Why do individuals have very limited awareness of smart contracts? Are you familiar with the answer to his question? Well, it’s so because Blockchain technology is an emerging technology, and Smart contracts are one of the blockchain applications and key drivers of blockchain technology.
You can see a massive increase in the adoption of blockchain solutions by the financial services industry in the past few years.
Nowadays, smart contracts have unlimited potential to make an impact on several industries and sectors. There is not even a single industry or a sector that is under a cloud of various use cases of smart contracts.
Do you want to acquire a clear idea regarding the potential smart contracts and the benefits that they can offer you? Or do you want to obtain the answer to all the questions that you have regarding smart contracts?
If so, it’s the right time to throw light on the use cases of smart contracts that extend beyond cryptocurrency transactions and make use of numerous industries.
In this article, you’ll explore the top 10 best use cases of smart contracts in decentralized finance in different industries that are regularly growing as more individuals observe the exceptional potential of smart contract technology.
It will help you a lot in identifying how you can leverage smart contracts to reduce their costs and increase compliance:-
Table of Contents
Smart Contracts: What Are They?
Smart contracts are known as digital programs that are stored on the blockchain network. It’s quite a straightforward concept and a set of promises that is particularized in digital form.
Smart contracts have countless applications that assist in automating not only all the tasks but also the whole network, just like decentralized autonomous organizations. Besides, smart contracts are highly accurate, free from all sorts of errors, and execute contractual obligations to make transactions faster and in an extremely cost-effective manner.
Stay tuned to learn more about the use cases of smart contracts……..
1. Provide Digital Identity To Individualized Assets
One of the best use cases of smart contracts is offering a digital identity to assets that are comprehensive. It contains not only relevant information but also reputation and digital assets.
When digital identity is utilized in the appropriate manner, it enables to bring countless new opportunities for every individual. Additionally, the digital identity that smart contracts provide plays an integral role in safeguarding the identity of the asset from all of their counterparts.
Smart contracts assist you in storing all the components of reputational digital assets and form a digital identity of the individualized assets. When you connect smart contracts to several digital services, the counterparts can easily acquire information about the individuals without disclosing their identities.
Furthermore, Smart contracts have the ability to contain countless credit scores that lenders can utilize for measuring several potential risks.
From a wide range of personal information to digital assets, it’s possible for you to store more securely on the smart contract for creating a digital identity.
It allows you to interact with various platforms and services for making decisions about what to share and what not to. In fact, it becomes easy for you to make transactions without disclosing your identity to others.
Moreover, it enhances the security level of the users and reduces the possibilities of identity theft, discontinuity, and mismanagement.
The most famous illustration is- MyEarth ID, known as a decentralized identity management system that allows all the users to control the data of their specific digital identity and verify it in a more secure way with the assistance of third parties.
2. Bring Improvements In Financial Services
Smart Contracts play a very significant role in bringing several changes in financial services. It enables you to make a connection between the parties and confirm that the whole process will be accomplished in a hassle-free manner.
Moreover, with the use of smart contracts, it becomes very easy to make the process free from all kinds of errors. The other major advantage of using smart contracts in financial services is offering clarity and enhancing the visibility level to all the parties involved in the process.
3. Induce Automation In Loans & The Mortgage System
Smart contracts aid in bringing changes in loans and mortgages. As a consequence, smart contracts can enable you to link the stakeholders and confirm the whole process runs very smoothly.
Additionally, it also offers an error-free operation. For illustration, a smart contract can surely maintain a mortgage by tracking payments and releasing the asset when you pay off the loan completely.
Another use case of smart contracts is the mortgage system. To make it more simple for both the purchasers and sellers, smart contracts induce automation in the mortgage system.
With the involvement of automation in the entire process, it becomes completely free from inconvenience and less time-consuming, which is highly advantageous.
Loans & the mortgage industry need to be modernized massively, as it’s distended with too expensive third parties and time-taking procedures.
But, thanks to smart contracts that ensure over time, the lenders and loan seekers will agree to all the terms and conditions, including proof of funds as well as payment planning.
Overall with this emerging technology, it becomes quite easy to validate mortgage transactions without the involvement of lawyers or third parties.
