The Current State of Affairs
More and more companies are outsourcing their digital innovation projects, opting to partner with remote teams overseas that can outcompete the local market. That said, when working with distributed teams, some fundamental aspects of the working relationship may also change. Regardless of the risk of entrusting a long-distance party with product development – no matter how high the talent level is – it’s still important to reduce the business risk as much as possible the same way it is at home.
Systems still Operate in a Centralized Fashion, Mostly
In most agreements in this space today, parties engage in transactions with one another through a centralized broker or central system, and these are often external. In doing this, each party trusts the central system rather than each other. Although the practice is majorly tried and true, placing the trust on a third party to execute the business is inherently risky because it makes both main parties dependent on the third, not to mention it could also be unnecessarily costly.
Enter smart contracts.
Smart Contracts are a Blockchain underpinned software that stores the negotiating terms, contract verification, and subsequent execution of the agreed terms. These contracts are executed on top of the Blockchain using platforms like Ethereum, designed so that “applications run exactly as programmed without any possibility of downtime, censorship, fraud, or third party interference.”
In general, smart contracts offer a new way to remove trust issues and decrease costs by removing the need for a third party when fulfilling contract terms. Decentralizing the process using a smart contract makes it more secure, more cost effective, and faster.
Smart Contracts work and are executed entirely by triggers within the code, so there’s no human interaction during the execution process. This removes the need for the third party involved in more traditional contracts, saving time and money and reducing the overall risk of one side not holding up their end of the deal.
How does a Smart Contract help with remote teams?
For everyone involved in a remote work agreement, smart contracts enable easy transactions safeguarded by knowledge that the Blockchain technology authenticates them independently. For smart contract users, this means that when an agreed deliverable arrives and verified, the contracted supplier is paid automatically by the self-executing smart contract. In this way, the contract will also save time as suppliers won’t have to chase up payment of invoices for services since these are automatically completed via the smart contract.
Fortunately, the same thing applies when payment is confirmed for a product. That product can be transferred automatically to the buyer and its delivery information would be logged within the Blockchain. This provides a complete and incorruptible record of transactions logged on the Blockchain, all in chronological order.
Aside from the increased level of trust, smart contracts also give those involved:
- More autonomy: There’s no need to involve a third party, and once everything is set up there is no need to jump back in to complete anything.
- Safety and backup: Cryptography removes the risk of being hacked and as your documents are duplicated throughout each part of the chain, there’s no risk that they’ll get lost.
- Accuracy: Decreased human interaction with the process removes errors that can arise from manual input. There is a complete and accurate record of everything that has happened within the contract so all components can be tracked.
Smart Contacts remove the middleman, lower costs, and make the overall process of remote working agreements more efficient and safe. Expect smart contracts to play a big role in the future of work, as well as other areas as the technology matures.