Blockchain Smart Contract Solutions for Efficient Contract Management
Posted by odlesblockchain1 on April 27th, 2020
In this article, we explore the potential of blockchain smart contract solutions for contract management. Blockchain smart contract solutions enable businesses to establish new infrastructure and streamline their operations and processes.
Entering in any type of contract with a person or company you haven’t met is always challenging. For instance, due to trust issues, people don’t become an investor in a company established in a foreign country or agree to lend money to a stranger. Also, it requires a significant investment to set up necessary legal contracts to secure your transactions. As a result, we either don’t enter into such a contract or avail services of trusted intermediaries. However, the latter requires substantial settlement fees for providing services. Here, the use of blockchain smart contracts can formalize transactions between people and institutions as well as the assets they own.
Blockchain Smart Contracts
Blockchain smart contracts provide a solution by formalizing relationships between people and institutions and the assets they own over the Internet. They do it by establishing a P2P system that doesn’t require trusted intermediaries. While smart contracts are not new, the use of blockchain acts as the catalyst for smart contract implementation.
Blockchain is a decentralized ledger that follows the principles of a peer-to-peer network. It augments business processes by providing transparency, security, and immutability. All these features can effectively improve various business processes, including contract management solutions as well.
Traditional Contract Management
Businesses use software solutions equipped with tools and techniques to manage the lifecycle of contracts to ensure efficient contract management. A contract management solution manages contracts among employees, partners, and customers to maintain the workflow. Although such contract management solutions prove effective and useful, they provide limited functionality and features when we need to modify, verify, or securely store them.
Businesses see contract processing as one of the key hindrances for smooth operations and processes. With no transparency, efficiencies, and security, coordination for managing different activities becomes challenging, such as authoring, negotiations, renewal, enforcement/execution, and more. These activities become time-consuming and costly because of the involvement of various intermediaries and third-parties. Also, the dependency on various external actors makes these activities vulnerable to hacks while enabling various points of failure.
Blockchain in Action
Blockchain can help change how current contract management solutions work. It can provide businesses a way to master contract management.
Contract processing is a significant challenge for businesses, including authoring, negotiations, renewal, enforcement/execution, and renewal. So, can blockchain contract management solutions change and optimize contract processing? Let’s explore.
Use of Smart Contracts
One of the profound applications of blockchain is the smart contract. A smart contract enables network automation and turns paper contracts into robust, immutable, transparent, and efficient digital contracts. We can refer to smart contracts as legal codes that carry the similar legality of a paper contract. For instance, at Oodles, our blockchain smart contract development services can enable smart contract solutions that bring only two parties into play. When both parties agree to the terms of the contract, it is executed, making everything official. As smart contracts are computer codes, they can automate various contract-based processes.
For instance, one party can get a loan from another party, while the smart contract will store the loan amount, the interest rate, and other conditions of the loan. Further, a smart contract can trigger various manual conditional actions. It means, if one party has cleared the loan, the contract will self-close while also informing all the parties involved in the smart contract. It was Etereum that proposed the idea of using smart contracts with second-generation blockchain applications for additional efficiency and transparency.Also See: Smart Contracts, Smart Contract, Contract Management, Blockchain Smart, Smart, Management, Contracts
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