Blockchain-based smart contracts can automate various commercial operations, and several businesses and IT experts are considering their possible applications in industries like advertising and healthcare. However, smart contracts also have limitations, such as scalability and security difficulties, so decision-makers must balance the benefits against the disadvantages.

Defining ‘Smart contract.’

A self-executing software built on if-then logic is known as a smart contract. Vending machines, for instance, are a common sight in daily life. The machine will dispense the package of cookies stored in the B4 slot if someone inserts $2 and presses simultaneously. In other words, the vending machine executes the specified action if it obtains the required value item.

One of the most well-liked blockchain use cases is smart contracts, and for many people, the word “smart contract” connotes smart contracts on the blockchain. Different systems, including blockchain and distributed ledger technologies, can support smart contracts. In the latter scenario, a blockchain is used to store the software, executed when certain circumstances call for the subsequent action. A service might, for instance, cause a payment or service delivery.

Workflows can be automated by using a smart contract on a blockchain to go to the next phase when necessary. An input to the oracle in the blockchain-based smart contract causes the action to happen. The oracle links occurrences in the real world to the blockchain. It enables smart contracts to be executed using inputs and outputs from the actual world.

Oracles come in a variety of forms. Scanners and sensors, for instance, serve as hardware oracles. A smart contract receives data from an RFID sensor on food delivery and subsequently releases funds to the supplier. Another illustration is how an oracle in an IoT device might record various beneficial data that an AI system controls. The AI system subsequently utilizes the data to automatically trigger smart contract processes.

Blockchain smart contracts do not need private keys, which are generally required for business blockchain security. Instead, the private keys are controlled by the code that powers smart contracts, allowing data auditing by anonymous users. However, it is possible to further decentralize smart contracts so that they can accept a private key.

Top 10 examples of smart contracts in the real world

1. Boost a digital marketing campaign

Smart contracts may facilitate strong partnerships between marketers and publishers. A publisher achieving predefined goals is one of the conditions that can be included in a smart contract. The smart contract causes a payment to be made to the publishers once an oracle verifies that they have carried out their obligations. A clause might mandate, for instance, that a popular social media account to promote a coupon offer. The social media account owner is paid after 100 actual purchases are made with the coupon. Smart contracts could also solve issues by preventing misleading techniques like “pixel stuffing” or publishers from exaggerating the number of impressions associated with a particular ad.

2. The greatest possible client experience

Real-time smart contracts can strengthen B2C relationships. For instance, if a customer makes a playlist to listen to while jogging, a shoe company partnered with a streaming music service will give them free membership time. A smart contract might offer the consumer a discount on new shoes or provide playlist suggestions for music with a similar cadence. Assisting runners who like listening to music and keeping track of their fitness could raise customer expectations.

3. Fill the gap in your entertainment needs

The use of blockchain technology may enhance how customers engage with their favorite entertainment options. For instance, nonfungible tokens, or NFTs, verify the ownership of digital assets. The buying, selling, and trading of NFTs can be streamlined via a smart contract. Smart contracts might also pay independent creators like writers, musicians, and filmmakers. This technology eliminates the necessity for intermediaries to handle royalty payments.

4. Get rid of middlemen in interactions with money

Decentralized finance has gained interest thanks to blockchain technology. Peer-to-peer (P2P) cryptocurrency exchanges like those for bitcoin and ethereum are where it is most frequently used. The time and money required to settle these transactions could be decreased by employing digital currency and a smart contract. Additionally, smart contracts can automate manual banking procedures typically handled by financial institutions, such as determining a borrower’s loan eligibility, processing insurance claims, and implementing regulatory compliance.

5. Improve the pipeline for healthcare communications

Both insurers and patients must have clear communication. The ability to store patient records on the blockchain might reduce the amount of paperwork that needs to be processed, enhance regulatory compliance, and enable easy provider-to-provider information sharing. For example, a patient needs a particular medical procedure. A smart contract is triggered by a previous authorization request, which digitally examines insurance coverage and releases funds to the supervising facility.

6. Maximize human resource productivity

The process of an HR manager could be automated utilizing distributed ledger technology. For instance, a member of HR must verify employment history and check references. By streamlining these verification activities, a smart contract might make it easier to enroll new staff. Blockchain technology might also automate tasks like processing paychecks and enforcing employee contract terms and fines.

7. Boost identity and access management security

IT leaders must protect the digital identities of users on a system. In a society that depends on digital technology, paperwork completed to process identity requests manually is not timely enough. Constant dangers, such as data breaches, highlight the need for substitutes. Using smart contracts for user authentication could supplement or replace current identity management practices.

Also Read: The Top 10 Smart Contract Development Tools

8. Improve connections in the insurance sector

Policyholders and insurers interact on a variety of levels and in several ways. The complicated language of insurance plans and dishonest claim submissions by policyholders are two current barriers to a successful insurer-policyholder relationship. Using smart contracts may enhance the efficiency of filing claims, a policyholder moving insurance providers, or inter-insurance company cooperation. Insurers could also spot malicious behavior early on, thanks to the smart contract code.

9. Increase supply chain efficiency

Enterprise blockchain may be particularly useful for several aspects of supply chain management. Smart contracts might improve the traceability of items and materials. For instance, specific blockchain software could trace an item’s origins as it travels through several global supply chains and instantly calculates tariffs. However, several businesses are also looking into blockchain-based smart contracts. Blockchain can reduce errors and increase efficiency in those situations.

10. Efficient utility distribution

The potential for utilizing blockchain technology in the energy sector is expanding. Implementation is promising since blockchain can handle and store transactions forever. For instance, it might automate electricity distribution from an energy provider to a customer. By connecting smaller energy producers, the execution of smart contracts could simplify energy trade. Renewable energy sources could also be certified by a smart contract.