Contracts are an essential part of human life. Whether it’s buying a new home or hiring an employee, contracts are the trusted bonds that tie two parties together with mutually decided terms. However, as contracts need a third party to check whether the terms are being met or not, it makes them inconsistent and dependent.
That’s where smart contracts come into the picture. They are computer-generated programs that verify the contracts’ terms and conditions and trigger actions when specific criteria are made. They have found their place in numerous applications, and here are the top 5 benefits of smart contracts that you should know.
Unlike conventional contracts, the chances of errors are next to none. As they are computer-generated algorithms consisting of codes, there is a very low possibility of human error.
The program contains triggers that are activated when certain conditions are met. Once the trigger is activated, the program will alert the parties and notify them about further actions. For example, when an expiry date or deadline is reached, the parties in the contract will be warned and asked to take further steps like revisit the terms and renew or terminate the agreement.
You don’t need to worry about a breach of contract when it comes to a smart or automated contract. They are secured with peer to peer encryption, which is one of the core security features of blockchain. It ensures that only the parties in the agreement can access the classified information in the contract.
There won’t be any unauthorised access as all the information is encrypted. Different cryptocurrencies use the same encryption, making smart contracts one of the most secure applications of blockchain.
The automation achieved by automated contracts ensures maximum data is processed automatically without taking much time as conventional agreements do.
They process and verify thousands of information pages as they are automated within just a few seconds. That means even the most intricate contracts can be quickly processed and verified instantly. That is why many large corporations are now turning to smart or automated contracts to solve the problems associated with slow, conventional contracts.
When it comes to conventional contracts, you need to have an objective third -party that will determine and verify the contract terms. Automated contracts reduce the need for hiring a third party as the contracts are automated and don’t need external interference.
It also helps reduce the cost of maintaining the records manually, whether in printed or digital format. As soon as any changes are made in the contracts, they get stored and updated automatically.
Automated contracts are entirely processed with computer programs, which means they have little margin for error. That encourages trust and unbiasedness in contracts. The concerned parties can trust and agree with the terms of the contracts as they are autonomous, transparent and secure by nature.
Once the contracts are drafted, they are automatically processed by the network without any third party interference that would alter the integrity of the contract.
Smart contracts are revolutionary solutions that have changed the way people used to participate in contracts. That is why they have found their place in banking, healthcare, corporate, legal, accounting, insurance, and many other applications.