THE INTRICACIES OF SMART CONTRACTS: AN INNOVATION THAT WILL SHIFT THE FINANCE INDUSTRY
A Story of Innovation.
The widespread diffusion of technological advancements and innovation has extended to the different segments of various systems and societies in varying proportions. In global parlance, there’s been a considerable consensus that the degree to which a society witnesses change should be commonplace as such changes invariably inform the continued relevance of any society or system.
Accordingly, there’s been a shared commitment among various systems to ensuring that processes are consistently in check and reviews, being a natural order that will set the pace for advancements. Considering the financial history of Africa, the displacement of the barter system by monetization is a case in point. This development paved the way for new frontiers of discoveries which found notable expression in the work of Satoshi Nakamoto. In 2008, Satoshi explained peer-to-peer cash transactions without a centralized system, but through a digital ledger that stores transactions publicly after the verification of such transactions by nodes.
As espoused by Nick Szabo in his book, Smart Contracts: Building Blocks For Digital Free Markets, written in 1994, the concept of smart contract was such that transactions will be self-executing based on a trusted network that is completely controlled by computers. This discovery created no room for a third-party intermediary, hence, issues of trust were eliminated. This decentralized structure, not being subject to the control of a central party such as banks, brokers, or the government, guaranteed fairness and safety as ensured by the blockchain structure.
Unlike traditional contracts, the adoption of smart contracts in the finance system will mean that the terms of a transaction will be written as protocols that exist across a distributed, decentralized blockchain system. If this be the case, what then are the numerous benefits that abound with the adoption of smart contracts in the finance industry?
SMART CONTRACTS: AN INVENTION THAT WILL RESHAPE FINANCIAL SERVICES
In a bid to pioneer change in the finance industry, the numerous advantages of smart contracts will extend to the following areas:
1. Real Time Remittance: The adoption of digital modes of payments by leveraging blockchain-based smart contracts will ease payment processing thereby allowing real-time fund transfer while maintaining accuracy and transparency. This will also speed up transaction settlements as the system makes for autonomous verification. Payment lag, high volume funds transfer, and other challenges of Payment Service Provides will be addressed.
2. Reduction of paperwork and transparent auditing: The adoption of smart contracts in the finance industry will ensure that auditing is founded upon the basis of incorruptible and distributed codes in the Blockchain network. The solutions will enhance the transparency of records stored while eliminating any possibilities of infiltration. Since the system thrives upon computerized protocols, the cumbersome process of paperwork will be eradicated by this development.
3. Reduced transaction costs: The emergence of smart contracts eliminates third parties in the process of executing an agreement. Financial costs likely to be expended in acquiring the services of these third-party agencies will also be eliminated. This is so because the transactions governed by smart contracts are self-regulatory, and as such, low-cost record-keeping and reduction in the manual intervention will lower transaction costs in the long run.
4. KYC processes will be made easier: The adoption of a smart contract system will make the process of verifying customer identity easier for banks. They will be able to verify credit scores of individuals and identities based on Blockchain records.
5. Speed: Being a digitally computerized structure capable of processing instructions by virtue of its protocols, the time frame in which transactions are made between business-to-business and customer-to-customer transactions will be cut down and properly executed in little time. It will help speed up banking operations by cutting down unnecessary manual processes resulting in delays and irregularities associated with manual processes.
AFRIDEX AS A CORE PART OF A NEW FINANCIAL PHASE
In a bid to change the trajectory of financial institutions by reaching unparalleled levels of connectivity between products, holdings, and assets, the digitalization of financial instruments comprising smart contracts will take the benefits of Blockchain to the next level.
The AFRIDEX eco-system will leverage blockchain, cryptography, and advanced mechanisms such as smart contracts to create a new financial system characterized by inherent problem-solving features. The adoption of smart contracts will ensure that users of Afridex products will be able to pay and receive payment for products and services, trade, invest and manage their crypto assets on a single but all-encompassing platform. This way, the challenges faced by payment service providers vis-a-vis the traditional finance structure would have witnessed immense development in structural composition, process, and general output.