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Blockchain technology is in no doubt the biggest disruptive technology in the market right now. Cryptocurrencies, one of the applications of blockchain technology is promoting a paradigm shift that might lead to the evolution of money. Its disruptive force has already triggered conversations about the unnecessary influence of governments and its agents on fiat currencies. However, Blockchain despite all the promise it hold is not getting a particularly warm welcome in the mass market.

To begin with, the decentralized nature of blockchain technology is somewhat difficult for people to grasp and understand because we’ve been conditioned to look up to centralized authorities. Secondly, blockchain technology is still unnecessarily synonymous with cryptocurrency – many people wouldn’t have heard about blockchain technology if not cryptocurrencies such as Bitcoin. Unfortunately, traditional Wall Street types are doing an excellent job of undermining cryptocurrencies; hence, the mere mention of blockchain technology tends to trigger unflattering connotations about how Bitcoin might be a scam.

Smart Contracts to the rescue

The applications of blockchain technology are not restricted to cryptocurrencies alone. There’s an incredible opportunity to use blockchain technology in security systems, logistics, and business. Smart contracts are shaping up to be an interesting application of blockchain technology, which might succeed in bringing the power of blockchain technology to the mass-market.

Smart contracts are simply digital contracts created and stored on the blockchain to define the obligations of parties in an agreement, execute actions once pre-defined objectives are met, and automatically enforce the rules and penalties of the agreement.

Stavros Lambouris, CEO at HYCM Europe, provides an interesting insight into how smart contracts could potentially work in a business transaction. In his words, “you might want to think of a smart contract as a vending machine of sorts for legal/business services, in which parties drop tokens into the vending machine and the machine delivers a legally binding agreement and executes the terms of the agreement without the instrumentality of a third party.”

Let’s assume you want to rent an apartment from a certain John, you’ll transfer cryptocurrencies into a wallet, obtain a receipt, and John will create and send you a digital key to access the apartment by a specified date.

If you don’t send the cryptocurrency, the keys won’t be delivered to him, if John doesn’t create and send the keys, the money won’t be delivered to him.

If you attempt to use the key before the start of your rental period, the key won’t open the doors. If John issues another key to someone else while your rent is active, the new key simply won’t work.

The best part is that all of this is done digitally on the blockchain without needing the services of a lawyer, broker, realtor, property manager or bank.

Here’s how smart contracts push the mass-market adoption of blockchain

Cryptocurrencies are great but the depth of their disruption can be capped if governments make a concerted effort to create and push digital versions of their fiat currencies. Smart Contracts on the other hand have the potential to trigger disruptions all the way from government, business management, to the real estate, healthcare and automobile industries.

There’s no telling how far and fast can disrupt the current order of once enough people begin to understand how smart contracts work. To begin with, the security that blockchain technology provides is impregnable; hence, the terms of a smart contracts once active can’t be compromised for any personal gain or undue advantage.

Secondly, smart contracts make it cheaper and faster to enter into agreements without needing to hire and pay intermediaries such as lawyers and brokers. In fact, distributed nature of blockchain technology ensures that any changes made to the contract is visible in real time to all the parties involved in the agreement.

Lastly, smart contracts create an enabling environment for near-instant execution of terms. Since smart contracts are hard-coded to follow an ‘if-this: then-that protocol, you don’t need to worry about sending reminders or updating terms – smart contracts will execute in line with predetermined rules.

What are Smart Contracts?

Courtesy of: ChainBits

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