Imagine that you bought a car, and then you bought insurance; however, the insurance indicates that it will only cover 70% of the damage caused to the car in case of accidents. Now he ends up having an accident, however the car was 80% damaged. And now, to claim the insurance, you will have to go through arbitration and other legal issues. Now imagine a scenario, if a simple piece of code would monitor the data and automatically transfer $250,000 to your account if the damage was of a certain level.

Market Research Future, a market analysis company, recently revealed in a report that the global smart contract market is expected to reach approximately $8.3 million by 2030. The sector is expected to register a growth rate of 21.40 % compound annual growth rate (CAGR) over the forecast period of 2022-2030. “Smart contracts can be used to perform various functions such as automatic error checking, routing, payment calculations, and payment processing. Also, the areas where smart contracts are used in DeFi are margin trading, stablecoins, derivatives, lending and lending,” Vijay Pravin Maharajan, founder and CEO of bitsCrunch, told FE Blockchain.

Market analysts claimed that smart contracts are self-sufficient, reducing reliance on brokers or other intermediaries. “As the blockchain transaction records are encrypted, it is very difficult to hack. Also, hackers would have to tamper with the entire chain to change a single record in a distributed ledger because each record is linked to previous and subsequent records,” Edul Patel, co-founder and CEO of Mudrex, a cryptocurrency investment platform , mentioned.

Furthermore, it is believed that smart contracts will eliminate the risk of manipulation by other parties. “The absence of intermediaries in smart contracts results in cost savings. Security, cost reduction, ease and speed of execution are all benefits of smart contracts for users,” added Bharat Patel, President and Director of Yudiz Solutions.

At an elementary level, smart contracts can help decentralized autonomous organizations (DAOs) establish the foundational framework. If DAOs work on the basis of smart contracts, it will be able to work without any human intervention. The core team of community members only need to create a smart contract so that everything can be put on autopilot and can be visible to the entire community.

It should further be believed that smart contracts can help reduce counterparty risk. According to Pushkar Singh, a partner at Tremis Capital, the smart contracts are automated and neither party has control over the execution and enforcement of the agreement. “It’s also relatively cheap for smaller transactions,” he added.

follow us TwitterFacebook, LinkedIn