How Smart Contracts Streamline Business Agreements
The business world is constantly evolving, and companies often seek ways to improve efficiency and reduce costs. Smart Contracts are the proven solution adopted by thousands of organisations worldwide.
Let’s examine the benefits of Smart Contracts compared to traditional contracts and how they offer a superior solution in various areas of business agreements.
The involvement of intermediaries
In conventional business, the enforcement of traditional contracts usually necessitates the involvement of intermediaries, such as banks, lawyers or notaries, leading to an increase in time and cost. Instead, smart contracts are self-executing and do not require intermediaries, offering a more efficient and cost-effective solution.
Time to Market
The traditional contract contains many phases like negotiations, drafting and signing, which leads to a longer processing time. In the case of smart contracts, this procedure is fully automated, which reduces the time needed to build and deploy an agreement. This approach is helpful for smaller transactions if the expense of a conventional contract process would be more than the value of the transaction.
Payment Settlement
Traditional contracts require complex payment settlement processes due to human intervention and manual activations, leading to delays and increased costs. The Smart Contracts use an event-triggering strategy with predetermined conditions to reduce the time and cost associated with payment settlement.
Transparency
The transparency of smart contracts is one of their prominent advantages. The contract’s terms are available to all parties, are stored on a decentralised ledger, and cannot be changed. This feature lowers the possibility of fraud and raises party trust.
Secured Record Storage
The Manual way of sensitive information/records management using conventional contracts can be time-consuming and error-prone. Smart contracts improve accuracy and dependability by storing all pertinent data on a decentralised ledger/storage that is easily accessible and verifiable by all parties.
Security
Traditional contracts can be changed or forged and are vulnerable to fraud and tampering. However, smart contracts are kept on a private, decentralised ledger, increasing security and lowering the risk of fraud.
Cost-Effectiveness
The cost of executing a typical contract requires the services of intermediaries and other third parties, which would be high. An automated smart contract lowers the cost of execution and makes it more accessible to small and medium-sized organisations.
Verifiability
Verification of stored information is a fundamental activity in business scenarios. Traditional contracts require physical signatures, which increases the time and cost associated with signature verification. Electronic signatures on smart contracts result in a more efficient process.
In conclusion, the business world experiences more prominent advantages with smart contracts over traditional contracts, such as fewer intermediaries, increased time efficiency, simplified payment settlement, transparency, improved record keeping, enhanced security, cost-effectiveness, and efficient signature verification.
As technology advances, more business domains will use smart contracts to streamline their processes. Smart Contracts are poised to play a tremendous role in determining the future of corporate agreements.
Check out real business examples here
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