Automating Your Business

 View Only

Using Blockchain Smart Contracts To Automate Your Business

By Andrej Kovacevic posted Tue June 07, 2022 06:58 AM


Businesses operate in a programmable economy where the need to innovate and automate is hard to dismiss. Everywhere you look, the trend in enterprises is undeniably shifting from slow and traditional processes to massive automation and decentralization. Even the way companies make agreements are already changing because of smart contracts. 

Smart contracts are built on the blockchain platform and take out any intermediary's involvement to perform transactions. They can execute contract terms automatically based on predefined conditions. There's no paperwork to deal with and no time delays and fees that often come with the manual methods. 

But few small businesses understand the power of blockchain technology and smart contracts. And, unfortunately, fewer can allocate the money, time, and talents necessary to utilize it. Many are still questioning how this technology can make a difference in their workflow and operations. 

In this article, learn a little more about blockchain smart contracts and how to use them for business automation. 

What Are Blockchain Smart Contracts?

Like any contract, smart contracts outline the terms of a deal or agreement. But, instead of papers sitting on a desk, smart contracts are stored on a blockchain. They execute the terms of the agreement by following simple if/when-then statements, which are written into codes. 

When such prerequisites are met, a network of blockchain computers executes the actions and creates unanimous trust between disparate and anonymous parties without requiring a go-between. This means you don't need a central authority or legal system to release funds, unlock protected contents, send notifications, or deliver services. 

With blockchain smart contracts, speeding up several areas of business operations online has become possible. The transactions and details of various dealers are also better secure since they're encrypted and stored on a digital ledger. And, without the middleman expenditure, they also help reduce operational costs and time. Generally, smart contracts are categorized into the following types: 

  • Legal Smart Contracts: Legally enforceable, these smart contracts require the parties to fulfill their contractual obligations. Failure to comply may result in strict legal recourse. But certain elements must be present for a contract to be binding, such as offer and acceptance, awareness, consideration, capacity, and legality. 
  • Decentralized Autonomous Organizations: DAOs or decentralized autonomous organizations are an entity with no central authority. Instead, they are bound to specific rules coded in smart contracts. But DAOs are also used to form a limited liability company (LLC). With a DAO LLC, businesses can operate autonomously through the internet without human intervention and be recognized as legal entities. 
  • Application Logic Contracts: ALCs or application logic contracts have an application code that works with other blockchain contracts. They enable interaction and communication between devices under the Internet of Things (IoT) domain. 

How To Use Smart Contracts for Business Automation?

You can write any smart contract and utilize it in your network. But identifying an existing contract to automate within your business is essential. It's also worth considering that these smart contracts won't execute and make transactions happen without the parties meeting the requirements. Thus, the ability to code accurately is essential to creating and implementing a smart contract

But, to help your business get started, here are a few ways to use smart contracts for automation. 

Autonomous Payment

Prompt payment is crucial to your business's successful delivery and financial well-being. However, traditional payment methods are time-consuming and labor-intensive. The transactions are faster, more efficient, and less prone to errors with smart contracts. 

There's no need to reconcile billing statements and invoices. Plus, it eliminates the need for notaries, lawyers, and other intermediaries to process the payment. This is beneficial to your business's cash flow, primarily if it relies on insurance reimbursements. 

Real-Time Supply Chain Management

Effective supply chain management is vital for a company's success. It helps businesses easily detect problems or disruptions in the movement of goods. Unfortunately, coordinating with multiple suppliers and clients across numerous countries and time zones can be challenging. 

But smart contracts combined with IoT help automate several supply chain activities. It would allow the tracking of packages at every instance and protect your business from shipment and other related issues. And, with predetermined conditions, documentation and payment release can be done instantly. 

Automated Regulatory Compliance

Complying with regulatory demands can be tricky. But both regulators and companies can speed up the process through blockchain smart contracts. By having access to a trustworthy and auditable dataset, regulators don't have to wait for the firms to send the specifics. On the part of business owners and market players, they can better comply with existing regulations. This is because smart contracts allow them to reduce fraud and improve transparency in the records. 

Optimize Your Business Process With Smart Contracts

More businesses are resorting to technology to streamline their operations. Optimizing your business processes with smart contracts would be a great start if you're keen to get ahead of your competitors. Although they can get complicated from a technical point of view, their self-executing nature makes them a convenient tool. And with an expert’s assistance, you can utilize smart contracts to automate your business and ensure better success.