With all the Blockchain Technology application development hype, one thing that gets thrown around a lot is Smart Contract. It’s a most unique feature of blockchain act as a decentralized system which is shared between all the parties of the network and eliminates the involvement of third-party intermediaries.
Smart Contract is very propitious system offered by Blockchain though it has its own set of issues that are yet to be resolved, but it provides faster, cheaper and more efficient options as compared to the traditional systems. Because of this banks and government bodies are also turning to blockchains.
If you’re no cryptocurrency expert or a geek who always keeps eyes on the latest trends than first you should understand what exactly are these contracts, and what makes them smart? This blog aims to throw some light on what a Smart Contract is, mostly from an end-user perspective.
What is Smart Contract?
A Smart Contract is a digital form of any contracts; it helps you in transferring money, property, shares, or anything of value in a transparent way by avoiding the involvement of a middleman.
Smart Contracts were introduced by Nick Szabo, a legal scholar, and cryptographer in 1994.
Let’s understand it with this example:
Usually, for any contract, you would go to a lawyer or a notary, pay them, and wait while you get the document but with a Smart Contract, you simply drop a bitcoin into the ledger, and your boon, driver’s license, or whatever drops into your account will come out without the involvement of the third party.
The code of Smart Contracts contains all the terms and conditions in which parties agreed and the information about the transaction. All the information is recorded in a Blockchain, a decentralized, distributed public ledger.
Properties of Smart Contracts are:
Self-verifiable
Self-executable
Tamper Proof
Who Uses Smart Contracts?
Smart Contracts have made phenomenal changes in our daily lives by offering multiple advantages over traditional contracts. These are convenient, faster and transparent which makes them acceptable for people to streamline it in their workflow. Today almost all industries are using Smart Contracts and Blockchain Ledger Technology as it is a perfect blend of security and ease of Blockchain Technology Applications.
By eliminating the needs of intermediaries, Blockchain Technology in Financial Services and Smart Contracts have become more compelling therefore its usage is likely to gear up with the advancement of technology.
How Do Smart Contracts Work?
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Smart Contracts works like a vending machine. All you need to do is to put cryptocurrency into the contract along with all the necessary information that you want to keep as a record. Also, you have to define the set of rules, terms, and condition before any contract is ready.
A Smart Contract can work as a single or as well as a group of Smart Contracts. The single one will work independently while in a group concern person has to depend on each other to complete any task.
Some Blockchain Application Development Company already has set a couple of Smart Contracts and blockchain together to reinforce the features of Fintech mobile applications.
Benefits of Smart Contracts
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Smart Contracts have a lot of advantages; let’s see some of the benefits of the Smart Contract.
Transparency
Smart Contracts provide transparency to all the concerned members. Anyone from the concerned members can access the contract and see the terms and conditions of the agreements.
No Miscommunication
Smart Contracts are fully automatic therefore there is no chance for any miscommunication or misunderstanding.
Efficient Performance
Smart Contracts perform transactions more efficiently. It can process number of transactions with higher efficiency, accuracy, and speed without any fault.
No Paperwork
Smart Contracts are good for nature as it avoids paperwork. They are making better both the real world and the business world.
Backup
A Smart Contract always comes with backup so, there will be no chance of losing any of them.
It permanently records all essential documents with accurate details.
Final Thoughts
Smart Contracts can bring revolutionary changes in businesses though there are still many drawbacks, but it’s a great and positive start to a new era. The amazing features of the Smart Contracts make the system so lucrative and appealing so we can say that Smart Contract is the future.
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