Blockchain technology has the potential to drastically change the way business is done, mainly in accounting and contracts. Large businesses make contracts on a daily basis. Contract law is a wide field of study and essential to understanding how to run a successful business. What happens if the other party breaches a contract? Does a contract need to be in writing to be legally binding? These are things business owners and decision makers need to know. Smart assets are not widely used in modern business, but the benefits of integrating them greatly exceed the low cost of implementing them.
Using the blockchain, businesses can create and complete contracts that are stored on the public ledger permanently. Here’s an example of how a contract regarding the sale of goods to one party to another would take place using blockchain technology to cryptographically prove transfer of ownership:
If this seems complicated, it’s because it is. Transferring ownership of assets or creating smart contracts is currently a very technical process that requires immense knowledge of Bitcoin and blockchain protocol to successfully complete. Smart contracts through Bitcoin’s blockchain aren’t widespread due to the lack of understanding and the difficulty involved in using them. Applications like Colored Coins will likely have a large impact on smart contracts and representing assets on the blockchain. When the process is simplified, more businesses will be likely to use and implement blockchain technology into their daily operations and contract management. Unlike centralized data solutions, storing contracts on the blockchain ensures that data is distributed and protected from things like fire, flood, and other disasters that could wipe data or destroy facilities. As it becomes easier to create smart contracts and store tokens that represent assets on the blockchain, more businesses will likely turn towards the technology due to the incredibly low cost of operation and increased security.
What do you think about smart contracts in business? Let us know in the comments below!
Images via Pixabay
Drew is an undergraduate student at the University of Texas at Dallas, majoring in Business. He is an active member of the Cryptocurrency community, and enjoys collecting, trading, and writing about various coins. Outside of the digital currency world, Drew tends to spend his time with friends, playing video games, or studying. Feel free to email him with news tips or questions at [email protected]
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