What is a smart contract? How do smart contracts work? And what are they good for? I'll try to answer these questions in this post.
What are smart contracts?
A smart contract is an agreement between two or more parties in the form of computer code. The contracts are stored on the blockchain and cannot be changed. Transactions that take place in a smart contract are processed by the blockchain, which means they can be sent automatically without the intervention of a third party. When you enter into an agreement with a smart contract, no confidential advisor is required. The transactions only take place if the conditions in the agreement are met.
What can smart contracts do?
Smart contracts help you exchange money, stock or anything else of value in a transparent, trustless manner, all while avoiding the services of an intermediary and the possibility of conflict. Smart contracts provide you:
* Autonomy - You are the one who makes the deal and you don't have to rely on an intermediary to confirm transactions. The execution is automatically managed by a decentralized network, which excludes manipulation of contracts.
* Speed - Automated contracts can save you hours on manual paperwork.
* Security - Smart contracts are secured with similar cryptography that encrypts websites. In short, it keeps your documents safe.
* Savings - Because they disable the presence of an intermediary, smart contracts can save you a lot of money. Where, for example, you would normally have to pay a notary to witness your transaction, this is now regulated by the blockchain.
* Backup - Unlike files on your computer, data on the blockchain is duplicated many times over. So you do not have to be afraid of losing something that is registered on the blockchain. Also, there is no way anyone can say they lost the contract or the dog ate it.
A smart contract in effect
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