How Smart Contracts Are Automating Financial Services

The massive rise in adoption of the Blockchain technology has really been something I love so much because it has offer amazing innovations that one will not have thought about. One of the ways those transformation happens is through smart contract and which I will be explaining to you. When we talk about smart contracts, it means those contract that self executing by itself and that is what platforms like decentralised platforms used. Platforms like Ethereum, they help to increase the financial services.

Smart contracts as it were are programs that is stored on the Blockchain technology that automatically carries itself out as far as conditions set are been met. There is a particular principle that smart contracts work on and that is the If-then statements. This principle means there are certain conditions that must be met before the contract is automatically executed.

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Now let me briefly talk about the role of smart contracts in the Financial services. The first is it helps to improve the financial services as compared to the traditional system we are used to which most of the time can really be slow, costly and inefficient. One of the ways smart contracts bring efficiency is through the payments and transfers.

With smart contracts, certain barriers that the traditional system face is been eliminated and then established. With smart contracts, you can be able to make payments and even make them automatically as far as conditions are been met. With smart contracts, payments can be made irrespective of the distance as far as the conditions are surely met as that is the most important.

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The other aspect I will like to talk about is the Lending and the borrowing aspect. With smart contracts, the services of lending and borrowing process will be carried out more automatically than before and this gives edge over the traditional lending we have all been used to most of the time. Before traditional institutions can give you a loan, you will need to pass through several means which sometimes can really be frustrating most of the time. Telling from experience.

The other aspect I will also like to talk about is the aspect of Investment Management and Tokenisation. Instead of investment management been handled by financial advisors or brokers as it were in the traditional system, but with smart contracts, a lot of those processes can be automated and this makes it efficient and accessible. This is possible through the innovation of the Decentralised Finance platforms. Not only that it even allows the user to be in massive control of the services.

Even though it has so many benefits, I will say there are so many challenges and considerations that is attached to it and one of the limitations that smart contracts have is been limited to the accuracy of the code that is created to be conditions to be met. Not only that, errors sent to the Blockchain cannot be corrected except a new contract is created which could be inefficient.

Smart contracts have really helped to actually transform the financial services as a lot of benefits that is setting standards and which has so many benefits. In fact there are a lot of more benefits attached to it and I am so optimistic that the future of smart contracts will still be much more brighter and brighter than before. And yes even with those challenges, it can still be overcome.