Smart Contracts & Business Advantages: Sergey Nazarov of SmartContract.com Shares Insights
Hello my Steemit and DSound brothers & sisters. With the falling price of Steemit and other Cryptocurrencies, it can be discouraging. Here is something that can help you put it in perspective and remember the long-term benefits of the underlying principles of blockchain and smart contracts. Enjoy!
Smart Contracts & Business Advantages: Sergey Nazarov of Smart Contracts Shares Insights
By Terry Brock for Steemit & DSound
Business is made possible by contracts, both written and verbal. In the past lawyers make a living drawing up contracts that stipulate expected actions on various parties, payments which should be made, dates and times for payment, and consequences if the terms are violated.
Smart contracts build on top of this concept to increase efficiency, increase reliability, and reduce costs. Smart contracts have been designed by people who create them and are based on digital coding in blockchain.
Blockchain is the technology that empowers bitcoin and other cryptocurrencies along with smart contracts. The most popular of the cryptocurrencies associated with smart contracts is Ethereum https://www.ethereum.org/.
Ethereum allows developers to write their own smart contract, called “autonomous agents” in the founding white paper for this cryptocurrency. These autonomous agents include the various tasks that will be assigned and how each party will implement what needs to be done. Payments are stipulated based on the fulfillment of select, quantifiable objectives.
Ethereum is a cryptocurrency which holds the #2 place in market value behind bitcoin. A recently released competitor to Ethereum is EOS https://eos.io/ designed to further enhance smart contracts.
Smart contracts are also called self-executing contracts. They take the place of traditional agreements by being able to self-execute and self-enforce. Self-execution is the reason we see strong benefits of smart contracts.
Recently I had the opportunity to talk to the CEO of SmartContract.com, Sergey Nazarov, where he explained the business benefits of smart contracts and where they excel best. You can see the full video here -
During the interview I suggested hypothetically that a smart contract would be good if I were to agreed to clean his windows. We could have a smart contract that would pay me if I perform as I said I would and not pay if I did not. He agreed that a smart contract follows that basic idea but it would be very difficult to ascertain something as qualitative as cleaning windows. Smart contracts operate better when there is a rich data set from which you can derive information.
Smart contracts work best when you can ask quantitative questions like amounts, temperature, weight, time and date, and other measurable items. There's a lot of subjectivity to my hypothetical window cleaning example. It all depends on what the parties agree is "clean" and what is "still dirty.” The more quantifiable, the better application for a smart contract.
A good example of using a smart contract might include shipping freight. For example imagine you’re shipping crates of fruit across oceans in large tankers. This is an ideal application for a smart contract. As you would suspect, a smart contract is good for confirming many different pieces of data that are attached to the delivery of those crates of fruit from their origin to their destination.
Of course this work involves commonly understood items such as how many crates are contained, the weight of various crates, perhaps the number of items in each crate, when the crate was loaded, and other variables. Embedded sensors can be deployed to measure data like moisture, temperature, and other quantitative variables. Sensors are part of what is called the Internet of Things (IoT) and the data they generate can be a huge part of the data feed for a smart contract.
The smart contract could continue to track variables like arrival date and time, fees attached for tolls and duties paid, and any other modifications to the contract. A host of data inputs make for better contracts and are no problem for machines to process rapidly. Instead of costly litigation to solve problems, a smart contract stops execution, i.e. someone doesn’t get paid, if pre-determined conditions are not met.
The field of finance is another area where smart contracts work very well. The financial industry is driven by data and calculations are used to determine contract goal achievement. When certain quantifiable goals and milestones are achieved, the smart contract will allow predetermined conditions, think payments, deliverables, etc., to execute.
The opportunities for this technology are amazing. Discover what is possible in this short video:
Get to know the benefits of smart contracts and how to implement them properly. The business advantages are enormous.
I look forward to hearing from you and getting your comments. Thank you very much for listening.
Terry
Terry L. Brock, MBA, CSP, CPAE
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Good stuff Terry!
I see this being transformational in construction contracting. I think it could reduce administration costs tremendously.
Yes indeed, Mike. It will improve efficiency, tighten security, and reduce costs. Hey, when I went to business school they told us that stuff like that is over in the good column! :-)