A good number of organizations are now considering adopting blockchain into their organizations. Much of the hype surrounding blockchain has been focused mainly on cryptocurrencies.
However, unless investments factor into the overall business strategy, most organizations would benefit more by focusing on smart contract technology. Smart contracts are computer programs that could record the terms of agreements using blockchain and automate the steps to their fulfillment. Since blockchain already features transparency and immutability of records, smart contracts adoption could make a company’s transactions secure and efficient.
If your organization is intent on implementing smart contracts, there are several issues you might face. To start, smart contract development requires a degree of technical expertise. In addition, you must be aware of smart contract admissibility in your territory and that contracts must comply with legal standards. Mechanisms must also be in place to allow for arbitration in the event of disputes.
Fortunately, there are now smart contract platforms on the Ethereum blockchain, such as Confideal, that make smart contract adoption easier for businesses. Here are three areas in which these platforms could help your organization.
The Ethereum blockchain has been instrumental to the growth of smart contracts adoption since it opened its platform for developers to use. This feature allows developers to create their own tokens or cryptocurrencies which allowed many startups to hold initial coin offerings (ICOs) using the blockchain.
However, even with such a blockchain available, smart contracts are essentially software so your organization must have the technical skillsets to create your own contracts. Having such resources on hand could be a challenge for most small and non-tech businesses especially now that blockchain developers are much in demand.
To address this, Confideal, for example, seeks to lower such barriers by providing easy to use interfaces for smart contract creation and management. This way, more organizations should be able to leverage smart contracts to improve their business processes. Confideal already has a working product and is set to run its ICO in November after meeting its targets in its token pre-sale.
“Smart contracts can help make transactions better, faster, and safer. And understand that we can use it because one year, two years ago, it wasn’t in high demand. Nobody understands what smart contracts even now… It’s our aim to make it [widely accepted],” said Confideal CEO Petr Belousov.
An easy to use interface is just one key feature of a good smart contracts platform. What makes a platform truly valuable for organization is if it helps streamline the whole process of creating and fulfilling agreements.
Traditional contracts are tedious and requires the involvement of intermediaries such as lawyers and other agents to facilitate the steps towards fulfillment. Smart contracts automate the process by eliminating these intermediaries by taking over their functions. The use of blockchain allows smart contracts to be fulfilled to the letter and can even automatically facilitate disbursement of funds using cryptocurrencies.
Disputes can also arise from trades and deals so it is also important to have mechanisms in place to manage arbitration. Traditional ecommerce platforms and merchant services often facilitate disputes between merchants and customers, but this process involves actual human agents. However, even with large platforms like PayPal or eBay dispute resolution have their share of criticisms. There had been complaints from users getting handed decisions without any explanation as to why such was reached.
Smart contract platforms like Confideal remedies this by leveraging blockchain’s transparent record keeping and combining it with legal expertise. Upon creating contracts, parties could select from qualified arbiters to handle the resolutions. Arbitrations on the platform conform to national laws and international regulations which is crucial when resolving disputes concerning large transactions. As an alternative, Confideal also offers mediation option which has less gravity than arbitration but could help parties quickly and amicably settle disputes.
While there is a growing acceptance of blockchain across industries, territories still must cope with regulations that would help further secure and legitimize blockchain transactions. People’s perception of blockchain has largely been influence by cryptocurrencies and even if bitcoin is proving to be quite a valuable commodity, it is still met with skepticism by some.
In the United States, there is already a growing acceptance of blockchain and smart contracts. Despite the Securities and Exchange Commission bulletin that cautions investors regarding ICOs that seems to have curbed US-based token sales, various states including Vermont and Arizona are now putting up legislation that acknowledges the admissibility of blockchain records.
Laws may vary in each territory, so smart contract platforms must take these under consideration. Compliance must be factored in your organization’s choice of a smart contract platform. Platforms can provide access to legal expertise or ensure that pro forma templates comply with legal standards. Smart contracts would serve little point if they can’t be legally enforced.
A key benefit to adopting smart contracts is to improve efficiency by automating the fulfillment of agreements and lessen dependence on intermediaries. Smart contract platforms are now making it easy for companies to adopt the technology with minimal technical expertise. However, blockchain is still an evolving platform. Aside from technical consideration, the legal aspect must be considered. The choice of platform must also factor in compliance and the availability of arbitration mechanisms to make smart contracts truly work in an actual business environment.