A smart contract is a self-executing contract through which a specific task is completed only based on the fulfillment of conditions. It is a technology based on blockchain technology where blockchain technology provides security and a smart contract automatically fulfills a condition and executes a transaction or an event. Smart contracts have multiple uses in various sectors. Today I will discuss the widespread use of smart contracts in a few cases.
Today I would like to discuss the use of smart contracts in the banking and finance sector. The banking and finance sector is a very popular sector because our financial transactions depend on this sector to a large extent. Banking and finance cannot be excluded in a modern economic state and society. However, in the traditional banking system, the bank acts as a separate party. Financial institutions are also another separate party that connects lenders, borrowers, buyers and sellers.
But through this middleman many times there is an opportunity for dishonesty and delaying or resorting to some kind of inconvenience. Basically, the bank acts as an intermediary between the two groups who want to borrow money from the bank and those who want to keep the money in the bank. Common people can take loans from banks subject to certain conditions and business organizations can similarly do their financing through banking channels subject to certain conditions. On the other hand, those who want to deposit their money in the bank also keep their money in the bank for profit by following certain conditions.
As in both cases it is important to fulfill certain conditions and the banks or financial institutions ensure that those conditions are fulfilled properly. That is, a regulation is set according to which the banks establish rules between their buyers and sellers.
But if the matter was done through a smart contract, then it would be much more effective and efficient. Because these conditions would have been confirmed automatically through smart contract and no specific middleman i.e. bank was needed. Once a borrower can submit certain conditions and documents, the loan will automatically be approved. Again, if a certain depositor confirms the verification and identity according to his specific conditions, his profit will automatically go to him. In this way, it is possible to make the banking and finance sectors more transparent, efficient, and timely with the help of smart contracts and blockchain technology.
Smart contracts achieve automation of various financial processes, including peer-to-peer lending, decentralized exchanges, and automated investment management. They ensure secure and transparent transactions. It is reducing the dependency on traditional financial intermediaries and streamlining the process of financial operations.
Today's discussion has become long so I will discuss some of the successful use of smart contracts in several other sectors in future posts.
~ Regards,
VEIGO (Community Mod)
What you are saying is right and with smart contract we can surely see things happening in a smart way through automation and there is no manual intervention required. Technology has been evolving and smart contract is a fantastic innovation on the blockchain that makes things great driven by the technology without human involvement.
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This is a wonderful article you have written on application of smart contract in the area of finance indeed where this to be implemented I agree that it will ensure for a more effective and efficient financial system.
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Your content is really very informationfull
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Smart contracts are really vital and important, love the way you highlighted the various possibilities of it.
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