Today, smart contracts are available to optimize many financial and business processes. In essence, they are self-executing, self-enforcing protocols that are governed by explicit terms and conditions. On a blockchain, smart contracts can streamline complex processes that involve several intermediaries and this has led to them becoming one of the most popular and talked about subjects in the blockchain industry. They allow the performance of dependable transactions without the engagement of third parties.
The
financial industry is recognizing the transformative impact of blockchain
technology to generate new revenue, deliver process efficiency, improve
end-user experience and reduce risk in business operations.
Over
the last five years, the technology has matured for enterprise-grade use
demonstrating the following benefits:
- Security: Its distributed consensus-based architecture eliminates single points of failure and reduces the need for data intermediaries such as transfer agents, messaging system operators, and inefficient monopolistic utilities. Ethereum also enables the implementation of secure application code designed to be tamper-proof against fraud and malicious third parties— making it virtually impossible to hack or manipulate.
- Transparency: It employs mutualized standards, protocols, and shared processes, acting as a single shared source of truth for network participants
- Trust: Its transparent and immutable ledger makes it easy for different parties in a business network to collaborate, manage data, and reach agreements
- Programmability: It supports the creation and execution of smart contracts— tamper-proof, deterministic software that automates business logic – creating increased trust and efficiency
- Privacy: It provides market-leading tools for granular data privacy across every layer of the software stack, allowing selective sharing of data in business networks. This dramatically improves transparency, trust, and efficiency while maintaining privacy and confidentiality.
- High-Performance: Its private and hybrid networks are engineered to sustain hundreds of transactions per second and periodic surges in network activity
- Scalability: It supports interoperability between private and public chains, offering each enterprise solution the global reach, tremendous resilience, and high integrity of the mainnet.
Part of a new future for finance
- Blockchain clearly will have significant impacts on the finance function, and most organizations will gradually adopt the technology as they envision a new operating model for finance. We anticipate the following key trends:
- Blockchains will connect to existing financial systems. Despite the benefits of blockchain, it will not replace traditional ERP systems overnight. Rather, distributed ledgers initially will supplement the systems of record, specifically in cases where balances are frequently recalculated as transactions occur. And while blockchain enables a real-time view of data, the integration with legacy systems may cause a delay in harnessing the ultimate value of the distributed ledgers.
- Blockchains will be a hybrid of private and public ledgers. As blockchain technology evolves, we expect finance organizations to start with private blockchains— such as a ledger shared within a company or shared by a company and a vendor—which will enable them to retain sensitive data while gradually embracing more public ledgers. These could include permissioned blockchains for industry consortia and other entities, as well as truly public blockchains that operate in an open marketplace.
- The regulatory environment will remain in flux. As blockchain decentralizes financial activities, governments will continue striving to understand and regulate the technology. And those that do so effectively will have an opportunity to attract global investment and become frontrunners in a blockchain economy.
Introducing a transparent way to do business
- Smart contracts can bring radical transformation to industries like finance, real estate, retail supply chain, telecom, or manufacturing by changing the way international business and trade is executed. They improve the efficiency and speed with which commercial arrangements are carried out and facilitate complete transactional transparency. Other benefits include improved security as all actions are recorded.
- With blockchain, the goal of a smart contract is to carry out a set of instructions that end up simplifying business and trade between anonymous parties. Blockchain is a distributed database that records all transactions that have ever occurred in a network. By scaling down the formality and costs associated with traditional methods, smart contracts have become a foundational technology in blockchain and a key element of the Ethereum network.
- Smart contracts can be bundled into decentralized applications within decentralized finance (DeFi) to execute more complex functions. The validity of smart contracts in financial technology (FinTech) is becoming more and more apparent. This new form of agreement improves the accuracy and verification of worldwide transactions by combining two simple concepts into one powerful idea.
Overall,
blockchain smart contracts certainly have the power to transform the way agreements
are made across various industries, particularly within FinTech. However, it
will take some time and require more development before it reaches its
mainstream approach.
Email at: - sales@blockchaindevelopments.io
Connect with expert team: - https://bit.ly/2B32Az7
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