Using Blockchain Smart Contracts for Business? Consider All Your Options
Haven’t heard about blockchain or smart contracts? No worries. You are not alone. Most people outside of the IT-field and the financial service industry haven’t either. While Bitcoin and some other cryptocurrencies have already become a household buzzword – with their rising value rose their popularity – not many are aware of how the blockchain and smart contracts actually work.
A well-known fact – smart contracts on blockchain play a role of an intermediary and allow for executing certain transactions in case required criteria are met. However, how can smart contracts influence businesses and their transactions?
Positive Impact: Quick and Low-Cost Transactions
The biggests advantage of using blockchains in business transactions is their high speed and relatively low costs. As smart contract transactions are executed by software and automated processes, the cost of these transactions are considerably reduced (especially, comparing to conventional transaction costs). The speed of transactions on a blockchain is so high, that as soon as certain requirements of the system are met, the funds can be transferred from party A to party B right away. Therefore, there is a fair amount of reasonable matters to turn your transactions on blockchain. It will surely give you a great privilege over those companies which still use traditional means of costs transaction.
Negative Impact: Acceptance and Lawfulness
One of the biggest weaknesses of smart contracts is their image in the eyes of an ordinary user. Not many people know how they work, therefore, not many are ready to rely on an unconventional and unfamiliar technology. On the one hand, the growing popularity of IoT increased the recognizability of “smart” things (smartphones, smart houses and even smart cities). On the other hand, all those things are new and not yet well-known. So, users may not be ready to use them on a regular basis.
Secondly, there are some legal issues of smart contracts usage. Integration of any new phenomenon into a legal system is always associated with certain misunderstandings and could create grey areas for interpretation in terms of law. Not all countries accept blockchain financial contracts as legal and do not allow using them as a lawful framework for economic transactions.
As with any innovative technology, blockchain smart contracts have certain beneficial features as well as their share of drawbacks. Among its strong suits is technological possibility to deal with entirely virtual tasks. It can be a good choice for an online game market or something similar. However, how well can blockchain cope with issues that appear outside of the virtual domain? What if somebody fabricates acceptable criteria (even though we know that the algorithm is totally reliable)? We still cannot be sure that everything works correctly in this case.
It is obvious to anyone who has to deal with software development that any software has weak points. We can always find some detractors willing to exploit these bugs. However, smart contracts remain relatively safe and strongly protected system in terms of transaction security. Therefore, if you want your business to keep pace with the times, consider blockchain smart contracts as a reliable alternative for your current transaction methodology at least in future.
If you have any doubt, don’t hesitate to contact United Perfectum. We have a team of experts, who would be happy to consult and answer your questions.