The benefits of smart contracts and its adoption in Asia

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Asia has long been at the center of the blockchain revolution, whether embroiled in the hunt for alleged bitcoin creator Satoshi Nakamoto or hosting the world’s biggest digital currency mining pools.

Relative to other jurisdictions, blockchain adoption in the region has been very fast, and it has led to governments swiftly establishing regulations and increasing oversight. However, this does not necessarily mean that blockchain will stop thriving. Rather, it creates a framework for the opposite.

For many blockchain-based startups in Asia, this broader acceptance has led to innovation and the use of many underlying blockchain technologies. Smart contracts particularly have become a key point of development.

Building a better agreement

Creating contracts between companies is notoriously difficult. The complex legalese is designed to protect the parties involved, but it often slows progress. This costs each party valuable time and money. Contracts can also grow so complex that they can leave matters open to interpretation, leading to disagreements.

Enter smart contracts, a type of contract that creates a set of rules that govern an entire exchange system between two parties. It creates a set of programmed instructions that are automatically executed without intervention.

Imagine a smart contract as an “if-then” function.  If a certain condition is met, then a certain process is undertaken via the contract. This could include the exchange of cryptocurrency or other assets, depending on the nature of the agreement. It’s a transparent system, as all activities are logged in a public blockchain ledger. This increases accountability and protection for participating parties.

One issue with smart contracts is that it requires a business to hire someone to write a program that interacts with the blockchain, which is expensive. But smart contract-based startups are already addressing this concern by simplifying the process into a single platform. They make easy interfaces that increase the accessibility of smart contracts.

These services come at a crucial time—there have been many breaches in the past that took advantage of companies that hired unskilled developers.

Creating opportunities for Asian startups

For Asian startups, smart contracts present a useful foundation for business models and new ways to accept payments and access financing.

Some Asian startups have also used smart contracts to create their entire operations and have tested new use cases for them. One such company is Japanese firm Couger, which has partnered with KDDI Corporation to build a smart contract system that can be integrated with internet-of-things (IoT) and AI technologies on the blockchain itself. Its overall purpose is to integrate multiple disparate systems on one platform to deliver better services to customers and improve internal processes.

Several Singaporean startups, on the other hand, have taken advantage of smart contracts’ transparency to improve services in the real estate and business space:

• Attores has created a system that allows digital document sharing and signing using smart contracts.
• Averspace offers property rentals and sales based on smart contracts.
• Popety hosts a property logbook based on smart contracts that is publicly visible on the Ethereum blockchain.

By using smart contracts to make processes easier for companies, these startups are carving out the pathway for greater blockchain adoption and accessibility.

Smart contracts as a pathway to capital and transparency