Whether you’re renting an apartment, buying a car or opening a bank account, contracts are an essential part of any formal agreement.
The traditional contracts involve a high volume of paperwork and complexity, without mention administrative costs and depend on a middleman to settle everything.
And as we move into a more computerized world, Smart Contracts emerged as the natural way of making business agreements more reliable and less complicated. Especially in the Finance Industry.
What is a Smart Contract?
Simply said, this is a digital contract built into a blockchain network. And, since it’s blockchain-based, the Smart Contract absorbs some of the distributed ledger characteristics, such and immutability and transparency.
The great catch of a Smart Contract is its self-enforcing nature. Once all the clauses are settled, the contract executes itself, without the need for human intervention. This specific feature allows the computer-based protocol to automate processes.
Smart Contracts in financial services
The computer-based protocol can bring a bunch of benefits to financial services. One of them, as we just mention, is automation.
Automated processes can help banks and clients with loans, for an example. The loaned money can be transferred directly to the client account.
Once the day of the payback reach, as written in the contract, the money will be automatically transferred to the bank. The contract enhances security and avoids frauds.
For e-commerce, blockchain and a Smart Contract Development can facilitate cross-border payments, reducing costs with processors parties and conversions rates.
Conclusion
Smart Contracts are here to stay. From simplify contracts to automate processes, the digital protocol can help modify the way we do business. Blockchain App Factory, one of the top Smart contract companies in the market, offers full Smart contract services for your venture.