The blockchain technology has brought forward many programs which revolutionized how the economy operates now. One of these is blockchain based smart contract development. It carries the features of blockchain having immutability of information, the anonymity of involved parties and decentralized network. Gradually, smart contracts are replacing traditional agreements and the problems mentioned below:
Problem With Legally Enforced Contracts
Usually, The contracts between two or more parties are originated and executed through a legal attorney who is permitted to be the third party for the contract by the government of a particular country. If one of the parties of contract breaches the terms, the dispute is solved through negotiations, settlements and in some cases trials. This type of affairs is not just lengthy in the process when arises but also one or both parties face negative consequences on monetary bases.
Moreover, the whole process is handled by humans which can be manipulated or bribed. And one of the party can face greater punishment such as jail time if he/she fails to follow the legal verdict by the court. There are many limitations as such in legally enforced contracts which results in a loss by parties involved but gain for third-party. These limitations were hard to tackle as there was no other alternative.
Problem With Web Platform Based Contracts
Online web-based platform provides payment services for buyers and sellers. These services include buying and selling of consumer goods. Typically, two types of issues arise in these types of contracts, product not received and product no as described by the seller. With ease by technology, the buyer can raise dispute which web platform communicates through algorithms to sellers. This dispute resolving has a time limit of 20 days or as pre-determined by the third-party platform. If neither of the party has escalated the dispute to claim, then it closes by itself without any resolve.
Another issue in these platforms is frauds by buyers. Sellers claims that chargeback has been initiated fraudulently. The platform itself only allows those sellers with best practice record to resolve the issue in their favor. The platform itself controls such disputes, but any of them requires legal enforcement are taken to court and rest is the same process as mentioned above.
Also, other than an exchange between two parties, organizations require contracts between teams or more than two individuals. At that time third-party requirements also increase adding to the cost and length of the process.
Multi-Signature Escrow: Smart Contracts for organizational as well as small need contracts technology has provided us with blockchain based smart contract development. Smart contracts are digital contracts which do not require any third party, parties decide the terms of agreements and add them cryptographically making them immutable. If one of the party fails to provide the agreed terms, contract automatically reverse the agreed amount to its core.
Ethereum based smart contract development is the most popular open-source platform. But mostly here participants of network use development of a digital contract for cryptocurrency transactions. Smart contracts can also provide Multi signature escrow meaning contracts where more than two parties signature to access a smart contract is required. For example, a smart contract development between two organization for delivery of services for a stipulated amount of time will need two or more teams to access the contract and its terms. It is achievable through private blockchain development company which provides a decentralized network as well as the control over information flow which is required for an enterprise.
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