In the last article
(Smart Contracts. Part 1. When the paper knows what you said and does to it), we told a little of the story, sorted out what a smart contract is and what essential elements it carries, walked through the areas of application of smart of contracts and outlined how we plan to implement corporate smart contracts for our clients in the Jincor ecosystem.
In this article, we will go down to earth a bit - we will move from theory to practice, analyze the specific advantages of smart contracts, simulate three examples of using corporate smart contracts, and touch on the shortcomings of the infrastructure. In addition, we will talk about what difficulties may arise in the implementation of smart contracts and how we deal with them in Jincor.
Why use smart contracts? What does this give?
Compared to regular paper contracts, smart contracts have several fundamental advantages:Autonomy.
You independently conclude all agreements - there is no longer any need to contact brokers, banks, notaries, lawyers and other intermediaries to confirm or certify the transaction. By the way, this also excludes the possibility of manipulation by these persons, since the contract is executed automatically by the network, and not by one or several people.Trust and preservation.
Cryptography, data encryption and storage on the blockchain are responsible for the security of your documents. There are hundreds of duplicates, and no one can say that they have lost your documents. Blockchain and its decentralization also make it almost impossible for hacker attacks and the substitution of your smart code.Speed.
A lot of time is usually spent on working with paper documents and their support. The program code of smart contracts automates these tasks, thereby freeing you from personal involvement in many business processes that are usually performed manually.Saving.
Smart contracts save your funds, as they eliminate intermediaries from the business processes mentioned above. The cost of notarization of transactions can reach hundreds of thousands of dollars. But to certify with a notary is sometimes necessary not only the contract itself, but each transaction for it. I think that each of you have already encountered this in your work and understands how much money you are talking about.Accuracy.
Automated contracts are not only faster and cheaper than regular contracts, they also help to avoid mistakes that occur when manually filling out forms of documents and exclude the human factor when conducting transactions under a contract.
Some examples from economics:Investment Banking:
when trading syndicated loans, corporate clients using smart contracts could expect shorter settlement cycles. Instead of the current 20 or more days, smart contracts can provide billing cycles of 6-10 days. This may lead to an increase in demand for trading in these instruments by 5%, which will lead to additional income in the amount of $ 2 to 7 billion per year for professional traders.Insurance.
The use of smart contracts in the consumer insurance sector can lead to an annual savings of $ 21 billion due to automation and reduction of overhead costs for processing claims. Consumers can also expect higher insurance payments, since insurers can use part of the savings to do just that.Banking services: the
industry of banking instruments and lending (corporate, consumer, mortgage, etc.) will be able to benefit greatly from the implementation of smart contracts. By automating the procedures for concluding banking contracts and executing transactions on them, and also excluding people who process and filling out documents from the process, banks will be able to expect savings of between $ 480 and 960 for each loan - this will lead to savings of between $ 3 and 11 billion. year. For consumers, this savings can translate into lower points for interest rates on loans, as well as lower transaction costs for bank charges and transactions.* Smart contracts can be used even with popular voting. In this case, protection against any kind of hacking will be ensured by the fact that hackers will need the computational power of the Lord God himself in order to hack the blockchain and substitute the necessary voting transactions.
Now for the disadvantages and the solution we see for them in Jincor:Lack of environment and infrastructure.
As we said in the first article, the blockchain technology reminds us of the Internet of the 90s, when there were hardly 20-30 worthy programs and services for the entire network. As a result, many features are not yet implemented. In the case of smart contracts, for example, there are no oracle programs that could bind the digital world to the real world and provide smart contracts with all the necessary input data for the execution of their business logic. This creates certain obstacles to the integration of smart contracts into the daily life of organizations. Most contracts are somehow related to the outside world - shipments, customs, logistics, and so on. All these data require a strong network of oracles that will provide them in a safe and reliable way.Decision.
The accelerated development of technologies and the participation of such giants as Linux, IBM, Intel, Microsoft and many others in their development allows us to say with reasonable confidence that the solution to this shortcoming is just a matter of a couple of years.The immutability of smart contracts.
Another possible obstacle could be the immutability of smart contracts. Smart contracts are programmed business logic stored in Blockchain and unavailable for change. But in real life, contracts have properties to be revised, they are often amended or changed by agreement of the parties. Future smart contracts should be able to keep free entries in themselves, to which the smart contract will be able to access and check their code for relevance, or use the data from the supplementary agreement to fulfill obligations under the contract.Decision:
We agree, it looks scary and incomprehensible to the majority. In fact, in the picture, the smart contract system works with the proxying smart contract. A proxying smart contract is a contract that allows customers to make indirect requests to other smart contracts. Thus, if you, for example, have a labor smart contract with your employee with a payroll system, and you want to transfer it to a contract system, then you only need to develop an additional agreement in the form of a separate smart contract and replace it in a proxy contract address to current.The lack of qualified professionals.
For the development of smart contracts, their deployment and resolution of potential disputes over them, any organization will need to be accompanied by specialized firms, or the presence of so-called codelawyers in the staff. Codelawyers is a bright new term applicable to people with a very rare set of competencies, including programming smart contracts and law education with experience in law practice.Decision.
The way out of this situation can be a significant simplification of the procedures for creating simple template smart contracts to solve typical business problems. To do this, we develop in Jincor our own smart contract designer, which will make the process of creating and deploying smart contracts no more difficult than making purchases in an online store.Regulation of smart contracts.
The speed of technology development is really impressive. In this area, humanity rushes at superspeeds, and regulators simply do not have time to develop a legislative base for new technologies.Decision.
A progressive society, if it wants to further develop technologies, should independently develop a new foundation and reach a public consensus confirming that the code is the law according to which it should be regulated. At Jincor, we plan to actively participate in public and legislative hearings and offer our own versions of regulatory acts that open up the use of smart contracts for all businesses and individuals.The secrecy of smart contracts.
Currently, all blockchains used to record smart contracts are public, and transaction records are open and can be analyzed by any Internet user, which creates certain restrictions. Banks, financial services and other companies are not too willing to disclose their corporate relations, and most large companies generally have a trade secret regime for corporate interactions, which makes public blockchains unsuitable for corporate smart contracts.Decision.
To hide this data from third parties, companies need to be able to build smart contracts on a closed enterprise blockchain, which will keep all data and transactions confidential. The development of just such a blockchain is occupied by Jincor specialists.Jincor ico
Jincor launches ICO to collect the funds needed to further develop the ecosystem and enter the global market.
Starting from August 21, you will have a unique opportunity to buy JCR tokens as part of pre-ICO
two times cheaper than the starting price of the token (ICO will start on November 1).
JCR tokens will be needed in the future for organizations to fully utilize the platform. Despite the fact that the use of the Jincor ecosystem for organizations will be free, some of the functionality will be provided on a paid basis, and JCR tokens will be accepted as payment for settlements with Jincor. In particular, the creation of smart contracts and their arbitration will be paid.