Blockchain Smart Contracts For Frictionless Work Process Between Parties

Blockchain smart contracts are helping enterprises to tackle the problems remained in the cooperation process across parties.

Illustration of people avatar business agreement concept

According to Market Research Future’s report, the global smart contract market expects to reach a valuation of $300 million by the year 2023, and the market is set to demonstrate a CAGR of 32% during the review period of 2017 to 2023. The business value of blockchain smart contracts in tackling the collaboration across the entities makes it highly recognized.

What is a blockchain smart contracts?

The term “smart contract” was coined by Nick Szabo — a computer scientist, law scholar, and cryptographer — in 1994, implying the idea of a digital contract that can automatically execute the order by using algorithms without face-to-face meeting or the interference of a trusted third-party to implement the process.

But it was not until in 2008 when Satoshi Nakamoto introduced Bitcoin and blockchain as its underlying technology that Smart contract has become complete.

The point of blockchain smart contracts is to digitally handle business logic in a decentralized database and make the implementation of contract terms to work automatically as an alarm clock.

Smart contract and blockchain is a perfect combination. With blockchain, information used in the “contract” is precise and unchangeable once recorded due to the hash function and consensus algorithm.

A smart contract requires some condition: competent parties, digital signatures, contract terms, and a distributed blockchain platform.

It is factual that smart contracts are popular with transactions that use cryptocurrencies as a financial instrument such as Bitcoin, Ethereum.

Many enterprise blockchain platforms are reinventing the use of blockchain and smart contracts in the daily business operation and gradually eliminating the dependence on cryptocurrencies.

For example, instead of using cryptocurrencies in transactions as public blockchain platforms (like Bitcoin and Ethereum), Hyperledger Fabric deals with transactions by merely using business logic such as a defined token in the chain code. (In Hyperledger, Smart contract is called Chaincode).

The mechanism of smart contract in a permissioned enterprise blockchain platform like akaChain is going through some steps: In the beginning, the contract takes data verified on the blockchain database, then peers in the chain will execute the chaincode to check whether the transactions are invalid. If yes, peers will sign, creating an endorsed transaction. Finally, to meet the condition of the consensus algorithm, the transaction will be considered successful and recorded on ledger only when collecting enough peers’ signatures.

Smart contracts apply in various solutions of different sectors, typically in Finance and Banking (such as options contracts in securities transactions, Blockchain-based Credit scoring system, eKYC), Insurance Claim, Supply Chain, E-commerce.

How can a smart contract enable frictionless work processes between parties?

Concerning the traditional written contracts, these are the efficiency of blockchain smart contracts considered via some aspects:

The automatic mechanism:

  • Automation also allows a contract to perform in a vast number of transactions at the same time.
  • With an automatic mechanism, a smart contract makes daily business operations easier. For instance, notarization vanishes because data is already stored on a distributed database immutably — a unified set of data with multiple verified copies.

The elimination of intermediaries and a trusted third-party:

A smart contract separates data handling tasks to technical tasks to help enterprises to protect their confidentiality.

Traceability:

Stop the misunderstanding of terms:

Time-stamp process and immutability even offer fair and accurate proof shreds of evidence to make it easier to resolve possible contradictions afterward.

Reduce cost and enhance business operation:

Besides, geography separation is no longer a problem because all processes perform online, giving enterprises the chance to cooperate with more potential partners and operate more globally.

Conclusion:

Despite the meager of proven successful applications, according to Gartner, “by 2022, smart contracts will be in use by more than 25% of global organizations.”

The complicated situation probably includes in the early stage of blockchain smart contracts

deployment, but once the system operates, you will see the great transformation to both business and law operations and the million-dollar value it holds.

Box:

akaChain is an enterprise blockchain platform built on Hyperledger Fabric. With smart contracts and ready-made solutions, akaChain delivers blockchain-based applications to help tackle business problems arising in modern enterprises with optimization.

Contact us for more information:

Phone: +84 90 1133883

Email: admin@akachain.io

Addresses: FLC Twin Towers, 265 Cau Giay street, Dich Vong Hau ward, Cau Giay district, Hanoi, Vietnam.

The Permissioned Business Blockchain for Enterprises