Blockchain Smart Contracts Implementation
Blockchain technology has created an incredible impact on various sectors. Enterprises and government agencies are increasingly adopting Blockchain technology to gain efficiency in their operational processes. Blockchain is becoming standard in the global market due to Bitcoin and cryptocurrency expansion, but there are some other potential trends of the Blockchain platform. One of the trends that drew the attention of the banking sector is Smart Contracts development.
How do Smart Contracts Work?
Smart Contracts are programmed Blockchain solutions that help execute transactions between two parties or organizations based on predefined terms and conditions. Simply put, they are helpful in the automation of commercial contract execution. It helps parties to regulate the exchanges directly without any involvement of arbitrators. After satisfying the conditions, it triggers the next process automatically.
Challenges of Smart Contracts Implementation
Though the future of Blockchain seems promising and it is expected that the Smart Contracts market valuation will touch $345.4 million by 2026 at a CAGR of 18.1% , it is still a budding market. At first, Blockchain Smart Contracts development might look like a great potential for banking and finance enterprises to rapidly roll out a new product. However, a deep understanding of the potential complexities and challenges behind Smart Contracts implementation is important. Some of the challenges are:
Inaccurate coding and requirements produce incorrect contract structuring
Inadequate cybersecurity setup increases the risk of hacking
Repetitive variations in legislation. As many nations are still working out the regulation to legally manage the crypto market, and changes can practically affect the contract structure
Incompetent use of contracts leads to unnecessary costs. This unintended cost makes the contracts inefficient and becomes unappealing to customers
Benefits of Smart Contracts Development for Banking Industry
In the digital era, many banks follow a contractual agreement (third-party imposed T&Cs) basis for the execution of exchanges and processes. However, providing significant attention to each user can delay the process while costing a lot of money. Whereas, deploying Smart Contracts on Blockchain networks enable automatic execution of contracts based on terms and conditions. This provides numerous potentials for the banks. Some of the benefits of Smart Contracts implementation by banks are