3 industries that blockchain technology and smart contracts are likely to disrupt
Bitcoin technology has been in the news in the past few months as its elusive creator had purportedly been identified. However, it now seems the mystery of who created this alternative method for processing transactions between counterparties still remains unsolved. Something else that remains unknown about this Bitcoin and blockchain technology is how it will disrupt business in general.
You may also have heard the term “smart contracts”. A smart contract is a software program that perform functions when certain conditions are met that are agreed upon by contracting parties. The term smart contract was first coined in 1993 by Nick Szabo, a computer scientist with a vision for electronic commerce revolutionizing business practices and contracting. However, it wasn’t until blockchain technology was developed that smart contracts had a mechanism for being realized. It is not strictly a “legal contract” but the law and smart contracts is a topic for a another day.
The obvious industry for blockchain technology and smart contracts to disrupt is that of Finance as it provides an alternative mechanism for verifying authenticity in transactions without the requirement of a middleman. However, it also seems likely that it could transform a number of others. Some of these suggested in an article by CBInsights include the following*:
1. Car leasing and sales - Visa and Docusign have been working on a partnership to simplify the process of car leasing to one click and one signature. Usually transactions such as these require copious amounts of paperwork including those to do with insurance and credit checks. Those wanting to enter a lease can purchase the correct currency for the process through Visa and to do so all the relevant paperwork will need to be verified. A “smart contract” can be automatically created once the correct currency has been paid. This smart contract may even involve the car being automatically unlocked once payment is received. Once this technology has been applied to leases it conceivably will be able to be applied to car sales as well.
2. Ride Sharing - Uber and Lyft ride sharing services currently operate with the model of a centralised system. These companies use software to process payments between drivers and customers as well as processing information such as whether the driver has a valid license and other information including verification of the vehicle’s safety. A blockchain model for ridesharing would look quite different. It would use its own form of currency like bitcoin which users can buy or earn. It then would provide the ability to those who have been given access to this currency to locate other people driving on similar routes. Users would only be given access to the currency once proper verification had taken place. Riders would pay and drivers would earn currency for rides. An Israeli startup, La’Zooz uses this model. Smart contracts are created when their is a transfer information between two users of the currency allowing for the rideshare to occur. Eventually with self-driving cars the smart contract would be the automation of the rideshare once the transfer of information had taken place.
3. Online Music - Blockchain technology could allow consumers to pay artists directly without the need of an intermediary. Two startup companies, Ujo Music and PeerTracks are working on disrupting this industry by with blockchain technology and smart contracts. Often the royalty and licensing agreements governing how artists are to be paid are complex and centralized systems for payment have often meant that the distributions to various people involved in production have been anything but transparent. Payment for these fees would be taken care of when listeners purchase the currency needed to buy the product directly from the artist. This arrangement will lead to greater transparency on how much and why various artists get paid the amount they do. A smart contract would occur once the payment of the currency has been paid to the artist which would trigger the release of the music to the listener and payments to various stakeholders.
So there you have three industries that blockchain technology and smart contracts are set to disrupt. What are your thoughts? How will blockchain technology and smart contracts change the business world?
It may be sometime in the future before these changes hold. However it’s exciting to consider how it may transform the way we contract. ContractRoom is also trying to transform contracting and the way people come to agree. It’s a contract management and online negotiation platform that streamlines collaboration and captures and leverages data so in the future those using it will be able to “predict agreement” with Predictive AgreementTM. To find out more visit our website at www.contractroom.com or schedule a free demo here: