Smart contracts have transformed the way transactions and deals are made all over the business world.The global smart contract market achieved a value of $397.8 million in 2022 and it’s expected to achieve $1.46 billion in 2029, with a Compound Annual Growth Rate (CAGR) of 24.2% during the 2023-2029 forecast.In this post, we'll explore the definitions of smart contracts, its origins, its advantages, and its integration with blockchain technology.What are Smart Contracts?Smart contracts are self-executing programs developed to automate specific actions in a deal. When the preestablished conditions occur, these transactions happen in a traceable and irreversible way, which represents a milestone in terms of efficiency and security.The advantage smart contracts offer is the possibility to offer transactions and reliable deals between many anonymous parts, without needing a central authority, legal system, or external supervision.This decentralized approach brings a new dimension to the way contracts are managed, eliminating intermediaries and simplifying processes significantly.What’s the origin of the term Smart Contracts?Smart contracts were created by American cryptographer Nick Szabo, who invented this term in 1993. Szabo, a visionary in his field, proposed the transition of traditional contracts to a more automated system. However, at the time, technological limitations prevented this idea from happening successfully.In 2014, however, with the creation of Ethereum, smart contracts truly became real. Ethereum took smart contract technology one step forward since it allowed for more complex and customized contracts. What are the advantages of Smart Contracts?Even though it’s a relatively recent technology, the use of smart contracts by large companies and individuals has revealed a series of significant benefits. We'll show you some of the main advantages below:

• ** Savings in resources**: Smart contracts reduce expenses on paper, printing, notary fees, storage, and more. Document management becomes simpler, reducing the need to invest in large equipment to manage and monitor the volume of contracts.
• Agility: Since clauses are self-executing, the need for monitoring and human intervention to validate what was agreed to is reduced considerably. In many agreements, especially financial transactions, contract enforcement is immediate.
• Security: Encrypted storage on a blockchain network significantly reduces the risk of fraud and modifications in the contract after it’s published. The possibility of non-authorized access to the contract content is eliminated thanks to encryption.

These features make this innovative way of managing contracts to be increasingly attractive to companies and people seeking for a more efficient and safe contract management.How do smart contracts work with blockchains?Blockchain is a highly safe database that is basically immutable against fraud. It stores blocks of data with date and time records, acting as a decentralized database. Each time you add entries in this network, you need the permission of all of the participants in the chain and data can’t be deleted. If a member tries to change this, all others involved will know about it.This feature ensures data is recorded safely, offering an additional level of trust in transactions and contracts managed by smart contracts.How is blockchain used in smart contracts? The answer lies in its ability to create the main digital smart contracts for financial transactions and cryptocurrencies. When blockchain was created, they opened the door to only transferring money when all of the preestablished conditions were followed in the smart contract. The network itself is in charge of validating these actions.Examples of Smart Contract useWhen it comes to smart contracts, there are various examples in different fields and situations that include deals, transactions, and processes that require trust, transparency, and security. Here are some examples below:

• Decentralized Finance (DeFi): Smart contracts allow for the creation of financial services without any intermediaries, such as banks or brokers. This makes operations such as cryptocurrency exchange, investment, loans, and payments faster and more independent in a decentralized financial world.
• Non-fungibles Tokens (NFTs): Self-executing agreements allow for the creation and exchange of NFTs, indivisible and unique digital assets, such as works of art, collection items, games, and domains. They ensure authenticity, ownership, and transfer of assets in the blockchain network.
• Health: Smart contracts improve data management and information exchange in the health sector. They can store encrypted medical records and allow only authorized professionals to access them.
• Real Estate: Smart digital contracts make real estate transactions easier and faster, reducing red tape and costs related to it. They record ownership in the blockchain network, verify IDs, validate documents, release funds, and transfer titles in an automated, safe way.

These are a few examples of how smart contracts can transform various sectors. It can also include supply chain, intellectual property, online games, insurance, and more, demonstrating its flexibility and potential in digital revolution.How do you prepare a business for Smart Contracts?To effectively prepare yourself, you can consider a couple of key aspects:

• Process digitalization assessment, assessing the internal adaptation level.
• Implementation of legal technology, making the creation, signature, and management of digital contracts easier.
• Digital jurimetrics tools, to write safe and advantageous clauses.
• Personnel training, especially for those in charge of managing and controlling the implementation of self-executing contracts.
• Creation of security policies, such as data protection, access management, and prevention of possible cyber threats.
• Development of validation protocols, such as ID verification of people involved, authenticity of documents, and compliance with the related rules and regulations.

Get to know SYDLE ONEIf you’re looking for easier management of your corporate contracts, including self-executing contracts, SYDLE ONE is the ideal tool for you.With SYDLE ONE, you can create and edit contracts, legal opinions, powers of attorney, and other legal documents with agility and security. Store them in a cloud to have convenient access, share them easily with people involved, and keep up with contract updates and deadlines.Simplify your approach to contract administration with SYDLE ONE, the solution that is efficient, secure, and practical. Find out about the new era of business contract management.Get to know SYDLE ONE!