Smart contracts are one of the most disruptive blockchain applications transforming industries ranging from finance to logistics. By enabling automatic execution and data sharing between parties, smart contracts reduce costs and friction in critical business processes.
In my decade as a web scraping and data extraction expert, I‘ve seen firsthand how transforming analog business operations into programmable logic unlocks new value. As smart contract adoption accelerates, understanding use cases across sectors provides a window into their vast potential.
In this post, I‘ll share my perspective on the top 9 emerging use cases with real-world examples of smart contract adoption. My goal is to demonstrate to business leaders how this technology can be applied to gain competitive advantage.
1. Decentralized Finance (DeFi)
DeFi platforms utilize smart contracts to offer financial services without intermediaries. In 2021 alone, the total value locked in DeFi applications reached $94 billion. Smart contracts power sophisticated DeFi offerings like:
- Lending and borrowing different cryptocurrencies on platforms like AAVE.
- Derivative trading on platforms like Opyn that use smart contracts for options contracts.
By eliminating the need for traditional financial institutions as intermediaries, DeFi democratizes access to financial services. The automation enabled by smart contracts also allows these platforms to efficiently manage a high volume of transactions.
McKinsey estimates that blockchain-based financing could facilitate over $1 trillion in loans to micro, small and midsize enterprises in emerging markets. DeFi smart contracts bring us closer to that goal by minimizing counterparty risk and collateral requirements.
2. Non-Fungible Tokens (NFTs)
NFT trading volume surpassed $17 billion in 2021, making it one of the biggest use cases of smart contracts. Smart contracts assign ownership of non-fungible tokens and control their transferability. Additional features like royalty payments and access rights can also be programmed into NFT contracts.
While high profile NFT sales like Beeple‘s $69 million Christie‘s auction brought headlines, NFTs also enable real-world applications like proof of ownership for digital assets. Their programmability via smart contracts unlocks new business models for content creators.
I see immense potential in using NFT smart contracts to fractionalize ownership of high-value assets. This helps democratize access to investments like luxury collectibles and real estate reserved for the ultra wealthy.
3. Copyright Management
Smart contracts are already being used to simplify royalty payments for creative works. Ownership data like digital fingerprints for copyrighted assets can be immutably recorded on-chain. Artists minting NFTs can bake royalty payment terms into smart contracts, ensuring they receive a percentage of any secondary sales.
This use case streamlines compliance and payments for players across music, art, literature and other creative industries. Automated royalty distribution through smart contracts reduces administrative overhead for repeated micropayments.
Immutable smart contract royalties could also give more leverage to creators in negotiations with publishers and distributors. By transparently encoding their rights on a blockchain, artists gain visibility and evidence into how their works are monetized.
4. Data Marketplaces
Data marketplaces allow buying and selling of datasets, API access, and data streams. Some feature smart contracts that enable automated, real-time data sales.
For example, Ocean Protocol uses smart contracts so purchasers can subscribe to streams of data from sources like connected vehicles and satellites. Smart contracts eliminate manual work, while encryption ensures data transparency and privacy.
By using blockchain oracles to validate external data, smart contracts can trigger based on events in the real world. This unlocks "data as a service" business models not possible before.
5. Financial Data Management
Smart contracts enable shared business ledgers for transparent, accurate financial data between companies. All parties can use the same figures, reducing disputes and manual reconciliations. Automated updating and sharing of unified financial data also improves reporting speed.
Currently, acquiring data like invoices requires lots of back-and-forth communication and paperwork between companies. Smart contracts solve this by providing one source of truth accessible to permissioned parties.
In supply chain finance, an invoice can be tokenized as an NFT containing key details. Payment release occurs automatically when the buying party acknowledges receipt on-chain. This reduces settlement times from weeks to days, freeing up working capital.
6. Gaming
Smart contracts are widely used in crypto gaming for activities like:
- Buying/selling/trading in-game assets
- Waging battles between characters for prizes
- Breeding and combining collectible characters like in Axie Infinity
These contracts enable true digital ownership of in-game assets. They also facilitate emerging play-to-earn models where players earn crypto rewards.
PwC estimates the video game market will grow to over $300 billion by 2026. Adopting smart contracts brings transparency that builds trust in gaming. This helps attract new users to Web3 titles unlocking new models like interoperable metaverse economies.
7. Healthcare Data Sharing
Smart contracts enable secure, selective access to healthcare data. For clinical trials, researchers can pay to access specific genomic data sets on a blockchain through self-executing contracts.
Platforms like EncrypGen combine healthcare data with payments on-chain. This allows sharing while protecting patient privacy through encryption and access controls.
The transparency of participants being paid for their data, and researchers accessing only relevant data, addresses ethical concerns limiting healthcare data sharing today. As genomic medicine advances, smart contracts will be critical to convince patients to share their data.
8. Insurance
Major insurers like AXA and Generali are exploring blockchain to cut administrative costs and fraud. Smart contracts can automate claims and payouts based on trusted data feeds like IoT sensors.
For example, Arbol offers weather insurance for farmers fully executed by smart contracts. They connect to weather data APIs, automatically paying claims when conditions trigger coverage terms.
Though adoption is still early, automation and transparency from smart contracts offer appealing benefits for insurers. Smart policy contracts can also be extended to cover connected assets like vehicles and supply chain shipments.
9. Supply Chain Traceability
In logistics, smart contracts create shared visibility into supply chain data. This simplifies coordination between parties and locating in-transit items.
Walmart used smart contracts to trace the sources of its products, even tracing mangoes back to the farms where they were grown. This brings radical transparency that builds trust with customers.
Maersk trials found that a shipment of flowers going from Kenya to Rotterdam generated nearly 200 communications documents. Smart contracts simplify trade by storing key shipment events on a shared ledger.
As supply chains face increasing complexity, smart contracts are an important tool for end-to-end digitization. They increase resilience while reducing losses, waste and delays.
Conclusion
From finance to gaming, smart contracts are already changing how business is conducted across industries. As the technology matures, additional use cases in healthcare, insurance, logistics and more will be unlocked. While hype has cooled since the 2021 NFT mania, enterprises are still steadily exploring adoption.
With benefits like transparency, automation, and data sharing, smart contracts will be a critical part of how companies leverage blockchain. Their programmability unlocks the full potential of blockchain by encoding complex business logic on-chain. As technology leaders implement blockchain solutions, understanding these top smart contract use cases and examples provides valuable insight into their immense disruptive potential.