4. Insurance: One Of The Crucial Use Cases of Smart Contracts
The insurance sector is full of so many sorts of disputes. And these disputes have become the most common issue in this sector. Smart contracts play a very vital role not only in settling these disputes but also in claiming to settle the process very smoothly.
Smart Contracts ensure that it has the appropriate documentation to facilitate the insurance policy and make the entire procedure so convenient for both the insurance provider and the insurance buyer.
Besides, it automates policies and services in the insurance sector to reduce insurer costs and lower premiums. This way, it becomes possible for the policy-holders to get payments more fastly as compared to the current manual procedures.
Now, you’ll surely have a clear idea about the significance of insurance in the financial industries that have well-proven use cases in decentralized finance.
However, the present insurance system is completely bottlenecked due to the abundance of paperwork, conventional audit systems, and bureaucratic insurance claiming processes, but grateful for the successfully implemented smart contracts that solve all the issues of the current system.
For instance, you can consider a case of an accident victim who is in need of insurance. The victim can’t wait for the permission to pass, and this is where an insurance release through a smart contract is a boon.
In such conditions, the smart contract undoubtedly facilitates as well as ensures that it has all the essential documentation, including reports and driving records. A smart contract is configured with the appropriate guidelines, documents, and data accumulation methods to execute itself immediately after the accident.
5. Makes Inter Border Payments More Convenient
With the assistance of smart contracts, you can make inter-border payments more easily to facilitate international trade. Smart contracts can revolutionize trade finance and propels international transfer of commodities & initiation of trade payments via using merely a letter of credit.
Furthermore, smart contracts enhance the liquidity level of financial assets and improve the financial efficiency level of all purchasers, suppliers, and institutions.
Inter-border payments refer to cross-border payments, which are payments across different countries. These payments are important not only for individuals & merchants but also for businesses, industries, and international development organizations.
Due to the exorbitant fees and lengthy processing times, inter-border transactions are mostly inconvenient. But, smart contracts based on blockchain technology make the entire process very simple and uplift the global economy.
Precisely saying, smart contracts are a game-changer move in inner-border money transfers because it contributes to accelerating the entire payment process.
6. Bring Improvements In the Supply Chain Management Industry
Smart contracts assist in tracking the items more easily and conveniently within the supply chain. It is beneficial for bringing a high level of transparency or visibility in the supply chain management industry and for improving overall inventory tracking.
Smart contracts are helpful in reducing the need for verification and offering enhanced levels of tracing to reduce fraudulent activities in the whole procedure of supply chain management.
Smart Contracts are also known as self-enforcing or autonomous contracts that don’t have any requirement for intermediaries or third parties to operate.
If you design a smart contract for a supply chain, it’ll not require any kind of daily management or auditing as well. This way, it becomes simpler for you to receive the deliveries outside the schedule, trigger already recognized escalation measures, and ensure a smooth operation.
7. Improvements In Clinical Trials
Smart contracts improve clinical trials by providing better and advanced levels of inter-institutional visibility. It is advantageous for automating data sharing between institutions and enabling privacy-preserving computations.
For making clinical trials more effective, smart contracts support you in sharing data among professionals and across industries. Smart contracts are really very helpful in the process of verification of the information and ensuring that the data is absolutely accurate.
Generally speaking, smart contracts are a game-changer for those individuals who are making efforts to launch broad-access clinical trials and bring benefits to the healthcare industry.
Smart contracts are a proven milestone in solving so many medical challenges, including- detrimental research practices, poor reproducibility of clinical research, and many more.
Smart contracts based on blockchain technology are considered the guardians of the integrity of the already existing events and their appropriate chronological order as well.
Smart contracts are really an interesting tool that allows you to trace the clinical research and bring improvements in the research reproducibility. Basically, from a practical point of view, clinical trials are one of the most complex systems of intertwined data streams.
Smart Contracts are a very significant opportunity for clinical research as it helps in making a structure of the most transparent verifiable methodology, providing a set of major metadata, and assisting in the verification of the clinical trial integrity not only transparently but also partly algorithmically.
It can enable you to lead to the structuration of community-driven Internet of health-related information, accumulating- researchers, patient communities, Internet of Things data flows, and social networks at a worldwide level.
