This is one term that scares many first-timers away at first sight. Taken apart, a smart contract means what it says, “smart” enough to operate without human or third-party intervention, and a “contract” serves as a set of laws that bound an agreement, decision, or action.
Now let’s get more technical for in-depth understanding.
Smart Contracts are a set of computer code (protocols) that run on blockchain technology and comprise explicit terms & conditions (pre-defined rules) established with the consent of the involved parties.
Why smart contracts
- Verification of transactions, records, and data entry
- Execution of transactions with speed, accuracy, and void of human errors
- Enforce decisions that facilitate equal communication between two or more parties involved.
- Transparency in executing activities across the blockchain with records of data available to the public while keeping the personal details of involved parties private.
- Clear and concise communication to all parties.
As blockchain technology progresses, the use of smart contracts now goes beyond financial markets and is being adopted for use in the most diverse industries ever. From record-keeping/data access in healthcare, secure voting online by Governments, management of supply chain records and tracking, to purchase of online goods, automobiles, and finally automated management systems.