Since Blockchain technology gained wide usage in various businesses, the use of smart contracts increased simultaneously. They were introduced in 2015 by an American computer scientist, Nick Szabo.
Ethereum was the foremost platform to launch smart contracts in the year 2015. Experts estimate that Smart contracts will hold a global net worth of around 345.4 million USD by 2025. Here is the complete guide to help you learn more about Smart Contracts.
What is a Smart Contract?
A digital contract similar to a physical world contract is known as a Smart Contract. It contains the rules for negotiating the conditions of an agreement. We cannot delete or change the agreed terms in a smart contract. It also helps businesses to carry out transactions and agreements easily at a low cost. Additionally, smart contracts do not involve any third parties.
How do Smart Contracts Work?
Smart contracts are simply computer codes that contain terms and conditions. They automatically function when predefined conditions are met. Since smart contracts are present in a distributed ledger called Blockchain, anyone can see the transactions that take place in the network.
What are the Benefits of Smart Contracts?
As smart contracts function within the Blockchain, they have a few similarities to the latter technology. We cannot change or delete any data present in the contract and so they have a strong defense against hacking. Besides, they do not require any third party to perform transactions.
The various benefits of smart contracts are as follows.
-
Smart contracts eliminate the middlemen and create a transparent and direct communication between the buyers and the sellers.
-
Smart contracts are immutable, so they acquire a huge amount of trust from the users.
-
They help to reduce or completely eliminate the transaction fees.
-
The possibilities of hacking and fraud are nearly impossible.
-
Since they work in a decentralized network, smart contracts possess high resistance to data loss.
-
As smart contracts work with digital processes, we do not need additional paperwork for recording the transactions.
-
Every function in a smart contract happens automatically, so they have more accurate data in less time.
Use Cases of Smart Contracts
Due to their beneficial values, smart contracts have extensive applications in different businesses. Let us see some of the use cases of smart contracts.
Voting
With the help of smart contracts and blockchain technology, the voting process is very much likely to support a secure, transparent, and cost-effective system.
Supply chain
Smart contracts provide real-time visibility in the supply chain. So, the sellers can track their inventory and avoid frauds and thefts.
Banking
Smart contracts enable a secure transaction between two parties without any third parties involved. The time and cost of this process is comparatively lower than the traditional method.
Healthcare
Smart contracts offer the facilities like insurance and storing a patient's medical records. This ensures the privacy of a person by safeguarding their data.
Conclusion
Over the past few years, smart contracts have gained more popularity and trust among people. But creating such effective contracts demand related technical knowledge and skills. However, a promising blockchain enterprise can provide valuable smart contract development services.