Besides, it also adds characteristics, namely-individual granularity, security, and decentralization, with a transparent level of interactions for ensuring the easiest & the most transparent analysis.
8. Assist the Government
Another major use case of smart contracts is in the Government sector. Smart contracts play a key role in assisting the Government in managing all operations in a very easy and automated manner.
One of the prime operations among those is recording land titles for the simplest asset transfers. With the use of smart contracts, it becomes easy for you to make the entire procedure more efficient and transparent than before.
There are countless ways in which governments can leverage smart contracts to streamline the procedures, including- reducing fraud, sharing resources, and securing data storage.
Smart contracts enable the civil authorities to establish well-secured digital identities of their citizens, collecting their personal information, including certificates, passports, marriage licenses, driving licenses, and more, into a single encrypted element.
This way, it becomes very simple for the public authorities to change or manage the personal records of individuals with the assistance of smart contracts.
Smart contracts offer the government the right of individual authorization for accessing their information. It enables the legal tax authorities to speed up and streamline the procedures of tax collection more significantly.
Civil authorities can use smart contracts to verify if the tax data match the transactions made. Or can it calculate the level of social security and deductions in taxes?
Apart from the verification of tax data compliance and implementation of a public ledger, Smart contracts help tax departments to decrease the cases of tax fraud.
9. Collect Financial Data More Accurately & Transparently
Financial information is extremely significant for all organizations, and that’s why the use of smart contracts is greatly advantageous in this regard.
Smart contracts offer the essential mode to record accurate & transparent financial data without compromising its accuracy and transparency.
Therefore the accumulation of the financial data is absolutely uniform across several organizations, resulting in an in- decrement in the cost of auditing & reporting; ensuring compliance; maintaining consistent financial information; eliminating the need to swap any other document like invoice images; enhancement in financial reporting or integration of the data; increment in stability level of the market, and many more.
Smart Contracts are helpful in facilitating collect data in the most accurate and transparent way. These smart contracts are advantageous to execute a particular set of financial rules without the requirement for any intervention.
It streamlines the workflow of administration and saves the time of all the accountants. For illustration, AllianceBlock, the other intersection of smart contracts and finance, builds a protocol to bridge DeFi-decentralized finance and TradFi-traditional financial services.
AllianceBridge of the AllianceBlock is a well-recognized validator network that leverages Hedera Consensus Service.
10. Helpful In Managing Assets
Smart Contracts are really very useful in managing assets in a more efficient as well as effective manner. It makes the entire procedure of managing assets quicker just because of the induced automation.
But, most of the time, it was absent in the case of conventional practices. With the help of smart contracts, the process is converted into a fully transparent contract so that the users can’t get even a single opportunity to make a complaint.
Smart contracts deliver value propositions to the assets. It not only assists asset managers in obtaining awesome efficiency but also in creating entirely new assets.
This way, both the asset manager and users can acquire a better level of information and make deductions in the costs of getting digital assets. Smart contracts really act as an extremely credible digital container that underlies the entire status of the asset.
Smart contracts enable asset managers to gain an extremely granular level of information concerned with the assets in the safest and most efficient way.
So, without the interference of any intermediary, it’s possible for you to get data related to the asset on an ongoing basis. Do you have the desire to obtain extreme-quality data related to the asset?
Are you feeling unable to manipulate the data related to the asset at extremely low costs? In such circumstances, smart contracts are truly worthwhile to offer immediate transparency to asset managers and users as well.
Upon Consideration, as blockchain technology is expanding and upgrading on a daily basis, it has become essential for smart contracts to bring increment in its potential in the upcoming years.
The use cases of smart contracts that are mentioned above will surely rise in the future because there is also the availability of a wide range of other use cases. If you are interested in making smart contracts for your organization, it’s the best time to explore the potential of smart contracts.
For this, instead of minimizing your imagination, just move ahead to create decentralized applications and protocols that scale with smart contracts.
Hi, I am Daniel Murphy I am an experienced author, writer, and content strategist with 7+ years of experience in crafting technical content that adds value to user search and engages visitors.
I am passionate about core tech writing covering Defi smart contract Development, dApp, eCommerce, Blockchain, Internet of Things, unreal engine game development, unity game development, Augmented Reality, Cloud Computing solutions, etc.
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