At a time when business and professional relationships are increasingly conducted remotely, finding secure ways to formalize contracts or close deals without the use of physical paper is becoming essential.
Smart contracts, or intelligent contracts, come to solve these problems in a revolutionary way thanks to the blockchain.
First of all: what is blockchain?
These are the protocols on which smart contracts or cryptocurrencies operate. Basically, they function as a public registry of transactions, thanks to which these transactions are recorded and validated without the intervention of any central authority or bank. A decentralized and free network of intermediaries is in charge of verifying transactions through the use of cryptographic algorithms.
Everything is recorded in the blockchain, which acts as if it were a ledger, recording all the inflows and outflows of money that take place in the network.
Each of these blocks includes a series of transactions that will be validated by the network nodes by means of mathematical problems. Whoever solves the problem or “hash”, confirms the transactions it contains and joins this block to the previous one.
The network of nodes trying to validate the transaction will check that the payer has the necessary amount, that the party that should receive the transaction receives it correctly, and that the amount transferred has been subtracted from the initial account.
This complex system that links each block to the previous one makes everything verifiable and impossible to delete or modify, a fact that becomes the main attraction of this technology: no one has the ability to adulterate the information contained in the blockchain network.
Smart contracts within the blockchain
Knowing now how the blockchain works, we can easily understand the usefulness of smart contracts.
In them, we can establish an agreement that, given a certain condition, will resolve it by giving each party to the agreement what it is entitled to.
For example, we can make a sports bet between two parties who put a certain amount of money that will be retained in the contract. The programming of the smart contract can include that at the end of the sporting event, the smart contract checks the results. When the date arrives, the programming of the smart contract reviews the results and delivers the economic amount to the winning party.
This allows the parties to enter into agreements autonomously without intermediaries and are tremendously reliable, since these smart contracts are contained in the blockchain which, as we have seen, is extremely reliable. It will be the network that validates the entire process and records it on the network, making it impossible for any of the parties to modify it on their own.
Electronic signatures and smart contracts
In the future, both solutions could go hand in hand, with the electronic signature serving to certify agreements contained in a smart contract.
However, smart contracts are currently not within the reach of everyone, as they require a series of computer skills and there are still no major options that make their programming accessible to the general public.
Because of this, the electronic signature currently becomes the easiest and safest option for the conclusion of contracts digitally, remotely or in person. Its advantages:
- Remote: like smart contracts, it does not require the presence of the signatory parties in the same physical location
- Security: the integrity of the digital signature with Viafirma is equivalent to the manual signature, adding a series of security layers that guarantee the integrity of the document, the signer’s identity and the traceability of everything that has been done in the signed document.
- Process agility: improves productivity by being able to automate some tasks and thanks to the immediacy of shipment.
- Costs: savings in travel, paper, ink, document storage or time that can be dedicated to other more productive processes.
If you were thinking about the advantages of smart contracts but do not yet have the capacity to conclude them, discover all the advantages of electronic signatures.