“Until the contract is signed, nothing is real.”
— Glenn Danzig
What would you call a business that isn’t “doing business?” Blockchain will have a large impact on the way organizations engage with one another. Doing business means transacting with other parties to facilitate something that wouldn’t be possible alone. In such an arrangement, the two organizations need to be sure they can trust each other.
In 2017, this trust is provided by a set of pages, or contract, that lists all the terms and conditions of engagement. When a party doesn’t adhere to the promises mentioned in the contract it can be enforced by law — but this can result in an expensive and timely process. So in many cases, going to court over a breach of contract simply isn’t worth the trouble.
Using blockchain technology, many of these contracts can be converted into Smart Contracts. Unlike conventional contracts, smart contracts consist of software code and are executed by the blockchain network. The beauty of these smart contracts is that they cannot be modified after they are deployed, which ensures neither party in a deal can walk away without doing their part.
Smart contracts, written in code on the blockchain, are contracts that are completely inalterable once they have been triggered.
Imagine you’re in a band and you want to sell your music to someone, meaning you’ll have to transfer an audio file. How can you be sure the buyer will pay for it after receiving it? At the same time, the buyer might be skeptical too, thinking you won’t send the audio file if they make the payment first. A smart contract ensures that once the buyer has transferred the money, the audio file will immediately be sent to the buyer. Once deployed, no one can stop the contract from being executed. So both parties can trust the code.