When you buy a car, the retail price of the car is at least a few hundred dollars short of what you pay. When you buy a house, fees and other logistical costs drive the price up. You end up with most of the burden of these transactional costs. However, sellers also feel this burden with closing and intermediary costs taking up a large chunk of the seller’s profit. So where does this money go? The money is made by realtors and real estate agents who draw up paperwork and make sure everything goes according to plan. Since there is a lot of money at stake, there needs to be some trust and understanding between the two parties. Smart contracts do exactly this, without the need for an intermediary.
"Blockchain technologies could reduce banks' infrastructural costs by $15-20bn a year by 2022”.
Another industry that stands to benefit from the implementation of smart contracts is the insurance sector. Insurance companies spend millions of dollars processing claims and while just smart contracts won’t create a viable system that cuts costs, minimizing and streamlining the entire process can allow smart contracts to prevail and succeed. Determining car insurance rates and processing claims are very reliant on factors such as the number of accidents, age of driver, etc. With multiple smart contacts for each policyholder, there could be a system that sees an accident automatically enforce a higher rate as well as a shift in your policy.
In summary, smart contracts are a great technology that can benefit both consumers and producers, but are still too young to be implemented on a large scale. The blockchain technology behind each smart contract makes it a secure and trustworthy contract, free of legal jargon and manpower that costs all parties involved. While many use cases show the bright future of smart contracts, there are still many hurdles that need to be jumped before we can see smart contracts around the world, in every aspect of our lives.