How Smart Contracts are Reforming Global Industries

Key Takeaways

• Smart Contracts have unfolded as a reformative technology across industries, enhancing efficiency, automating processes and reducing costs.
• Real-world evidence demonstrates the adoption of smart contracts by organisations like Walmart, Estonia’s health department and the government of Chhattisgarh.
• Scalability and regulatory concerns pose an implementation challenge, but continuous innovation and cross-chain interoperability will drive mass adoption in the upcoming years.

Introduction

Smart contracts have emerged as revolutionising technology in the blockchain realm and have completely changed the way we think about digital agreements. Smart contracts are self-executing contracts that have certain predefined code written. When these pre-determined conditions of the agreements are met, the smart contract automatically executes the agreed-upon actions, eliminating the need for a third party, making transactions faster, more secure, and cost-effective. From Healthcare to BFSI to Supply chain, smart contracts are disrupting the functioning of organisations across industries. 

In this blog, we’ll learn about the potential of smart contracts and their unprecedented impact across industries, we’ll go through the real-life examples of organisations that are leveraging smart contracts and discuss how they might further evolve to disrupt their respective industries. Whether you are blockchain enthusiast or simply curious about the future of digital agreements, the smart contracts trend is worth watching.

• Supply Chain Management

  Smart Contracts are transforming the supply chain management across the product distribution channel. The traditional form of functioning due to the vast and complex network of stakeholders faces problems of traceability of goods and payments data, slower response time due to manual processes and misalignment due to inefficient cross-border coordination.

  Smart contracts, backed by the blockchain technology, offer superlative solutions transforming supply chain operations by enabling comprehensive traceability of goods, automating payments upon delivery, ensuring authenticity at every stage and allowing the vast network of stakeholders to be in sync with the line of work. Manufacturers and wholesalers, with the use of blockchain technology can enhance the efficiency and transparency of their businesses which could further lead to lower operational costs.

  Real-life applications:

  Walmart came up with blockchain-powered smart contracts to track food supply chains. According to a Hyperledger case study, Walmart can trace the origin of 25 products from 5 different suppliers with the help of their blockchain technology and they ran a pilot test where they were able to track the origin of US mangoes from 7 days to just 2.2 seconds.

• Banking, Financial Services, and Insurance (BFSI)

  Smart contracts are revolutionising the financial world by automating complex processes such as loans, mortgages, and insurance claims. Traditional banking which relies on extensive paperwork, multiple verifications, and lengthy approval times, are getting streamlined. By removing intermediary intervention, smart contracts reduce risks, ensure transparency, and enable faster settlements at lower costs, making financial services more accessible globally.

  In the insurance sector, they automate policies, triggering immediate payouts when predefined conditions are met. This not only boosts efficiency and customer satisfaction but also significantly reduces operational costs for companies.

  Real-life applications:

  DeFi platforms like Aave and Compound use smart contracts for decentralised lending and borrowing, allowing users to deposit assets, earn interest, or borrow against collateral without intermediaries. AXA’s Fizzy employs blockchain focused smart contracts for flight delay insurance, automatically triggering disbursal based on real-time flight data.

• Healthcare

  The Healthcare industry has to deal with huge amounts of data, ensuring data security, retention and controlled accessibility. This industry also faces the problem of data deficiency and record-keeping of historical patient data. Functioning by implementing the use of smart contracts could be instrumental for the healthcare industry, where patient data including all the health details are recorded and secured through a permissioned access which is controlled by the patient, ensuring privacy at the same time improving efficiency. This network could be integrated with insurance companies to streamline the process of automated insurance claims, fostering administrative efficiency and reducing time.

  Pharmaceutical companies could make use of these records with access permission to get insights about the production of appropriate medicine and to track the manufacturing and distribution of medicines across their supply chain network.

  Real-life applications:

  Estonia’s eHealth system leverages blockchain and smart contracts to secure patient records, where healthcare providers across the country are interconnected and the data of patients is secured through a centralised database ensuring that only the authorised personnel have access and thereby reducing administrative burdens.

• Real Estate

  Real estate usually faces the problem of lengthy documentation and multiple intermediaries causing inefficiency and making the process exhaustive. Smart contracts can transform this space by integrating the decentralised technology and thereby automating property transfers, streamlining ownership verification and infusing trust between buyers and sellers.

