contracts can link to one another to provide utility to other contracts with ample application across multiple industries, such as healthcare, logistics, finance, insurance, and IoT. And utility comes from many places rather than just the elimination of third party validation to execute the contracts.
Today, we are seeing smart contracts and blockchain technology being applied on simple pricing or simple binary issues as well as even more complicated issues such as “if vendor offers this level of indemnity, then respond with fallback clause X”.
Are you ready for automated smart contracting?
Smart contracts and blockchain technology are a natural continuation of relational contracting. They offer a way to develop the relational contracts from the past by driving corporate efficiencies and agility. The introduction of blockchain into the equation brings offers a fair and flexible framework to align with the guiding principles of relational contracting (namely reciprocity, autonomy, honesty, equity, loyalty and integrity). As a result, smart contracts flay the foundation for continuously aligning interests and strategic objectives for the parties by specifying what joint success and value looks like.
For companies this translates to fair, balanced contracting guidelines that maximize the value to the business.
With Trakti’s unique approach to bringing AI inference directly on the blockchain, we are unlocking new possibilities by enhancing the capacity of smart contracts with a specific set of instructions. As the first contract negotiation and management platform integrated in the blockchain, we increase responsiveness in contract management and bring automation, auditability, accuracy, consistency, and objectivity to every transaction.