One of the most obvious use cases for blockchain technology comes in the form of deploying smart contracts. Unlike its traditional contracts counterparts, a smart contract operates completely autonomously without relying on any human oversight. It goes without saying this technology holds a lot of promise, both in and outside of the financial world.
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The World of Smart Contracts Is Here
The way companies do business can be streamlined by quite a margin, which will not only make day-to-day operations more efficient, but also reduce overhead costs by quite a margin. Putting that terminology into practice, however, is a lot easier said than done. Bitcoin and smart contracts will be able to lend a helping hand here, though.
To many people, the concept of using Bitcoin as a means of transferring value either makes a lot of sense, or no sense at all. Until people figure out how they feel about Bitcoin as currency, the underlying technology will help transform our daily lives unlike any technology that has come before it.
Smart contracts are nothing short of being a technological marvel to behold, as the concept envelops so many different aspects of business and finance. Imagine wielding a tool that can automate employee payouts, dividends, conduct payments in a proper contactless manner, without having to deal with inefficiency or intervention.
Up until this point, having transactions complete automatically is pretty much impossible for everyday consumers, as there is always an intermediary involved in the process. When paying with a plastic card at a store, the card – and the bank issuing that card, are two intermediaries facilitating the transfer of value. Plus, consumers have to manually complete the payment, by either swiping the card or entering a PIN code.
While this system is acceptable for now, future improvements will need to be made. Smart contracts create an ecosystem in which payments execute automatically once the user scans a code, which will lead to greater economic benefits for all parties involved. Funds settlement takes mere seconds, there are small to no fees attached, and the economy will prosper.
That is, assuming there are companies who can bring smart contracts to the masses in a convenient manner. So far, only the Ethereum project is working on smart contracts linked to a public blockchain, albeit there is still a lot of work to be done before a mainstream concept is created. Also, the Ethereum blockchain has been the subject of various security concerns, making it a less preferable choice to the Bitcoin blockchain itself.
Private Blockchains Are Not All Bad
Although there are very few people in the Bitcoin scene who see the value of private blockchains right now, there is at least one advantage to this concept. A private blockchain could be a great platform to test the viability of smart contracts in a financial environment. One can rest assured various financial players working on blockchain technology projects will be willing to give this a try.
It will take time until the public perception regarding smart contracts changes, and by the time that happens, a workable solution needs to be ready. Private blockchains could help foster future innovation in the smart contracts industry, although the concept could disappear into obscurity as well.
Source: American Banker
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