  Real-life applications:

  Dantewada district in Chhattisgarh, India has recently digitised 700,000+ land records on Avalanche blockchain ensuring transparency, security and simplifying ownership verification. Propy, a blockchain-based real estate platform, enables buyers and sellers to complete transactions by the use of smart contracts, assuring efficiency and transparency.

• Legal Industry

  Legal agreement historically required extensive paperwork, manual intervention and compliance adherence which made the entire process time-consuming and fallible.

  Smart contracts are changing the legal scenario by creating self-executing agreements that automatically enforce terms when predefined conditions are met. They streamline regulatory compliance, simplify dispute resolution, and enhance contract management, all while reducing the dependency on intermediaries.

  Real-life applications:

  OpenLaw helps to create, access and execute smart contracts that are legally binding backed by blockchain based smart contracts, reducing reliance on traditional methods and fostering efficiency.

• Government and Public Services

  Governments can use smart contracts to streamline public record management, voting systems, and identity verification processes. Blockchain-powered voting ensures transparency, security, and accessibility, making elections more trustworthy. Additionally, governments can automate social benefits distribution, ensuring timely and error-free payments.

  Real-life applications:

  In 2018, West Virginia piloted blockchain-powered voting via the Voatz app for overseas military personnel, improving electoral security and accessibility.

• Intellectual Property and Digital Rights Management

  Musicians, writers and digital artists who are intellectual property holders and content owners often face the issue of piracy and inaccurate royalty distribution. Smart contracts tackle these issues by verifying the ownership of the content and automating the royalty payment process so that content owners get their share of compensation fairly and accurately.

  Real-life applications:

  Platforms like Audius and Mediachain Labs (acquired by Spotify) use smart contracts to distribute royalties transparently and ensure fair payments to artists whenever their content is played or shared.

• Energy and Utilities

  The energy sector is exploring decentralised trading solutions using smart contracts so that consumers can buy and sell excess energy in peer-to-peer markets, while utilities can automate billing and grid management, ensuring efficient energy distribution and reducing costs.

  Real-life applications:

  Power Ledger, an Australian company, allows consumers to trade excess solar energy through smart contracts, creating a decentralised and sustainable energy marketplace for all stakeholders.

• Gaming and Esports

  Blockchain technology is revamping the gaming industry by enabling true ownership of in-game assets, allowing gamers to buy, sell and trade virtual items. Along with this the decentralised reward system ensures that players are fairly compensated for their achievements.

  Real-life applications:

  Enjin leverages the capability of blockchain and smart contracts to empower gamers with true ownership of digital assets, enabling seamless trading across various games while ensuring authenticity and security.

• Automotive Industry

  The automotive industry is leveraging smart contracts to revolutionise processes such as vehicle leasing, automated toll payments, insurance, and secure ownership transfers. By integrating with IoT technology, smart contracts enable real-time automation of vehicle usage agreements and payments, enhancing efficiency and reducing manual intervention.

  Real-life applications:

  Companies like HireGo implement smart contracts for car rentals, ensuring secure access and automated payments without intermediaries.

Conclusion

Smart contracts are revolutionising industries by improving efficiency, transparency, and security. While challenges such as scalability, security risks, and regulatory concerns remain, ongoing innovation and future of cross chain interoperability will drive widespread adoption. As blockchain technology matures, smart contracts will play an essential role in digital economies, transforming how businesses and individuals interact in a decentralised world.

FAQs

• How does Smart Contracts Work?

  Smart contracts run on blockchain technology and have certain code written to it; they are self-executing agreements that automatically execute when pre-defined conditions are met.

• What are the benefits of smart contracts?

  Smart contracts help revolutionise the functioning of organizations by increasing the transparency, efficiency and security of the processes.

• Which blockchain supports smart contracts?

  Major blockchains that support smart contracts are Ethereum, Solana, Avalanche, etc. 

• What are the regulatory challenges for smart contracts?

  Smart contracts as of now face regulatory uncertainty and legal requirements vary from country to country, but governments across the world are working towards a framework to integrate smart contracts into the existing laws.