Blockchain for smart contracts: staying ahead with latest technology for digital contracts
Blockchain, the incorruptible ledger, has the tremendous potential to change technology framework for organisations managing their business applications handling business transactions, contracts, supply chain, inventory, remittances, money transfer, etc.
Before talking through the advantages of blockchain technology for Smart Contract Management, it is also equally crucial to talk about misunderstood facts about blockchain. In plain English, Blockchain is an electronic database, which maintains information, records, and data in a structured way, and allows various stakeholders to access and share their relevant confidential data most securely.
As you go deep in understanding the technology infrastructure, setup, and the multiple layers and processes, you will be overwhelmed to know that the advantages of Blockchain technology are huge and it is poised to completely revolutionise the way we conduct business.
Blockchain smart contracts
A smart contract is a self-enforceable legal contract written in computer language managed through Blockchain technology of distributed ledger. The computer code contains a pre-defined and agreed rules under which all the counter-parties of that smart contract agree to transact with each other.
The enforcement, delivery, payment and performance of the contracts are done when the predefined rules are met.
Blockchain smart contracts have the potential to benefit all industries, including banking, insurance, manufacturing, retail, real estate, and services, etc.
Transactions like settlement of securities can happen in a fraction of time as compared to days and weeks in a normal contract format. Manufacturers and distributors can get instant updates and instant transaction settlements for the complete supply chain, which can help inventory management, raw material planning, movement of goods, production planning and growing sales.
Businesses also can manage commercial contracts smartly and swiftly to ensure there is no heartburn with vendors, suppliers and internal audit and compliances.
Building scalable smart contract management solutions
For every business transaction, every party to the contract engages and put in extensive efforts in finalising legal contracts and managing them over the contract lifetime. This process remains largely the same for every commercial contract.
To make it Blockchain-enabled, the process involves all stakeholders, steps and revisions, and enable itself to Blockchain for complete transparency, ease of enforcement, etc.
Basically, using the distributed ledger concept — where all relevant stakeholders have access to their relevant data and information — all parties to a transaction will share the same view of data and information that has been agreed and time-stamped as it is added to the ledger.
What to do with legacy contracts
Blockchain-enabled smart contracts will take existing contracts (paper or digital form) and upload them on a Blockchain database accessible to all relevant stakeholders for respective contracts to allow all stakeholders based on legal access rights to securely view contracts, revise and accept changes, take action, make payments, etc. on a distributed ledger.
As the subject speak, its truly an incorruptible digital ledger that is programmed to record every event and transaction with complete transparency with all stakeholders. All stakeholders get email, notification, and alert for every action and update the blockchain shared ledger to everyone to see the latest status.
The process makes it completely legal and the documents are definitive contracts, stored electronically in one location accessible by only the parties with access, and with recorded versions and activity.
Highest levels of security
Leading smart contracts platform uses the highest levels of security and multiple layers of encryptions, enabling restricted data access. While they allow uninterrupted access, it’s absolutely based on rule-based access rights.
The solution provides access to every party to contract with access to executed contract along with various versions with tamper-proof framework.
Partner with domain experts
Tech-enabled businesses looking to transform the process of contract drafting, execution, and management look for the right partner with domain expertise. Blockchain has tremendous potential and has shown big success for large enterprises globally.
In the journey of digitisation of contract management moving from Document Management Software to Contract Management Software, the time has come to build the most trustworthy, scalable, secured, and transparent platform on Blockchain to enhance trust and transparency with all stakeholders.
As global tech giants and business houses looking to Blockchain to re-invent their technology infrastructure, it’s about time even CFOs, CIOs, and General Counsels remain agile and business enablers to contribute to the bottom-line.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)