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Revenue Distribution Using Smart Contracts

19:53 10/04/2018

Revenue distribution in a business model context is rather simple. It means that a profit (and a loss) is shared among all participants whether they are stakeholders, business alliances or common employees.


This technique had existed long before it got popular among the Internet users. Many business sectors (management, engineering, social, sports, energy, financial, luxury and others) use this approach. There are many ways to apply it. Tax division for different governmental institutions, sales participants, entertainment organizations and, of course, profit share.


Revenue distribution has some obvious issues to be solved. The most important are transparency, safety and rapidness. Since each industry has its own peculiarities, it is hard to collect all possible challenges together, but some of them are common. Thus, it is always important to develop new technologies that could manage the process of revenue distribution ensuring its reliability. Blockchain technology is definitely the one as it has smart contracts (smarts).


Smarts are absolutely effective when it comes to revenue sharing among users. Each smart contract is a solid agreement implemented in blockchain in the form of a small software component. It is ready to be activated and executed as soon as required conditions are met. Important features of smarts are security and so-called “trustlessness”. But what is more crucial is transparency.


Suppose we are interested in 100 BTC investments with a 5% annual profit in the future. This brings up to 0.05 cents per each dollar in the particular case. If we decide to do this right now, we will have to wait and hope the project is trustworthy.


Talking about smarts, we are guaranteed to get our revenue part. The difference is that the agreement conditions and rules are implemented in the smart’s code. As soon as revenue payment conditions are met, the smart will immediately transfer our share.


But what about revenue security? Blockchain technology is a public ledger distributed among all participants. Thus, smarts cannot be changed as they get intrinsic to the main chain. Or they might be changed but only if all parties agreed on this action. Such a level of security is achieved even without an intermediate person.


Rapidness is out of doubts as well. Smarts work in the real-time environment. More than that, participants may instantaneously recall their revenue parts anytime and even on a regular basis. This is nearly possible in the real world, as too much administrative activities are required.

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