Smart contracts defined
Smart contracts is not a new concept. It is an electronic quantitative transaction agreement that implements the actual contract terms. The overall goal of smart contract design is to meet common contract conditions (such as payment terms, liens, confidentiality, and enforcement, etc.), and to minimize malicious and accidental abnormalities, and to minimize reliance on trusted intermediaries. They are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement.
How smart contracts work
Smart contracts work by following simple “if/when…then…” statements that are written into code on blockchains and it executes the actions when predetermined conditions met. And then the blockchain updated when the transaction is completed which ensure the transaction cannot be changed anymore. There can be as many stipulations as needed to satisfy the participants that the task will be completed.
Benefits of smart contracts
Security
Blockchain transaction are encrypted, which makes them very hard to hack.
Speed and efficiency
Because smart contracts are automated, there’s no paperwork to process at all.
Trust and transparency
There’s no third party involved, and the encrypted transactions are shared among the participants, so there is no chance that someone can modify it.
The future of smart contracts
Today, most blockchains have smart contract functions. The functions of smart contracts range from very simple such as Bitcoin or Litecoin to more advanced Dapp-enabled blockchains such as Ethereum and AOS.
We are still in the early stages of using smart contracts and dapps. But companies and even governments are already experimenting with its potential. They are now used for a variety of tasks, including digital identity, supply chain management, insurance, data storage, and more.
