The Green Economist
July 1, 2018, 10:25 am
A Smart Contract leverages the language of blockchain to create an auditable trail that enables automation in contract management. Automated payment methods have always existed, but currently they are being conducted with pen and paper, and through escrow accounts. The process can also prove very costly.
Smart contracts make it much easier to implement, monitor and streamline the process. And because everything is in open view, the approach is transparent and a lot more interactive, therefore much more reliable.
Blockgeeks give a fantastic example on their site. They compare the technology in smart contracts to a vending machine. Where for instance, ordinarily, you would go to a lawyer or a notary, pay them, and wait while you get the document. With smart contracts, you simply drop a bitcoin into the ‘vending machine’ and your escrow, driver’s license, or whatever drops into your account. Smart contracts are a lot safer in that not only do they clearly define the rules and penalties around a traditional agreement, but they also automatically enforce them.
In a smart contract, everything happens concurrently, and it does this in a check box type approach. Once you have submitted your end of the bargain, it automatically marks it done. It is open, transparent, and in full view of everyone, whereby you can tell where the hold-up is, or if anyone has defaulted on their end of the bargain. If any party backs out or does not carry through their end, the contract automatically ‘refunds’ the faulted party.
Nowadays, the value of blockchain is created in the system in a way that does not require as many nodes of verification because everything is streamlined and just needs boxes to be ticked off. The system is able to do it involving lesser people and lesser time. From a sustainability point of view, this means less resources. So, for example, instead of having ten people handle 100 contracts, you would probably just need two.
This system is based more on verification rather than being a paperwork heavy framework. From our point of view, the ability to integrate it with new services, innovation and other related elements is what creates a green economy.
In fact, one could say, this is the democratisation of processes.
Photo Credit – https://medium.com