AUTOMATING MANUAL PROCESSES

One of the main advantages of smart contracts is that they automate manual processes. This increased efficiency can lead to faster and more reliable transactions and reduced administrative overhead.

For example, you could write a smart contract to manage agreements among users, such as tokenized collaterals, loans, or subscriptions. Smart contracts can enforce the rules and outcomes of these agreements without human intervention, ensuring fairness and compliance. You could write a smart contract that automatically hold funds and pays out a specified sum to contractors according to the progress data. If they try to withdraw without meeting the requirements, the smart contract won’t execute.

But none of this addresses a fundamental issue: where to get the variables with which the contract is evaluated. If the data are not derived from recently added on-chain data, a trusted source of external data is required. Such a source is called an oracle. More on blockchain oracle in our future articles.

REDUCING COSTS

As mentioned earlier, smart contracts can reduce the time and costs of executing contracts. Smart contracts reduce transaction costs by eliminating the need for intermediaries, such as lawyers, banks, or brokers. These intermediaries usually charge fees for their services and may introduce delays or errors in the process. With smart contracts, the parties can interact directly with each other through the blockchain, without relying on third parties to verify or enforce the contract. This can save money and time, as well as avoid disputes and fraud. For example, construction guarantees and bonds can be tokenized and programmed into a smart contract that will execute automatically when the specific requirements are met.

INCREASING TRANSPARENCY AND AUDITABILITY

Ethereum smart contracts are also transparent and auditable, as they are executed on a public blockchain that anyone can access and verify. This means that the contract code, the transaction history, and the current state of the contract are all visible and immutable on the blockchain. This can increase trust and confidence among the parties, as well as provide evidence and accountability in case of disputes or audits. For example, if a smart contract is used to manage a bidding process, the bidders can see how their bids are evaluated and the status of the bidding process.

Smart contract also provide contract utility, which means that they can be used by other contracts to perform certain functions or access certain information. This allows bidders to be evaluated with reference to their previous smart contracts. Ethereum blockchain enable complex and dynamic interactions among multiple smart contracts, creating a network of decentralized applications (dApps) that run on the Ethereum blockchain. This is extremely useful for construction projects involving multi-level contracts. Conflicts and clashes of all the smart contracts within a project can be minimized. Furthermore, this also allows all smart contracts within a project to be synchronized chronologically as well.

IMMUTABLE STORE OF INFORMATION

Finally, smart contracts can be used to store information on the blockchain, such as membership records, identity documents, certificates or cost data. This can provide secure and permanent storage of data that can be accessed and verified by authorized parties. For example, you could write a smart contract that stores your cost data on the blockchain, allowing you to share them with external parties and charging a small fee automatically when someone makes a query. Smart contracts can also be used to collect and merge data for a crowd-sourced data library where data inputs will have to be authenticated. You could also write a contract that issues tokenized digital certificates for different stages of a project’s progress. This contract will serve as a tokenized official document of the certification and also contain all the historical contractual obligations and fulfilments that can be traced and referenced in future projects.

Key Takeaways

Ethereum smart contracts offer numerous benefits to individuals and businesses alike. They decrease transaction costs while boosting efficiency, as an intermediary is no longer needed. The smart contract does the entire job, acting like an efficient personal assistant who doesn’t make any errors. They also increase transparency and auditability, as they are executed on a public blockchain that makes them visible and immutable. Furthermore, they provide contract utility, enabling interactions among multiple smart contracts and dApps. They can also manage agreements among users and store information securely on the blockchain.

Often, business consultants will recommend that a business reinvent all its systems to create a completely new one based on AI and blockchain technologies. We don’t share that philosophy. We believe it’s better to find touch points for AI and blockchain in what you already have, and build extensions from those touch points. Today, businesses are ultimately built on networks of people and solutions. In the end, blockchain is all about building trust. Trust in the data, and trust in the blockchain.

Embracing data in your workflow and cultivating a culture of data-driven decision making today is the cornerstone for Blockchain technology in your organisation. N3C provides you with analysed and regularly updated cost data to kick start your journey. Sign up N3C at N3C – National Construction Cost Centre (cidb.gov.my)