Smart Contracts play an important part in the crypto industry. Smart Contracts can enable the processing of everything from cryptocurrency or fiat currency transactions to transportation. Smart Contracts are slowly but gradually revolutionizing the world and becoming more common in our day-to-day life.
In this article, we will be discussing what Smart Contracts are.
What are Smart Contracts?
An American computer scientist named Nick Szabo, the inventor of the cryptocurrency called “Bit Gold,” first introduced Smart Contracts in 1994. He considered Smart Contracts as digital contracts that are transaction protocols that are executed automatically.
Smart Contracts are computer programs that run on a decentralized blockchain network. They are self-executing lines of code that are executed when a specific condition is met, like a crypto transaction being made. Smart Contracts are similar to traditional contracts as they digitally facilitate features like verification of a negotiation.
Smart Contracts remove the need for an intermediary, and you don’t have to pay the middle-man to make a contract as they are created once and stored on the blockchain network. This makes Smart Contracts a lot more efficient and secure. This is one of the main reasons the government and banks are starting to use Smart Contracts instead of traditional contracts.
This version of contracts can be used to exchange cryptocurrency or fiat money, deliver goods or services, unlock digital content, etc.
To learn how do Smart Contracts work, read the part given below.
How do Smart Contracts work?
To develop a Smart Contract, a business team tells their requirements to a group of computer developers. The developers then start coding the logic of a Smart Contract on a programming language according to the client’s requirement.
Once the Smart Contract is developed, it is sent to a team for security review. After the testing phase, it is deployed on an existing blockchain, which can then be used in a traditional contract.
Characteristics of Smart Contracts
Some of the characteristics of Smart Contracts are given below.
Smart Contracts are highly secure based on a decentralized blockchain network known for their high security. Cryptography that is involved in the blockchain makes it extremely resilient to hacking attempts.
One of the characteristics of Smart Contracts is that it is accessible to everyone, which means anyone can make one according to their own needs. All you need is a little bit of programming knowledge, and you can easily make yourself a Smart Contract.
Smart Contracts are computer programs, which means they eliminate the need for an intermediary. Plus, they run literally at the speed of light, which makes them extremely efficient and fast.
With a Smart Contract, you are the one in control as you agree instead of multiple people developing it for you. It knocks out the need for a lawyer or an intermediary to help to develop a contract.
This also reduces the risk of manipulating the contract as there is no biased individual involved, and it is managed automatically on a blockchain network.
Large corporations accept the significance of Smart Contracts and have started to accept them instead of traditional contracts. Smart Contracts have great applications that can and will make our life a lot easier.