What the heck is a smart contract?
In a nutshell a smart contract is just a program that runs when predetermined conditions are met. The data is then stored on a blockchain. Smart contracts work by following a simple 'if' statement that are written into code. The code and agreements contained therein exists forever on a decentralized, distributed Blockchain.
Various nodes or computers usually on a peer-to-peer network execute the code in the program, providing certain conditions have been met, verified. When the transaction is complete the blockchain(Distributed ledger) is updated. Usually the smart contract is created by a developer, and once conditions are agreed upon, participants will establish the terms for the contract.
Smart contracts typically have many stipulations as well as terms or rules. For example, how transactions and the data is represented, agree on the "if,when and then" rules that govern those transactions. Explore possible exceptions, and define a framework for resolving disputes.
What are some of the benefits of smart contracts? Speed, efficiency and accuracy. Once the condition is met, the contract executes immediately. Trust and transparency, there is no third party involved, encrypted records of transactions are shared across the ledger. Some examples of blockchain platforms include Bitcoin, Cardano, Ethereum, and Tezos
Security, Blockchain transaction records are encrypted, each record is connected to the previous record on a distributed ledger with a unique cryptographic hash function. To alter a record, the entire ledger would need to be altered. Finally there is cost savings as there is no need for intermediaries to handle transactions.
Ok, so now where can we use this? Business can use smart contracts to safeguard medications, retail and supplier relations, international trade deals, food supply, finance. Those are just some examples of how we can utilize this amazing technology to make the world a better place.
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