A smart contract is a code-based agreement between two parties deployed on a blockchain with pre-defined terms. Although many associate smart contracts with cryptocurrency, numerous real-life applications exist outside the crypto sphere.
However, figuring out where a smart contract is used isn't easy. So, let's explore five real-world examples of smart contracts in action and how they revolutionize traditional practices across different sectors.
1. Finance
Smart contracts are extensively used in cryptocurrencies, making them a valuable asset for the finance sector. The emergence of decentralized finance (DeFi) with smart contracts has provided a highly efficient alternative to traditional financing systems, offering immutable and trustless systems that ensure transaction transparency.
The DeFi market currently has a total value locked (TVL) of around $54 billion, highlighting its vast potential. DeFi not only facilitates peer-to-peer (P2P) transactions, but it also offers lending and borrowing services. But this market can be risky, and it is advisable to stay cautious of liquidity crunches and scams.
In addition to DeFi, smart contracts are finding their way into traditional finance. They can automate trades at both P2P and enterprise levels and are widely used in insurance services. For example, Insurwave caters to insurance companies with smart contract-based solutions. It offers a platform where insurance companies can create and manage their portfolio, leveraging blockchain technology to improve execution time and make insurance secure for both parties.
2. Healthcare
Smart contracts have the potential to revolutionize the healthcare industry by bringing transparency and efficiency to data recording. In addition, smart contracts can benefit hospital databases, laboratories, and health-related research.
Smart contracts can support clinical trials by ensuring data authenticity and allowing hospitals to keep a transparent record of patients' data and manage appointments efficiently. Encrypgen is one example of smart contract use cases in healthcare, using the blockchain and smart contracts for DNA data transfer. The Gene chain project detaches users' personal details from their DNA data to limit the selling of DNA data to large enterprises and give users more control over their data.
3. Gaming
Blockchain and smart contracts in gaming have transformed the industry. It has introduced a new genre known as play-to-earn blockchain games that allow players to make money while playing games. In addition, these games have introduced cryptocurrencies and non-fungible tokens (NFTs) in the games that give financial benefits to gamers.
Post 2020, P2E games became quite popular with the rise of numerous titles like The Sandbox, Axie Infinity, Decentraland, and others. You can play these P2E games to earn rewards in their native tokens like MANA, SAND, or AXS. The crypto coins these games offer can be used for purchasing in-game items and liquidated to get real-life items.
Furthermore, smart contracts are also used in fantasy sports, which are rapidly gaining popularity. According to Strait Research, the fantasy sports market will be worth around $78.5 billion by 2030. With smart contract technology, fans can participate in decision-making processes for their favorite sports clubs, further leveraging blockchain's potential.
4. Real Estate
Smart contracts have the potential to revolutionize the real estate industry. Whether you want to buy a property or rent it out, smart contract-based agreements can offer you a safe and reliable way to do so. This trustless technology allows you to write codes for the automatic transfer of property ownership or rent agreements, making real estate dealings much safer by ensuring that both parties follow the agreed terms.
By eliminating intermediaries, such as lawyers or brokers, smart contracts can reduce the overall cost of registration and legal consultation and offer transparency throughout the process. Several companies in the real estate industry, such as Propy, SMARTRealty, Rent Peacefully, PropertyClub, and Vairt, have already adopted smart contracts to enhance their services.
Propy, founded in 2017, offers a platform for selling and purchasing properties based on smart contracts and is among the first Web3 real estate service providers. SMARTRealty also offers blockchain rental solutions and facilitates buyers and sellers by offering smart contracts for rental agreements, mortgages, and property ownership transfers.
5. Legal Industry
The legal industry is another domain where smart contracts can thrive. It can be used for binding legal contracts for both business and social arrangements. In addition, smart contracts may work as e-signatures for agreements between different parties and mitigate the need for lawyers.
In some parts of North America, the government has even permitted using smart contracts for digital agreements. For instance, according to CoinDesk, marriage and birth certificates in California can be issued through blockchain using smart contracts.
Furthermore, paper or digital documents can be forged or lost at any moment, which makes them not entirely secure. Smart contract security audits can solve this issue by verifying documents on an immutable distributed ledger.
One platform that implements this technology in legal documents is Certoshi. It is a certificate issuance and verification system that works on Ethereum smart contracts to cryptographically secure documents.
Smart Contracts Are Revolutionizing Virtual Agreements
Smart contracts are commonly associated with cryptocurrencies but offer numerous other use cases. It is a promising technology that has been adopted in various industries, including legal, finance, healthcare, and more. For example, smart contracts can automate complex money transfers such as insurance or facilitate clinical trials.
This article has explored five industries that have implemented smart contracts. However, smart contracts are not limited to these industries alone. They can also be utilized in supply chains, voting systems, and even the music industry. The technology can potentially enter and revolutionize any domain where virtual agreements are required. We expect this technology to play a critical role in shaping the future of various industries in the years to come.