Smart Contracts: Adoption Value for Enterprises and General Use Case
At first, let’s understand how smart contracts are different from traditional contracts and the benefits that an enterprise can expect by making this shift to the digital format:
As you can see in the image, the main advantages of smart contracts over traditional contracts are that they save time and costs. Besides this, for enterprises with global operations, smart contracts can be executed without the physical presence of the parties involved, as a digital signature will suffice.
In today’s digitally connected world, time is a critical factor for most organizations. Reduction of costs too, is an important KPI for all functions leading to a rapid push towards digitalization of most operational activities. Remote teams are also no more an anomaly. Considering these factors, the benefits of smart contracts maybe obvious for all businesses, and in my point of view an ideal solution perfectly fit for our digitally transforming enterprises.
So, the question that arises is why businesses are not in a hurry to adopt smart contracts in their operations.
The complexity primarily depends on the extent to which your business processes will be allocated to run using smart contracts. There are easy ways of adopting smart contracts, though I do agree that using the word “easy” when talking blockchain is not advisable for sure. However, here, by easy I mean an instance where the business is only digitizing a paper contract, the signature and the storage of this contract for future reference. This process simply entails having two persons writing an agreement and putting their signatures at the end. That’s all! Easy, isn’t it! A text document, two digital signatures and a block in the chain!
However, enterprises are bound to have more complex processes than the simple situation we discussed above. So, what happens when an organization attempts to explore the adoption of the Internet of Things, where autonomous connected computing devices things are interacting with other devices or people?