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Without IoT sensors, intelligent contracts have only limited potential

July 10, 2020

The smart contracts According to experts in NYU business and blockchain technology, they are only of limited efficiency in certain industries if they are not implemented in conjunction with IoT sensors.

The extraordinary professors of the Stern School of Business at New York University, Hanna Halaburda and Yannis Bakospresented their research results at the conference of Unitize on July 10th the interaction between intelligent contracts and IoT (Internet of Things) sensors to improve business efficiency.

Smart contracts enable business to be democratized

The study examined how “Smart contracts will make the business landscape more democratic”, However, this is an advantage for everyone involved Deficiencies in the current application of the technology have been identified when used alone.

Without IoT sensors, intelligent contracts have only limited potentialWithout IoT sensors, intelligent contracts have only limited potential

Halaburda explained that IoT is important to maximize the benefits of smart contracts in the trade sector:

“It turns out that they solve a problem, but only partially,” he said, “but what doesn’t happen if we only add smart contracts is a higher quality of delivery. [de los bienes]””

He explained this using the example of a contract between a fruit transport company and the retailer The intelligent contract solves the problem of automated execution, but does not encourage the transport company to guarantee the quality of the fruit.

However, when adding IoT sensors to the processA smart contract can increase the level of detail or adjust payments to the quality of the fruit delivered, e.g. B. the storage temperature. As a result, Neither party has to trust the other to complete their part of the agreement.

Legal costs matter

The decision to implement smart or traditional contracts depends on the legal costs At the time of the discussion, Halaburda said:

“If the legal costs are very low, there is no point in implementing smart contracts if their implementation is expensive. […] For a region where it makes sense to use sensors [IoT]So adding smart contracts doesn’t mean creating more value. “

If the legal costs for traditional contractual disputes would normally be highThe implementation of IoT sensors and intelligent contracts has a maximum value, he concluded.

Savings of $ 300 billion a year

A current report from Cointelegraph Consulting and VeChain speaks that too Advantages of combining blockchain technology with IoTThis suggests that the food industry could save $ 300 billion a year in seven years. IBM has already implemented FoodTrustserving Walmart, Carrefour and California Giant Berry Farms.