Contracts are an important aspect of any professional business. These ensure that both parties are entitled to the proper services rendered and payments received. That said, contracts are a long and tedious process. Printing several pages of complicated legal documents on top of having to meet physically can be a huge hassle.
Thankfully, modern technology has streamlined this process too. Smart contracts are seeing more and more use throughout the industry, and it’s a great idea to hop onto that train as well. Today, we’ll be discussing what smart contracts are, and why they’re so useful for small and upcoming businesses.
What Even Is A Smart Contract?
Smart contracts are digital agreements that use code to automate the process of executing a contract. They are self-executing and operate on a decentralized platform. They are typically signed digitally as well, meaning they can be sent out en masse to several employees.
Smart contracts were first proposed as early as the 1990s by Nick Szabo, a computer scientist who also happened to be a legal scholar. It should be noted that smart contracts, much like regular contracts, aren’t always legally binding. They are simply agreements between two parties to fulfill their obligations.
More countries are accepting smart contracts as a legitimate form of a binding agreement. Europe and the United States have been slowly legalizing it since 2017, and it’s only a matter of time before it becomes the new normal for many booming businesses.
Benefits of Smart Contracts
There are several boons to using smart contracts over traditional ones.
Cost-Efficient
One of the biggest advantages of smart contracts for small businesses is the reduction in transaction costs. Traditional contracts often require intermediaries such as lawyers and banks to facilitate the process, which can be both time-consuming and expensive.
With smart contracts, the need for intermediaries is eliminated, as the agreement is executed automatically, reducing transaction costs and increasing efficiency. On the office level, digital contracts don’t require printing either, meaning offices save tons on paper and printer ink.
Enhanced Security
Smart contracts also offer increased security compared to traditional contracts. They are stored on a decentralized platform and operate on a blockchain, making them resistant to tampering, hacking, and other forms of fraud. This ensures that the terms of the agreement are executed as intended, providing peace of mind for both parties involved.
In addition, it’s far easier to have backups of a smart contract than it is to keep copies of a physical document. Of course, it’s still best to have physical copies of very important documents, but smart contracts are an additional layer of protection to ensure maximum security.
Transparency
Smart contracts offer increased transparency compared to traditional contracts. The terms of the agreement are stored in a public, decentralized ledger, making it easy for all parties involved to access and verify the details.
This level of transparency not only promotes trust between parties but also helps to eliminate disputes and misunderstandings. Oftentimes, contract disputes are a result of one party or the other misunderstanding the intent. With smart contracts, it’s far easier to just review things in-depth.
Streamlined Process
Another important advantage of smart contracts is their ability to automate processes. For example, a smart contract can automatically transfer funds between parties based on certain conditions being met. This eliminates the need for manual intervention and reduces the risk of errors or delays.
Automated processes also save time and resources, allowing small businesses to focus on more important tasks. The trouble with contracts is that they are literal hurdles before progress can start. After all, employees can’t work until they’ve signed a formal contract. Smart contracts get them on the job much faster than before.
Easy to Customize
Smart contracts are also highly customizable, making them an ideal solution for small businesses with unique needs and requirements. The terms of the agreement can be tailored to meet the specific needs of each business, allowing for a more flexible and efficient process.
This also makes them very multifunctional tools. Whether it’s supply chain management or financial transactions, smart contracts offer unparalleled versatility. This makes them a valuable tool for small businesses, providing a single solution for many different needs.
Conclusion
In conclusion, smart contracts are a powerful tool for small businesses looking to streamline their operations, reduce costs, and increase efficiency. With their reduced transaction costs, increased security, transparency, and automation capabilities, they offer a solution that is both reliable and cost-effective. It’s a huge boon for startups where both time and money are more valuable than ever.
You need master professional organizers to get that system in place, however. Although smart contracts are great in practice, setting them up is a logistical puzzle of its own. Professional organizers ensure that your business starts on the right foot in all aspects.