Smarts contract is a self-executing contract in which the conditions of the buyer-seller agreement are directly put into lines of code. The code and the agreements contained within it are dispersed and decentralized over a blockchain network. Transactions are trackable and irreversible, and the code controls the execution. Smart contracts work by following simple “if/when…then…” statements that are written into code on a blockchain. A network of computers executes the actions when predetermined conditions have been met and verified.
Speed, Efficiency And Accuracy
Once a condition is met, the contract is executed immediately. Because smart contracts are digital and automated, there’s no paperwork to process and no time spent reconciling errors that often result from manually filling in documents.
Trust And Transparency
Because there’s no third party involved, and because encrypted records of transactions are shared across participants, there’s no need to question whether information has been altered for personal benefit.
Blockchain transaction records are encrypted, which makes them very hard to hack. Moreover, because each record is connected to the previous and subsequent records on a distributed ledger, hackers would have to alter the entire chain to change a single record.
Smart contracts remove the need for intermediaries to handle transactions and, by extension, their associated time delays and fees.