These days, everything is transformed into a digital platform.
If we talk about education, classes have turned to Smart Classes!
If we talk about the documentation process, papers have been replaced by Smart Contracts!
Defining a Smart Contract
For example, if we compare these contracts with a vending machine; it is easier to drop a bitcoin in the vending machine and get the desired documents on the spot. Traditionally, you would have to involve a third-party person and wait until the person gets your work done. It may take a couple of days or weeks for you to collect those documents from that person, and the process turns out to be very time-consuming. Hence, smart contracts are introduced. In simple words,
- It is an agreement between the two parties in the form of a computer code which runs on a blockchain to make the contract unchangeable
- It does not involve any third party because it is processed by a blockchain network where automatic transactions happen and you don’t need to rely on anybody
- It eliminates trust issues because the transactions happen only when the agreement conditions are met
How Does IoT Link With a Smart Contract?
The Internet of Things is one of the most popular technologies in the current trends. Along with IoT, there lies another underlying technology behind cryptocurrencies that are making a breakthrough and that is ‘Blockchain’. It is believed that IoT and Blockchain are the recent couple goals of technology.
The major issue arising with the Internet of Things is data security and thus, blockchain is introduced to secure the IoT sensor data. IoT is evolving with the help of Blockchain and in return, Blockchain succeeds towards a more useful ledger in many areas.
One such area is Cargo monitoring. In logistics, large shipments are carried out and every cargo carries its bill of lading. The cumulation of these two technologies has resulted in the creation of smart contract solutions that allows the involved parties to stay connected with the cargo being shipped through a connected network.
Digital Bill of Lading
A digital bill of lading or an electronic bill of lading is an application of a smart contract solution that allows the involved parties to determine the terms and conditions of a shipment digitally. It also makes sure that all the specifications of the contract are met. Additionally, the digital bill of lading allows the concerned parties to monitor the shipment in real-time even from remote areas.
Benefits of Using a Smart Contract Solution While Trading
- Zero chances of contract manipulation- It is considered easier to manipulate any contract when held private or without any security. The ship owners have started using the digital form of method to avoid these kinds of contract breaches. They use an electronic bill of lading that proves to be a useful application. An electronic bill of lading includes all the contract details in a distributed and immutable ledger where it is difficult to manipulate or breach the contract through any means. This is helping many trade owners to trustfully involve the digital bill of lading process during the shipments.
- Cost Savings- Earlier, highly skilled labor was hired to handle the cargos throughout the shipment process. They were appointed in bulk and at large costs. When the smart contract solution came into being, the whole cost of the supply chain process reduced at a significant level. The manual requirement of handling the cargo is now being eliminated along with the supervision costs resulting in increased savings. Thus, the shippers can now directly perform their trading business without relying on the third-parties and gain a high ROI.
- Insurance Claims- Traditionally, the receiver of the package used to stay unaware of the proof or confirmation about the agreement conditions being fulfilled during the product transportation. It used to cause difficulty in filing returns of the goods. This problem has been solved by smart contract solutions. A smart contract solution facilitates the buyers to save or monitor the shipment data and thus, it makes easier for them to file an insurance claim.
- No Chances of Damage- A bill of lading designed in a paper format is often susceptible to get damaged or ripped. Also, it makes it easier to manipulate during long-distance shipments. Many owners have now switched to use a digital bill of lading to avoid such consequences. The electronic BoL, stored in a digital format, remains safe and secured from any infringement.
We learned about the importance of involving a smart contract in our businesses. In addition to this, it is quite clear that an electronic bill of lading serves beneficially into the trading business as it keeps the information secured, unmanipulated, safe from external damages, and is cost-effective. A Smart Contract Solution avoids having trust issues on the middlemen and lets you carry out the trading documentations independently.
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