Smart contracts refer to self-executing contracts with the terms of agreement between seller and buyer being directly written into lines of code. Generally, the code and the agreements contained therein exist across a distributed, decentralized blockchain network. A blockchain is nearly impossible to hack or shut down. Smart contracts were proposed by Nick Szabo in 1994. Smart contracts are computerized transaction protocols that execute terms of a contract.
COVID-19 Impact on the Global Smart Contracts Market
The COVID-19 pandemic is expected to positively impact the global smart contracts market. Awareness and adoption of smart contracts increased across the globe due to remote working and social distancing, as it helps in virtual enforceability of the contract and automates the whole process of manual contracting. The increased awareness has positively impacted the market.
Global Smart Contracts Market – Dynamics
Digital Transformation within the BFSI Industry expected to drive the Market
Digital transformation within the banking and financial industry has been very strong over the past few years. In developing as well as developed regions, adoption of smart technologies and automated technologies has increased extensively in enterprises of all sizes. Smart contracts incorporate critical tools for bookkeeping and eliminates the possibility of access to accounting records as it uses decentralized blockchain technology. For instance, in the case of insurance claims, the insurer performs error checking, routing, and transfer payments to the user through smart contracts if everything is found appropriate.
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Lack of Awareness & Knowledge and Low Flexibility Hindering the Smart Contracts Market
Adoption within industries other than BFSI is comparatively low due to lack of awareness and knowledge with regards to smart contracts and its applicability. Likewise, alteration or any change within a smart contract is almost impossible as the whole contract is developed on the basis of coding and any error in the code can be time-consuming and expensive to correct.
North America to Dominate the Global Smart Contracts Market
In terms of region, the global smart contracts market can be divided into North America, Europe, Asia Pacific, South America, and Middle East & Africa. North America is expected to dominate the smart contracts market during the forecast period due to healthy adoption rate of new products or technology within the region. Adoption within industries other than BFSI is also above the global average for smart contracts within North America.
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