What Are Smart Contracts?
A smart contract is one of the most widely used terms in blockchain. Simply put, a smart contract can be described as a computer code that sets the rules for the exchange of money, goods, content, and more between two parties without intermediary services. Smart contracts have huge potential. Some people even believe that this blockchain-based innovation can replace lawyers in the near future.
Smart contracts are built on the Ethereum platform which allows its users to create their own contract, or “autonomous agents”, as Ethereum’s whitepaper calls them.
How do smart contracts work?
Smart contracts work a lot like vending machines. You just drop a required amount of a cryptocurrency into the smart contract, and your goods drops into your account. All the rules and penalties are pre-defined and enforced by smart contracts. So smart contracts eliminate the need for intermediary services.
What are the objects of smart contracts?
There are 3 main parties for smart contract:
- Signatories — the parties that are going to use smart contract
- The subject of agreement
- Specific terms
What are the benefits of smart contacts?
There are various benefits for using smart contracts and here are some of them:
Autonomy — As we already mentioned, smart contracts eradicate the need for a third-party intermediary for your deal.
Savings — You save money by not using the services of an intermediary party
Safety — All your data is being encrypted and safely stored on a secure, shared ledger so it can’t be stolen.
Efficiency — With smart contracts you will be saving a lot of time, normally wasted on manual processing of paper documents.
Smart contracts are one of the revolutionary products brought to us by blockchain. They are here to stay.
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